Department of Education proposes student loan monopoly
The Department of Education published a proposal stating they will select one servicing company to collect all student debts on May 19.
According to the Department of Education, the plan is a way for the government to save money and create a simpler federal loan system.
"The federal student loan servicing solicitation we inherited was cumbersome and confusing — with shifting deadlines, changing requirements and de-facto regulations that at times contradicted themselves,” DeVos said in a press release. “Internal and external stakeholders both agreed it was destined for a massive and unsustainable budget overrun.”
Jenna Robinson, president of the James G. Martin Center for Academic
“It just makes things a lot easier to keep track of as a borrower and you’ll know where you stand,” she said.
The government will still hold the financial responsibility of lending money to students and families for school. However, once a servicing contractor is selected, that company will be the primary entity that borrowers go through.
“If that loan servicer doesn’t do its job well that could be a problem,” Robinson said. “There could be a lot of complaints from borrowers, but that’s
The Department of Education will accept detailed plans through July from bidders looking to be the government’s exclusive student-loan servicing contractor, and this plan will go into effect in 2019, when the current plan expires.
Under this new
The department’s proposal also amends the public service loan forgiveness program, which was formed under the Bush administration and carried out under the Obama administration.
The public service loan forgiveness program promises to cancel student debt for those who work for the government or nonprofit organizations if they can make on-time payments for 10 years. This can apply to teachers, law enforcement officers and a wide variety of careers.
Jay Schalin, the director of policy analysis for the James G. Martin
According to the Department of Education, the plan is estimated to save taxpayers over $130 million in the first five years of the contract. However, in a country where approximately 70 percent of college students are student loan
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