In a May 6 “Economic View” column for The New York Times, "The wrong way to fix student debt," Susan Dynarski describes three recent regulatory changes that are “making student loans riskier, more expensive and more burdensome for borrowers.”
The first regulatory change rolls back a directive that required the Department of Education to consider "illegal behavior" when deciding which vendors to select for student loan servicing contracts.
The second change? The disabling of the IRS Data Retrieval Tool, which made it easier for borrowers to apply for income-based repayment plans and to complete the lengthy and complex student financial aid application.
The third regulatory change allows student loan servicing companies to charge larger penalties to those who fall behind on their payments.
“When government regulation stifles innovation, it should be pared back,” writes Dynarski. “That is not the case here.”
“Dismantling the regulation of loan companies isn’t likely to unleash an innovative, private market that will improve services for borrowers,” she argues. “Deregulation, in this case, simply leaves borrowers at the mercy of an unaccountable corporate bureaucracy.”
Susan Dynarski is a professor of public policy at the Gerald R. Ford School of Public Policy, a professor of education at the University of Michigan's School of Education, and a professor of economics at the University of Michigan's College of Literature, Science, and the Arts. She is co-founder and co-director of the Ford School’s Education Policy Initiative, which engages in applied, policy-relevant research designed to improve educational achievement and outcomes.