What the Latest Changes to the Ed Department Student Loan Mean to You
The Education Department is battling states over their efforts to tighter regulation of student loan companies that consumer advocates believe could increase the chances of mismanagement and fraudulent loan practices.
Under the leadership of Betsy DeVos, the Department of Education has taken a number of steps to simplify rules for student loan companies that issue federal loan invoices that the department oversees. Several states, including Connecticut, California and Illinois , have recently passed or are trying to pass their own legislation to better monitor these companies, including the introduction of a Bill of Rights of the Borrower with minimum standards for timely payment processing, error correction, and information sharing. , ” The Washington Post reports . The Department of Education says the states do not have the authority to regulate them .
This is just one of the many actions the department has taken over the past year that consumer advocates say favors credit companies over students. Education also said it would end its partnership with the Consumer Financial Protection Bureau and block the CFPB’s efforts to protect student loan borrowers and deferred rules designed to protect students from predatory commercial schools. Last March, Devos “canceled a 60-day grace period to allow defaulting students to get back on track and avoid a 16 percent commission on loan balances.”
So what does all this mean for borrowers? As the states and feds are fighting over this in court, Consumer Reports notes , students will have to be more careful than ever. “The shift means that student borrowers need to be even more vigilant and independently explore all repayment options, double-check that their payments are credited correctly, and always keep good records,” writes CR . Here’s what they offer:
Keep good records
It sounds simple, but you need to know who your support staff is (the company that bills you monthly) and what kind of loans you have (federal or private). For example, keep a record of what you paid and how much you owe each month in an Excel document. If you don’t know and these are federal loans, CR recommends looking up this national database ( here’s how to use it ).
Know your options
Unfortunately, your loan servants are unlikely to be very helpful if you are having problems repaying your loans and want to change your repayment plan as per CR, so use the Department of Education Repayment Estimator or CFPB tool to understand each type of repayment plan. Private loans don’t have many repayment options, but talk to your service staff about suspending payments if you need to.
Make a complaint
Some major service centers have an ombudsman who can be contacted about issues:
- AES / PHEAA
- Educational Credit Management Corporation (ECMC)
- Great Lakes Higher Education Guarantee Corporation
- National Student Loan Program
- Sally Mae
- Texas Guaranteed Student Loan Corporation (TG)