Photograph by Kelvin Ma/Bloomberg
Uncle Sam Strong-Arms Students
Many of the 5 million Americans in default on their federal student loans last year didn't realize they qualify for more lenient repayment plans. In some cases, that's intentional. Private debt collectors -- hired by the federal government and paid with commissions of as much as 20 percent of what they recover - are pressuring borrowers to pay up without disclosing cheaper options. After Bloomberg's report -- part of a year-long series about abuses stemming from $1 trillion in student debt -- the U.S. Education Department agreed to tighten collection rules, and a Congressional bill proposed an income based repayment system that would almost entirely end the role of private collectors in managing federal student loans.