A plan which Education Secretary Betsy DeVos had presented earlier this spring to simplify the student loan process has been dropped, after meeting with opposition from lawmakers on both sides of the aisle.
DeVos had come up with a plan that would have allowed just one company to manage and collect monthly payments for all student loans. It was intended to save taxpayer dollars and simplify the process, but many opposing it were afraid it would reduce competition and create a federal contractor that was “too big to fail.”
A group of both Republican and Democratic senators had joined together to block DeVos’s plan, requiring a continuation of the current system with multiple student loan servicers. The effort was sponsored by Sens. Roy Blunt (R-Mo.), Elizabeth Warren (D-Mass.), James Lankford (R-Okla.) and Jeanne Shaheen (D-N.H.).
Sen. Warren released a video at the end of May, slamming DeVos for her plan to bring changes to the student loan program, and declared she would be keeping a close watch on her.
Tuesday the Department of Education announced they would be giving up on the plan, and would present a new proposal later to help improve the student loan program, Politico reported.
“By starting afresh and pursuing a truly modern loan servicing environment, we have a chance to turn what was a good plan into a great one,” DeVos said in a statement.
Spokesman Michael Woeste, speaking on behalf of Rep. Virginia Foxx (R-N.C.), chairwoman of the House Education Committee, said Foxx wants to work with the Trump administration to find a solution, but feels DeVos “made the right decision to cancel the single-servicer proposal.”
Over 42 million Americans have student loan debt, in the $1.3 trillion student loan portfolio from the federal government.
DeVos appointed A. Wayne Johnson in June to head up the federal student loan program. He stated that they will “take the best ideas and capabilities available and put them to work for Americans with student loans,” and will create “a customer support system that is as capable as any in the private sector.”
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