Education Secretary Betsy DeVos announced on Tuesday that she is tossing her plan to consolidate the nation’s federal student loan service providers.
The education secretary’s first plan was to pick just one company to collect student loan payments on the federal government’s behalf, but it faced a stiff bipartisan backlash. The opposition included two Republican senators who signed legislation that would have blocked the plan.
DeVos said that the Education Department will pursue “a truly modern loan servicing environment,” noting that “we have a chance to turn what was a good plan into a great one.”
Democratic Senator Elizabeth Warren (D-Mass.) celebrated the move by DeVos and promised to keep a close eye on the secretary as she moved forward. “Today the Education Department announced that it will reverse its single loan service plan – and I’m glad that they are changing course,” she wrote. “But it will be important to continue watching the Education Department and Betsy DeVos to evaluate whether its decisions are good for the millions of struggling student loan borrowers.”
Senator Warren had previously teamed with Sens. Jeanne Shaheen (D-N.H.), Roy Blunt (R-Mo.) and James Lankford (R-Okla.) on Tuesday to unveil legislation that would have blocked DeVos’s plan, requiring the Education Department to maintain multiple student loan services.
Republican lawmakers also celebrated the recent move by DeVos. A spokesman for House Education Committee Chairwoman Virginia Foxx (R-N.C.) said that DeVos “made the right decision to cancel the single-servicer proposal.”
The opposition to DeVos’ plan was concerned that it would give too much power to one company, reduce competition and leave student borrowers vulnerable. The Education Department had argued that it would simplify student loan borrowing and reduce costs.
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Credit: The Hill