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The federal government has, in recent years, paid debt collectors close to $1 billion annually to help distressed borrowers climb out of default and scrounge up regular monthly payments. New government figures suggest much of that money may have been wasted.
Nearly half of defaulted student-loan borrowers who worked with debt collectors to return to good standing on their loans defaulted again within three years, according to an analysis by the Consumer Financial Protection Bureau. For their work, debt collectors receive up to $1,710 in payment from the U.S. Department of Education each time a borrower makes good on soured debt through a process known as rehabilitation. They keep those funds even if borrowers subsequently default again, contracts show. The department has earmarked more than $4.2 billion for payments to its debt collectors since the start of the 2013 fiscal year, federal spending data show.
[...] Officials at the CFPB say the government should reexamine whether the loan program, and the lucrative contracts it bestows on private firms, is working for the millions of Americans struggling to repay their taxpayer-backed student debt.
"When student loan companies know that nearly half of their highest-risk customers will quickly fail, it's time to fix the broken system that makes this possible," said Seth Frotman, the consumer bureau's top student-loan official.
-- submitted from IRC
(Score: 4, Interesting) by ikanreed on Monday May 22 2017, @09:15PM
Since now we're actually talking about reality: I still think that's full of shit.
It's a signal the same way all our job titles and deeds and licenses and every other fucking piece of mundane bureaucracy we file away in a cabinet in our spare bedroom is: nobody knows shit about who you are and what you've done and the pieces of paper help establish that, yes, maybe you're an idiot, but in this case you're an idiot who has at least had to write a merge sort once in their life. Yes, you paid 250,000 for these 3 acres. Yes, someone sat with you and made sure you could drive without speeding for 10 minutes, and you're not totally blind.
That is to say: no they don't speak to your actual competence beyond some minimum, but a lot of people don't have that minimum, and so they're useful.