The Feds Get Caught in the Crossfire Between Students and Debt Collectors
The Obama administration says student debtors deserve better treatment. Recent government moves call that sentiment into question.
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One in eight Americans has a federal student loan, and complaints of mistreatment are legion. Unfortunately, a series of recent moves by the federal government could prolong borrowers’ misery.
The Obama administration has struggled to police student loan collectors at a time when student loan debt has skyrocketed. (The Federal Reserve pegs the total at about $1.4 trillion, double the amount from the start of 2009). The consequences of this debt load for the general public could be disastrous. Of the nearly 42 million people with federal student loans, more than 7 million of them are in default, government data show. Almost 3 million more are at least one month behind on their required payments.