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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: 2) by Lagg on Monday May 22 2017, @09:57PM (1 child)
Why flamebait? I don't have an opinion on the statement that is strong one way or the other. But is it not worth considering that maybe for America the government is the issue in education? I'm not a teacher, I couldn't tell you what it is. But come on, at least entertain criticism. jmorris was being dumb and bringing an irrelevant ex-president into the topic. But that feels like the only reason this was flamebait'd.
To be fair: Books are fucking expensive (no, I don't care that you can find them on cheggskytorrent.to), tuition is expensive, teachers are incompetent and there is probably a staffing issue. We already know that there's going to be a generation of two of mouthbreathers because of our bizarre Leave All Children Behind way of quota whoring. Maybe perhaps government involvement isn't helping matters either?
Not that I think privatizing it is smart mind you. Really don't know why anyone thinks this is a good idea in America especially anymore. Have you not learned? Or do you need to be arrested and put into a private prison for a few years to figure it out?
http://lagg.me [lagg.me] 🗿
(Score: 2) by jmorris on Tuesday May 23 2017, @04:06AM
That is me knowing stuff. Before Obama there was government guaranteed loans, in that the government would cover some of the losses on bad student loans if certain conditions were met. Of course those conditions were all about giving the government undue influence, duh, why do you think they did it? But Obama eliminated all of that and fully nationalized the whole college financing system. Bad for the students in that it is now a debt owed directly to the government and not dischargable in bankruptcy. Bad for the taxpayers because as we are seeing in the story today, government is not good at banking.
Obama's justification was whipping up hate against 'the banksters' because they made profits. Obama deemed every dollar of profit the banks were making as revenue in the takeover and used it as 'offsets' against the cost of Obamacare, something we who understand these things said at the time was fraudulent. Turns out it actually costs the government more to attempt to service these loans than the banks were making in profits so it costs the taxpayer more and instead of netting money to pay for Obamacare it counts as more of the unplanned costs of that fiasco.
Now we should all be able to see the banks were actually were adding value to earn their living, they actually know how to make and service loans. It would be better still were they entirely cut loose from all government control and guarantee programs. Let them build risk models and make loans. Yes that means useless majors will get unfavorable loan terms, this will serve as a valuable market signal to students that majors that do not increase one's earning potential are best left for trust fund babies who don't have to care, vs taking out a six figure loan for a four year party.