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DeVos abandons student loan servicing overhaul

DeVos abandons student loan servicing overhaul

Education Secretary Betsy DeVos on Tuesday announced she is scrapping her plan to consolidate the nation’s federal student loan service providers.

DeVos’s original plan — to select just one company to collect student debt payments on the federal government’s behalf — faced bipartisan backlash, including two Republican senators who signed on to legislation that would have blocked it.

DeVos said in a statement that the Education Department will instead pursue “a truly modern loan servicing environment,” adding that “we have a chance to turn what was a good plan into a great one.”

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Sen. Elizabeth WarrenElizabeth WarrenOvernight Health Care: Biden says US will have enough vaccine for all adults by end of May | Biden calls on all states to vaccinate teachers by the end of March | Texas, Mississippi lift mask mandates Biden picks for financial agencies offer preview of regulatory agenda Becerra tells Warren he will do 'thorough review' of executive actions on drug prices MORE (D-Mass.) celebrated the announcement on Facebook but pledged to keep a close eye on DeVos moving forward.

“Today the Education Department announced that it will reverse its single loan servicer plan – and I’m glad that they are changing course,” she wrote.

“But it will be important to continue watching the Education Department and Betsy DeVos to evaluate whether its decisions are good for the millions of struggling student loan borrowers.”

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Other Republican lawmakers praised DeVos’s move to scrap her original plan. A spokesman for House Education Committee Chairwoman Virginia FoxxVirginia Ann FoxxChamber of Commerce labels Biden removal of NLRB general counsel 'extreme' GOP scrutiny intensifies on firing of NLRB top attorney Biden fires Trump-era NLRB counsel MORE (R-N.C.) told Politico that DeVos “made the right decision to cancel the single-servicer proposal.”

Lawmakers opposed the consolidation out of concerns that it would give too much power to one company, reduce competition and leave student borrowers more vulnerable.

The Education Department had argued when it unveiled the plan in April that it would simplify student loan borrowing and reduce costs.