Big Student Loan Fees Back After Obama Memo Revoked

Loan guarantee agencies are once again free to charge huge fees to Americans who've defaulted on their federal student loans after the Trump administration revoked Obama-era guidelines this week, the Washington Post reports. Agencies had been charging fees of up to 16% of principal and accrued interest when people defaulted on their student loans. According to Time, an Obama administration memo in July 2015 forbid them from charging those fees as long as the borrower entered into the government's loan rehabilitation program within 60 days of defaulting and started paying again.

On Thursday, the Trump administration repealed the Obama guidelines and instructed loan guarantee agencies to once again go after defaulters. A report released this week found a double-digit increase in defaults, and the Trump administration says it was concerned about a lack of public input on the Obama guidelines. The change will not affect Americans who took out student loans after 2010. Sen. Elizabeth Warren had asked Education Secretary Betsy DeVos to keep the Obama guidelines in place, the Atlantic reports. It's unclear if the Trump administration will eventually ask for public input on the guidelines. (More student loans stories.)