Trump’s Student Loan Default Penalty Has an Unlikely Foe
The Department of Education reinstated huge fees against distressed borrowers. Debt collectors are saying, "No, thanks."
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Student debt collectors say they won’t charge distressed borrowers expensive fees, despite permission from the Trump administration to do just that.
Under a recent guidance change by U.S. Secretary of Education Betsy DeVos, those borrowers are vulnerable to major penalties if they default on privately held, government-backed student loans. After an outcry ensued from consumer groups and Democratic lawmakers who said the fees were unnecessarily punitive, the loan companies spoke out, in turn sparing as many as 11 million debtors who owe a combined $231.4 billion, according to federal data.