Federal Watchdog Is Investigating Possible Bias in Student-Loan Servicing

A federal watchdog is investigating whether student-loan-servicing companies discriminate against borrowers with past-due debt based on their race, sex, or gender, The Washington Post reports.

Patrice A. Ficklin, director of the office of fair lending at the Consumer Financial Protection Bureau, told reporters on Friday that the agency had identified student-loan servicing as an area at risk of credit discrimination, according to the Post. “We’re looking at disparities in outcomes … and we believe there may be some,” Ms. Ficklin said. They have already identified some high-risk servicers, she added.

Earlier this week, Betsy DeVos, the education secretary, withdrew several Obama-era memos meant to streamline the student-loan-servicing industry and improve customer service. She detailed the moves in a letter to James W. Runcie, chief operating officer of the Education Department’s Federal Student Aid office. The decision to withdraw the memos, which had not yet taken effect, drew the ire of some advocates and politicians, who viewed the move as the latest in a string of bad signs for borrowers.

The department did not respond to questions from The Chronicle about what plans it may have to replace the Obama-era memos.

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