A year of policy changes, amid soaring cost of living, is wreaking havoc on student loan borrowers
WASHINGTON – Today, the U.S. Department of Education announced the transfer of student servicing and collections to the U.S. Treasury in a massive shift that creates confusion and unanswered questions for student loan borrowers, including the nearly 9 million borrowers currently in default.
In response, Kyra Taylor, staff attorney at the National Consumer Law Center, issued the following statement:
“The last thing student loan borrowers need is more chaos from the federal government. Over the past year, the Department of Education has issued a dizzying series of rule changes that make it harder for borrowers to figure out what their options are on their federal student loans. Today there are nearly 9 million student loan borrowers in default, and those numbers are certain to rise if borrowers are unable to navigate the system.
“Moving default collections and student loan servicing to the Treasury raises a new set of obstacles and uncertainty with no plan in place to resolve them. The Department of Education hasn’t answered the question of how it will educate Treasury staff on borrowers’ rights under the Higher Education Act or how it will ensure clear communications with borrowers during this confusing transition.
“The stakes are high; any errors in the system that collects on defaulted loans and services loans in good standing will have devastating effects on families. These systems should ensure that borrowers are able to exercise their statutory rights, including their rights to statutory discharge and cancellation programs, reduced payments under Income-Driven Repayment plans, and more. Thousands of dollars from families’ budgets hang in the balance, as people struggle with a growing affordability crisis, record credit card debt and medical debt, and rising gas and utility prices.
“This appears to be part of the Trump Administration’s ongoing effort to dismantle the Department of Education, an agency that tens of millions of students and families rely on to pay for college and job training programs and to manage their federal student loans. Efforts to dismantle the Department of Education create disruptions and costly and frustrating problems for students, borrowers, and their families in every state.
“Congress should think twice before allowing the Department of Education to add unnecessary chaos into the student loan system. It must ensure that the student loan system adequately protects student loan borrowers.”
Related Resources
Support NCLC
Please support NCLC's work to advance consumer rights and economic justice with a tax-deductible contribution today!
Donate