This year, the federal government will pay companies that collect student loan payments about $600 million, and too often, those collectors fail to help millions of borrowers manage their accounts and some will actually drive them deeper into debt, according to a New York Times editorial today. The Department of Education addressed this problem last week, announcing it had changed its rules to make sure that loan servicers help direct struggling borrowers into affordable payment plans instead of allowing them to slide toward default. While this is a good step, it doesn’t go far enough to overhaul the student loan service system, according to the editorial. In June, congressional testimony by Rohit Chopra, the student loan ombudsman at the Consumer Financial Protection Bureau, pointed out that the difficulty student loan borrowers faced in correcting processing errors or getting loans modified resembled similar problems in the mortgage industry, where many borrowers have been subjected to unjustified foreclosures.
http://www.nytimes.com/2014/09/08/opinion/a-fairer-shot-for-student-deb…
For more on student loans and bankruptcy, be sure to pick up a copy of ABI’s Graduating with Debt: Student Loans under the Bankruptcy Code, available now in the ABI Bookstore.
http://bookstore.abi.org/graduating-debt-student-loans-under-bankruptcy…