Organizations Call for DeVos to Halt Student Loan Policy Changes - Higher Education
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Organizations Call for DeVos to Halt Student Loan Policy Changes

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by Jamaal Abdul-Alim


The regulatory changes being pursued by U.S. Secretary of Education Betsy DeVos in the student loan arena could “spell disaster for students of color who are too often exploited in consumer lending,” a group of 39 organizations said Tuesday in a letter to DeVos.

Education Secretary Betsy DeVos

“As it stands, the student loan servicing industry too often fails borrowers of color,” states the letter, sent on letterhead of the Leadership Conference on Civil and Human Rights and signed by a diverse array of organizations including the NAACP, Urban League and the Hispanic Association of Colleges and Universities, or HACU.

“Unfortunately, the changes recently announced by the Department of Education would exacerbate inequalities, making the already unfair and ineffective student loan servicing system even more harmful to all students and families seeking higher education,” the letter states.

The letter documents and laments a series of changes that DeVos has sought or implemented in recent months — including the delay and renegotiating of the gainful employment and borrower defense rules meant to hold for-profit colleges accountable for employment outcomes and to give relief to defrauded student loan borrowers. It also criticizes the rescission of a series of Obama-era memos and the revising of regulations meant to hold loan service providers more accountable. Those regulations also were designed to provide services and information in Spanish and information about repayment options.

With nearly three dozen hyperlinked footnotes, the letter stands out for the painstaking efforts its authors took to delineate the various economic disparities that student loan borrowers face along racial and ethnic lines.

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For instance, the letter posits that Black and Latino students are “particularly vulnerable to predatory practices in the lending space, as they come from families with significantly less wealth than White students.” It notes that the median White family in 2013 held “13 times more wealth than the median Black family and 10 times more wealth than the median Latino family.”

“Further, these students are often targeted by more expensive, lower-quality for-profit programs, where they represent 41 percent of all students enrolled,” the letter states. “Studies have shown these programs do not provide a wage premium for graduates, leaving them saddled with significant amounts of debt and no means with which to repay.

“Once in the workforce, graduates of color have lower wages than their White peers, even when controlling for education level,” the letter continues. “These factors compound to create an environment in which borrowers of color are left with debt but insufficient means, whether their own income or familial wealth, with which to repay.”

To underscore the point, the letter cites data that show 43.7 percent of Latino borrowers and 52.6 percent of Black borrowers in repayment were in default or seriously delinquent in 2014, compared to 36.6 percent of White student debtors.

The letter is just one of the latest in a series of several high-profile salvos in an ongoing battle to stop DeVos’ efforts to unravel various Obama-era initiatives and measures described by proponents as essential to the protection of student loan borrowers.

For iexample, on Monday, U.S. Senators Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio), ranking member of the Senate banking committee, sent a letter urging Consumer Financial Protection Bureau director Rich Cordray to “continue the CFPB’s work to protect students from ‘unfair, deceptive, and abusive acts’ by federal student loan servicers and debt collectors.”

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The letter followed a quiet announcement by DeVos to terminate information sharing agreements with the CFPB, an effort initiated by the Obama administration in 2011 and which the lawmakers said has aided oversight of servicers and helped protect borrowers.

However, DeVos, in a letter to Cordray, accused the CFPB of failing to promptly apprise her department of complaints it had received regarding student loans and instead handling the complaints themselves, which she characterized as “overreaching and unaccountable agency.”

The back-and-forth on DeVos’ regulatory reform efforts come as the Education Department prepares to conduct a series of meetings beginning in November to get stakeholder input on the revision of the gainful employment and borrower defense rules.

The latest letter to DeVos urges her to stop her efforts to rewrite the regulations.

“Rather than reopening critical regulations that protect borrowers and instead allowing for the continued exploitation of students of color, the department should focus on implementing the regulations already in place,” the letter states. It also urges DeVos to take “additional action to protect borrowers—including limiting enrollment at poorly performing institutions until they improve, ensuring information provided to students is transparent and accurately reflects career outcomes, and helping students avoid taking on large amounts of debt without an associated wage premium.”

The Department of Education did not respond to a request for comment.

In related news, The Institute for College Access and Success plans to release its annual report on student debt Wednesday. Among other things, the report will detail average student debt by state and list of a series of recommendations that include better information for students and continued access to federal student loans as opposed to riskier forms of credit.

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Jamaal Abdul-Alim can be reached at jabdul-alim@diverseeducation.com or you can follow him on Twitter @dcwriter360.

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