After being criticized for substandard student loan servicing, the U.S Department of Education recently announced plans to improve both, the manner in which monthly payments are collected and how collection companies are supervised.
As opposed to navigating through various loan servicers, student loan borrowers will soon have access to a single online portal through which payments can be made. Part of the new plan also includes a strategy to minimize student loan transfers, a constant problem often resulting in late payments. The Department will also establish an updated complaints system to address concerns borrowers may have about their student loans.
According to the Department, the new changes are aimed to “help borrowers stay on top of their debt and avoid confusion about who is servicing their loans.”
Out of approximately $1.3 trillion outstanding student loan debt, more than $103 billion is in default or more than 90 days overdue. Borrowers experience difficulty paying back their student loans as a result of over-borrowing, lack of sufficient employment, and loan servicing companies’ inability to offer assistance with regards to accessing options that may reduce monthly payments, such as debt management programs.
The new changes follows a request by the National Consumer Law Center and the American Civil Liberties Union to the federal court requiring the Department to be transparent about its debt collection policies and the potential abuse of delinquent minorities. To read more, please click here.