The Government Can't Agree With Itself on Policing Student Loan Companies
Student loan companies that don't meet the Consumer Financial Protection Bureau's expectations face the risk of lawsuits.
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An American defaulted on a student loan direct from the U.S. Department of Education every 28 seconds over the past year. Nearly all of those more than 1.1 million defaults were avoidable, because almost every borrower is eligible for a repayment plan based on affordability.
Too few borrowers in distress know they can reduce their payments simply by sharing a few recent pay stubs or a copy of their most recent tax return. Something in the repayment system is clearly broken, and so last month federal education officials moved to scrap it—slowly. In a few years, the Education Department hopes, loan companies to which it outsources collections will prioritize showing debtors how little they can pay to remain current over collections.