Let’s talk about debt, baby- specifically, student loan debt, and how Betsy DeVos is going to use student loan debt to ruin your life. No, really.
See, currently student loans are structured so that once you leave school (or drop below half-time), you have six months in which to find a job so you can start paying off them bills, bills, bills, and this is what’s referred to as your grace period. When that grace period is up, you have to begin repayment- or so lenders want you to think. See, here’s a secret: you do actually have options, depending on what type of loans you have. Federal student loans that are not health professional or nursing loans can be consolidated, which gives you one payment with one interest rate for all of your loans. If you are unable to begin payment immediately due to financial difficulties, you can use forbearance- your loans will continue to gain interest, but this will keep them out of default. Assuming you are able to consolidate, and have some income, you can apply for your loans to be placed on an income driven repayment plan, and there are multiple versions of this, each with different payment amounts and repayment periods (also a super-fun fact: assuming you eventually go back to school and get more loans, there’s nothing stopping you from repeating this process until the end of time). When you fill out the application on studentloans.gov ( and yes, you have to do it. Do not pay someone to do it. It’s completely free), you pick your servicer, which is the company you will be dealing with for the rest of the life of your loan. Different servicers offer different benefits, and the choice is completely up to you. But where does Betsy DeVos come into the mix?
See, the Enemy of Education is currently attempting to do away with all but one servicer and all but one repayment plan, and the servicer that looks most likely to win this $1.3 trillion game is Navient- formerly known as Sallie Mae.
In 2014, Sallie Mae changed their name to Navient, in order to separate the lending side of the company from the collections side of the company. Older adults may remember the feelings conjured up by the mere name “Sallie Mae”- and none of them were positive. Created in 1972 as a government-sponsored enterprise, Sallie Mae has been plagued with lawsuits and investigations into their loan servicing practices regarding everything from granting forbearance in order to increase borrowers’ interest rates to discrimination against borrowers of Black or Hispanic background in the form of higher interest rates. In 2014, an investigation into their debt collection practices was opened- the same year they split, and the servicing side of the company became Navient.
At this point, it’s important that I provide a brief disclosure: I am a former Navient employee- a debt collector, in fact. I also have student loans that went into default and went through the collections system, and are now being serviced by Navient. Everything I am about to tell you regarding their debt collection practices is coming from personal experience, and should be viewed as such. Just FYI.
So, in 2014, once the split between Navient and Sallie Mae was complete, defaulted student loans were sent to collection agencies, many of which were affiliated with the servicers themselves (such as my previous employer). What happens when a loan defaults? Essentially, all bets are off. Collectors are told to blow up debtor’s phones, and to use essentially any and all means available to either get the balance in full, or consolidate the loans. We called friends, family, neighbors, and jobs, and we were told to push for consolidation. Not repayment. Not rehabilitation. Consolidation. Which, like I said, can be good, but get this. Consolidated loans are, as I mentioned previously, sent to servicers. Now, with our company being affiliated with Navient, you would think we would have wanted every possible borrower to pick Navient, and that’s not an unreasonable assumption to make. However: Navient was the worst servicer out of the four possible options (the other three being Fedloan, Nelnet and Great Lakes). We weren’t allowed to tell the debtors who to pick, but we used to pray they wouldn’t pick Navient. Navient was notorious for losing paperwork, and the paperwork they did not lose took them months to process. When I found out after leaving the company that Navient was facing lawsuits for predatory lending practices, it did not surprise me in the least. Their entire lending program is set up for people to fail (not telling people when their repayment plans have to be renewed) and fail again (misrepresenting the effects of loan rehabilitation on their credit scores). So, with collectors pushing people to consolidate, and with Navient letting consolidated loans fall through by not processing paperwork in a timely manner (or at all), borrowers didn’t stand a chance of actually taking care of their loans.
Cut back to the present, where DeVos is pushing for one servicer to be responsible for everyone’s loans across the board. Right now, it looks like Navient is going to be the very lucky winner. And if they are, it’s going to be borrowers who truly lose.