This week began with a report from the Consumer Federation of America (CFA) showing that student loan defaults have increased 14 percent from a year ago to $137 billion. It ends with the Trump regime taking action.
Unfortunately, for nearly seven million Americans working to repay the Federal Family Education Loan (FFEL) Program, the action makes their situation much worse.
Under the direction of Secretary Betsy DeVos, Trump’s Department of Education (DOE) just cancelled an Obama-era rule that prevented FFEL agencies from charging 16 percent interest on student loans in default if borrowers enrolled in federal loan rehabilitation within 60 days.
President Obama introduced the rule to protect borrowers who were doing everything in their power to manage their student loan debt only to have lenders spike the rate to an unaffordable sum. That action grew from a 2012 lawsuit by borrower, Bryana Bible, in which United Student Aid Funds (USA Funds) charged her fees totaling more than $4,500 after her default. The Obama Administration sided with Bible, and the suit grew into a class-action involving students similarly burdened by the lender’s money grab from those who could least afford to pay. In January, after the Obama Administration sided with borrowers, USA Funds settled the case for $23 million.
Unlike it’s predecessor, this Administration is not taking the side of student loan borrowers. In its letter rescinding the protection, the DOE made no mention of the potentially devastating impact it could have on student borrowers, explaining only that the safeguard, “would have benefited from public input on the issues discussed.”
No doubt, seven million students are thinking they would have “benefited” from a government that worked for them. However, with the President trying to eliminate Meals-on-Wheels, school lunches, and healthcare for 24 million Americans — this week alone — it’s increasingly clear that the President has no interest in working for the American people.