![]() “That’s the trillion dollar question,” Chopra said. What’s more, the Trump administration hasn’t indicated whether it will continue with a servicer contracting process launched by the Obama administration last year aimed at incentivizing servicers to place borrowers in the plan best suited to their needs. Enrolling a borrower in an income-driven repayment program typically takes more time and effort than shuttling them into forbearance, a status that allows borrowers to stay current, but where interest still builds. “Most of the million defaults that occurred last year could have been prevented,” he said.īorrowers with federal student loans can enroll in payment programs that allow them to pay off their loans as a percentage of their income, but previous research from the CFPB, the GAO and others indicates that servicers can make this process more difficult than necessary. In his analysis, Chopra points to servicer failure as one of the reasons for the large number of defaults. Still, the administration hasn’t sent many signals about how officials plan to treat student loan servicing companies, the firms hired by the government to manage the repayment process for borrowers. Earlier this month, the administration announced it would delay implementation of regulations aimed at cracking down on abuses by for-profit colleges who advocates and law enforcement officials alleged lured borrowers into taking on unsustainable debt loads for degrees with questionable outcomes. So far, the administration has indicated it may be friendlier to the companies involved in the industry, which include for-profit colleges, servicers, lenders and other players. The government garnished more than $160 million in wages over unpaid student debt in last quarter alone. The consequences of defaulting on a federal student loan are severe for borrowers: They can have their wages, Social Security checks and tax refunds garnished. ![]() The findings come as policy makers, higher education officials and student loan borrowers wait to learn how the Trump administration will approach the nation’s $1.3 trillion student loan challenge. This raises the question about whether things will truly get better in the absence of broader reform.” ![]() ![]() “We should be seeing more improvements given the broader economic environment. “Despite a booming stock market and falling unemployment, student loan borrowers in today’s economy are still struggling,” said Chopra, the former student loan ombudsman at the Consumer Financial Protection Bureau, the Washington, D.C.-based government agency. Can employers solve the student-loan crisis? of outstanding federal student loan debt increased more than sevenfold, from 187 billion to 1.4 trillion (in 2017 dollars). ![]()
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