A federal program meant to help the most distressed Americans struggling with their student loans all too often fails them, a top official at the Consumer Financial Protection Bureau said, Bloomberg News reported yesterday. Efforts by the Obama administration to improve the treatment of Americans in default on their student debt have been inadequate, according to a report by Seth Frotman, the CFPB’s student loan ombudsman. He suggested that policymakers scrap parts of the current system, in which federal contractors make immense profits for debt collection practices that neither return enough money to taxpayers nor provide enough help to troubled borrowers, and start anew. Frotman’s warning adds to a growing list of worries plaguing the federal student loan system, in which more than 41 million Americans collectively owe nearly $1.3 trillion.
