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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 VLM on Tuesday May 23 2017, @02:42PM
Yeah, yeah, right or wrong, etc. We agree pretty much. If the .gov were rational in belief and behavior, etc. But it isn't. If the government leadership wasn't indistinguishable from a cabal of its own enemies, etc.
In practice, hasn't the government done every form of economic insanity for decades to boost housing prices? And the median boomer is gonna sell to the median gen-x who's gonna sell to the median millennial... the only question is what those median prices will be . The median millennial having a mortgage sized student loan means the government, which we know will do anything to goose housing prices, will do ... anything ... to get those kids into a bigger mortgage than mine, and they're gonna have to do something drastic about student loans if they want to pull that off.
I'm just saying the boomers can ask whatever ridiculous price they want for their retirement home nest egg, but I'm under no obligation to offer that much and they gonna have to sell because of death if nothing else, before I have to buy. And going the other direction my house will get sold to a millennial kid for what he can afford not what I need to pay to upgrade to a former boomer's house. And what he can afford isn't much after those student loans and miserable economy. Meanwhile the government has spent decades doing insanity to boost capital prices like real estate and equities.
In a way, either way, the kids win. If the government supports boosted capital prices then the kids student loan has to be wiped out either literally or via inflation in order for me to sell my gen-x house to a millennial at a government guaranteed nominal profit. If the government washes its hands of capital prices and there's an epic tulip style collapse in the price of real estate and financial markets, again the kids win because houses will be back to '80s prices where a single job family at minimum wage can afford a $40K house. Unfortunately the boomer thought he was going to fund his retirement nest egg by selling at $500K but LOL thats not happening. Either way I think the kids will be alright. The boomers and gen-x, not so much. Especially not the boomers.