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.
“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.
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.
