• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Financial Wellness

You are here: Home / News / Student Loan Debt Collection May Create a Monopoly

Student Loan Debt Collection May Create a Monopoly

July 18, 2017 by Katie Bentley

The US Department of Education is recommending that a single entity handles all student loan debt collection.

Monopolizing debt collection may help avoid confusing student loan debt collection laws.

Having a single debt collection agency also means lower operating costs.

This can also prevent massive budget overruns in the future Daily Tarheel reports.

Student Loan Debt Collection May Create a Monopoly

Student Loan Debt Collection Monopolization | What NOW?

The Department of Education published a proposal stating they will select one servicing company to collect all student debts on May 19.

Click here to read more.

Monopolizing student loan debt collection is the Department of Education’s proposed solution to simplify the debt collection process in the US.

There is over $1 trillion worth of student loan debts in the US that’s currently being handled by nine different debt collecting contractors.

Creating or acquiring a single institution tasked to collect student loans may be more cost and time efficient for the government.

Women Hold Two-Thirds of the Country’s Outstanding Student Loan Debt https://t.co/jJYFN9iZv5

— Mae (@mklee936) June 16, 2017

Simplifying Student Loan Debt Collection in the US

The Department of Education sees several flaws in the existing student debt collection process:

  • Shifting deadlines depending on the collecting agency
  • Contradicting debt collection regulations
  • Complicated payment management system and monitoring

A single institution may make it easier for borrowers. The government agency also sees repayment plans to be easier to manage with just one collecting agency rather than with the current nine collecting agencies.

In addition, the Department of Education enumerates these advantages of a monopolized student loan debt collecting agency for its borrowers:

  • Simplifying the student loan process
  • A single income-based repayment plan making the repayment process less complicated
  • Manageable repayment system
  • Earlier student loan forgiveness for government employees and NGOs

The monopolization on student loan collection is just a proposal.

But it has several disadvantages that may come with its possible legislation. One of which is it may not be able to handle the massive amount of student loans to collect in the whole of the United States.

Currently, total student loan value in the US amounts to more than a trillion.

And this number may continue to rise before the current student loan collection system expires. Hiring several multiple small agencies to help them do their work is also a possibility.

The chosen or approved collecting agency by the government may fail to keep up with the demands.

This would greatly affect its borrowers.

During the possible transition, complaints and other problems are bound to be inevitable. A single institution might not be able to handle such situations.

Student Loan Debt Collection Monopolization Effects

The Department of Education did not disclose any other information on the effect of such changes.

But having an exclusive debt collecting agency will mean fewer options for student loan borrowers.

Additionally, changes in interest rates of student loan repayments were unclear.

This may also affect the chances of future borrowers.  And it can possibly make acquiring a loan suited to one’s financial capacities too difficult.

Changing the current student loan collection system in the US may save the government millions of dollars.

However, it does not guarantee a lighter load or repayment program for its borrowers.

At present, 70% of borrowers in the US are struggling students.

The Young Turks shares insights on the appointed CEO for Student Loan System by the Department of Health:

Are you in favor of the possible monopoly of student debt collection? We would love to hear from you in our comments section.

Paying for student loans can be a struggle. Learn from this article on The Struggle for People with Student Loan Debt.

Filed Under: News, Student Loans

Previous article: How Much Does It Cost to File Bankruptcy?
Next Post: Credit Repair Software: To Use or Not to Use?

Primary Sidebar

Follow Us







RECENT ARTICLES

  • What is Chapter 11 Bankruptcy and How it May Protect BusinessesWhat is Chapter 11 Bankruptcy and How May It Protect Businesses?
    Chapter 11 bankruptcy isn’t uncommon, yet many fail to see its purpose. Most people have heard of Chapter 11 vs Chapter 7 liquidation, or even [...]
  • Personal Loans After Bankruptcy Discharge: Is This Possible?Personal Loans After Bankruptcy Discharge: Is This Possible?
    Applying for personal loans after a bankruptcy discharge? Getting approved may not be easy, but it still is possible. It will definitely require [...]
  • How to Stop A Student Loan Wage GarnishmentHow to Stop A Student Loan Wage Garnishment
    Student loan wage garnishment is the last thing you want to experience while paying student debts. Monthly wage deductions could ruin your spending [...]
  • Don’t Miss These Posts On Financial Wellness..
    Here’s what happened on Financial Wellness 1. How to Start Investing in Stocks Even With Debt If you’re in debt, then you might be afraid [...]
  • Credit Repair Credit Cards: Learn to Rebuild Your CreditCredit Repair Credit Cards: Learn to Rebuild Your Credit
    Trashing your credit score is so much easier than building a solid credit rating. It’s no wonder so many people seek out credit repair credit [...]
Instagram did not return a 200.

Connect With Us On Instagram!

Footer

Financial Wellness

© 2021
FinancialWellness.org
All rights reserved

  • Privacy Policy
  • Terms and Conditions
  • Contact Us

This Copyrighted Material may not be republished without express permission. The information presented here is for general educational purposes only. Material Connection Disclosure: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to/from this page and may receive commissions from purchases you make on subsequent websites. You should not rely solely on information contained on this page to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.

FOLLOW US

  • Facebook
  • Twitter
  • Instagram