Many consumers have launched opposition to the proposal by Betsy DeVos to cancel the reform on student loans collections in Obama administration because they say it will make it harder for students to make repayment on the loans. This will eventually cause many students to fall into defaults. Last year, it is estimated that over 1 millions students has ended up in default over student loans. The move suggested by Betsy DeVos, the education secretary, aims to help student loan service companies to win the federal contracts that will expire in 2019.

Navient is a student loan servicer that fell victim to the Consumer Financial Protection Bureau (CFPB) because of being accused of committing a variety of abuses on the consumers. Navient is one of the finalists for the federal contract that expire in 2019. The lawsuit claims that Navient deliberately charge high interest and fees on borrowers who are making repayment. It claims that Navient allows borrowers to postpone repayment at a high cost instead of offering a complete restructure on the loans. It states that Navient did not reveal options that allow borrowers to avoid default. If the move proposed by Betsy DeVos comes through, Navient and other student loan service companies will become winners and they will no longer be subjected to the guidelines established in Obama administration.

According to Bergeron, servicers refused to direct borrowers to more affordable loans because it will increase their costs for having to hire more representatives to spend time on the phones. Bergeron said that these servicers are making money by trying to cut down cost on the student loan services. He argued that Trump’s administration puts more interests on profits rather than taking into account the welfare of the consumers.

New guidelines was submitted to the FSA office by the education officials last year. The FSA is responsible of awarding contracts to student loan servicers. On Tuesday of last week, DeVos send a memo to the chief operating officer of FSA that claim the process is flawed because of inconsistencies in the setting of deadlines and the frequent changes in the requirement that need to be fulfilled. She emphasizes that it is important for student loan servicing companies to provide good customer service and be upfront on all the lending terms to the borrowers.

The National Council of Higher Education Resources is currently requesting lawmakers to perform an evaluation on the servicing contracts and remove the extra requirements that are giving student loan servicing companies a hard time. The Education Department has rescinded a rule under the Obama administration that do not allow student loan collection companies to charge fees on borrowers who opted for a 60 days repayment agreement.