How the Incoming Trump Administration Can Help Student Loan Borrowers


The 2016 presidential election is settled and a new administration will take office in two months’ time. Considering all that was said during this particularly contentious campaign, it’s no surprise that student loan borrowers are concerned about what that will mean to them beginning in 2017.

Two of the many items on my list of concerns have to do with the future of the Consumer Financial Protection Bureau, within the context of a potential repeal or overhaul of the Dodd-Frank legislation that created the consumer watchdog agency in the first place, and the Federal Direct Student Loan program, which the Obama administration established in 2010 as a successor to the simultaneously discontinued Federal Family Education Loan program.

The Possible Negatives

In the case of the CFPB, should Congress move to curtail the agency’s regulatory authority and/or impose more stringent oversight on its activities, I worry that less will be done to address loan-servicing-related problems, which include the misapplication of remittances on the part of private-sector administrators and their failure to promptly conduit financially distressed debtors into a government-sponsored payment relief program, or to prevent collection companies from pursuing past-due payments in a manner that violates the Fair Debt Collection Practices Act. (You can see how your student loan repayments are impacting your credit by checking your two free credit scores, updated every 14 days, on

As for the Federal Direct Loan program, a financial services industry that benefited from virtually risk-free income courtesy of the government-guaranteed FFEL program is probably getting pretty excited about the potential for its reincarnation, now that smaller-government-minded lawmakers are in control of all three branches of our system. And not just for the new loans that will be taken out in the future.

A Fresh Approach

At present, roughly one trillion dollars’ worth of Federal Direct Loans are currently on the books, plus another $200 billion to $300 billion in legacy FFELs.

But if one were to tally together all the federally-backed loans that are at present delinquent and in default, plus all those that have been granted temporary forbearance and longer-term relief to date, and compare that total to the aggregate value of all the loans that are currently in repayment, that number would approach 50%.

Any loan portfolio that looks anything like that is one whose loan agreements were improperly structured at the outset. If we want these debts to be repaid anytime soon — without continuing to spend outrageous sums of money to accomplish that objective — the new administration would be wise to bite the bullet and restructure all these contracts over an extended term at a rate that properly reflects the federal government’s costs.

That’s the first step.

The second is to lock in that cost by financing the Federal Direct loans that currently reside on the education department’s balance sheet as any prudent private-sector lending institution would, instead of continuing the government’s potentially ruinous tact of borrowing short to lend long in a rising-interest-rate environment. The new financing can take the form of direct borrowing on the part of the federal government as it does now, or the education department can oversee the sale of these loans into the private sector while retaining administrative oversight of their servicing.

This stands in contrast to the old FFEL program, where private-sector lenders originated student loans backed by the federal government, and had the option to later sell these contracts into the secondary market for added profit. Not only did that program create significant remunerative opportunities at the expense of taxpayers (who would be called upon to make good on the government’s guarantees), but it also distanced the feds from directly overseeing the administration of the loans it backed.

In a nutshell, that’s the key reason why there’s been so much foot-dragging on the part of the companies that service the FFEL loans that are in repayment: the interests of the private-sector note holders and investors are at odds with those of the taxpayers.

Finally, the new administration would also be wise to address the matter of student loan dischargeability in bankruptcy. Not so that borrowers would have an easier time getting out from under the legitimate debts they incurred, but so the potential for abject loss at the point of default would inspire all lenders to negotiate in good faith with financially distressed debtors who, for the most part, truly desire to honor their obligations.

All of this boils down to having the courage to take an evenhanded approach to solving a trillion-dollar problem. Hopefully, this new administration has enough of that to go around.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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5 Reasons Why You Might Not Want to Refinance Your Federal Student Loans


Many private student lenders are making a big push for a piece of the student loan refinancing pie.

Banks and venture capital-backed nonbank financial services companies are hard at work slicing and dicing that trillion-dollar market into bite-size, demographically based refinancing opportunities. Their primary targets? Borrowers who have the best longer-term earnings potential because of the schools they attend, their areas of study or for other reasons.

The lure is in the form of seemingly lower rates and streamlined documentation processes, which, on the surface, presents a good deal of appeal. That is, for borrowers with higher-priced private student loans and perhaps state-sponsored debts as well.

Those who’ve funded their higher educational pursuits with government-backed loans, however, may want to think twice, for the following five reasons.

1. Credit Underwriting

Despite the fact that all education-related loans — public and private alike — are virtually impossible to discharge in bankruptcy (thanks to the successful lobbying efforts on the part of the financial services industry in 2005, atop an anti anti-establishment scheme that dates back to the mid-1970s), today’s private lenders aren’t taking that invulnerability for granted. And they shouldn’t. Not with so many consumer advocates who are calling for the restoration of the bankruptcy code with regard to this form of debt.

So unlike the federal government, which blithely continues to process loan requests as it has before, private-sector lenders are looking more carefully at a prospective borrower’s ability to service the loan he or she is requesting. Things like historical earnings, debt levels, leverage and credit scores. And when these aren’t enough (or too much, as the case may be), they’re asking for family members and others who are financially better situated to co-sign the loan.

Pity the co-signer, though, when that occurs, because they will have a heck of a time getting out from under that responsibility, even after the primary borrower’s economic outlook improves to the point of self-sustainment.

2. Fixed Versus Floating Rate Loans

Also unlike the government-backed loan programs, some private lenders are tempting debtors with what amounts to low introductory-rate financing, much the same way that some banks and private mortgage lenders tempt other consumers with adjustable rate mortgages (ARMs).

In both instances, interest-rate risk is effectively transferred to the borrower from the lender. In other words, when rates move up, so will the amount of the loan payment. When rates move down, however, you may well find the payment amount will not decline below a certain point.

Certainly, there are those who are comfortable rolling this pair of dice. The question is, is it worth the gamble in the first place?

The average level of per capita student debt is roughly $35,000 as of 2015. At 2% interest — not an uncommon introductory rate — the monthly payment on a 10-year education loan amounts to $322. In contrast, that same loan would run $350 per month under the Federal Direct program, which charges 3.76% interest at present.

I don’t know about you, but I’m not willing to wager on the direction of interest rates for $336 per year.

3. Prepayment Penalties

And then there’s the matter of loan pre-payability.

Federal student loan borrowers have the right to pay off their debt in full or in part at any time, without penalty. That means, whatever interest the borrower would have been charged over the remaining term of his or her loan is waived when the debt is fully paid off, or discounted when the loan balance is reduced quicker than it otherwise would have been.

Not necessarily so in the private sector.

Depending on the terms of the refinancing agreement, the lender may require its borrower to pay a premium — a word that the financial services industry prefers to fee — to retire their loan ahead of time.

4. Superior Relief

Perhaps the key difference between public and private higher-education loans is the quality, quantity and active promotion of the relief programs that are available to financially distressed borrowers.

Setting aside for the moment the problems that the government is attempting to remedy with the loan-servicing companies to which the Department of Education subcontracts the administration of the student loans it originates, no other lender is as willing to accommodate both temporary and longer-term hardships than the federal government.

Whether you chalk that up to Uncle Sam’s sincere desire to assist troubled debtors or to protect the taxpayers who will ultimately be left holding the bag on this financing program, hands down, the government’s income-based, income-contingent and public-service debt-forgiveness plans are superior to all others.

5. No Going Back

Last but not least, there are no round-trip tickets when it comes to financing government-backed student loans that were refinanced by private lenders. Once these loans are off the government’s books — what happens when a loan that’s made by one lender is financed at a later date by another — they are no longer eligible to be refinanced under any of the government’s standard or distressed-borrower relief programs.

With all this in mind, while it could make sense to refinance existing education-related debts that were originated in the private sector — provided you’re not being asked to give up more in the form of co-signors, prepayment penalties and so forth in exchange for that consideration — it’s hard to justify refinancing your government-backed debts in this manner.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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Why All Government Student Loans Are Not Created Equal


The timing of an article in The New York Times couldn’t have been more ironic.

There we were, the day before we celebrate America’s Declaration of Independence, and the Times published an exposé on the hardball tactics that the State of New Jersey allegedly takes against student-loan borrowers who are unable to continue making their payments.

It seems that for those who fund their college education with state-sponsored money — which all 50 states and the District of Columbia offer — the word independence is actually two words: in and dependence.

How Student Loan Management Can Differ

I say that because, generally speaking, the principal difference between the loan programs run by the individual states and those run by the federal government is the government’s willingness to work with financially distressed borrowers so they can remain independent.

Something else that distinguishes federally backed higher education loans from those originated by all others — including the states and private-sector lenders — is the outsize influence the government wields on distressed-loan restructuring without regard for the ultimate disposition of the underlying contract.

In other words, even if a government-guaranteed student loan is sold to another entity — public or private, as has been the case with the discontinued Federal Family Education Loan (FFEL) program — the feds reserve the right to mandate a change in the contract’s repayment schedule, even though such a move would likely to have a deleterious aftermarket effect on noteholder rates of return (for example, when the repayment term is extended or a portion of the principal is forgiven).

This helps to explain why there has been so much foot-dragging on the part of loan administration companies that are subcontracted by noteholders to service FFEL contracts that have subsequently been securitized.

And then there is the matter of what constitutes a government loan.

Some time ago, a recent state-university graduate contacted me for advice on restructuring his education-related debts. He was the first in his family to go to college and, given his and his mom’s limited financial means, he funded his education by taking on a fair amount of debt — nearly three times his current annual salary.

We talked about the Department of Education’s various income-based repayment plans, and, armed with that knowledge, he contacted his loan administrator. Several days later, he wrote again to say that his debts were not eligible for relief. “How can that be?” I asked. “You told me these were government loans and the monthly payments consume roughly half your take-home pay. Clearly, you should qualify for IBR.”

As it turned out, the “government” loans he believed he’d taken out were from his state (he insists that his university’s financial aid office referred to these loans as “governmental”). A bit more digging on my part also revealed that program was, in effect, a public-private venture. Similar to the manner in which the now-discontinued FFEL program was structured, his state guaranteed against default loans that were originated, funded and later securitized by private-sector lenders. But unlike the federal government, his state seemed unwilling or unable at that point to mandate distressed-debt restructures after the fact.

Consequently, my young friend ended up like too many of his peers: living in his mother’s basement.

There are those who would say, “Yet another reason for the government to get the hell out of the education-lending business!” Certainly, the manner in which public-backed student loans are administered leaves much to be desired.

But that shortfall, as significant as it is, doesn’t outweigh the two key benefits of the Federal Direct loan program and its predecessor: lower interest rates and a panoply of relief options for when a borrower’s financial circumstances cause him to become unable to meet his payment obligations.

In fact, I would take this a step further by advocating for the federal program to accept for restructuring all types of higher-education loans, without regard for origination channel (state, private and peer-to-peer alike) or repayment status.

Think about it. Even if the base rate that the Federal Direct loan program currently charges is increased to compensate taxpayers for the added risk of guaranteeing these nongovernment loans against default, it would still yield a better social and economic outcome for the country, not least because most financially distressed borrowers are sincere in their desire to repay their debts.

The concept of independence is, after all, meaningless if the means for attaining it are nonexistent.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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The Letter That’s Helping One College’s Students Understand Their Student Loan Debt

Indiana University is changing the way its students are borrowing to pay for their education.

Back in 2012, the school began sending letters to students, estimating their total student loan debt and future monthly payments. Since then, the university says borrowing by undergraduates has dropped by 18%.

“We want students at every year to understand the debt they have,” says Jim Kennedy, associate vice president for student services and systems. “They get this every year, and they can see where they’re at.”

Back in 2012, after holding a series of focus groups in which students revealed they were confused about how much debt they had, the school decided to launch a series of initiatives designed to empower them financially.

Any of IU’s 110,000 students carrying loans receive the letter (you can see an example letter below), and they also have access to MoneySmarts, a series of podcasts and campus programs that focus on the intersection of college and money. (The most popular, according to Kennedy, is “How Not to Move in With Your Parents.”)

Around each of the school’s seven campuses, signs and posters encourage students to take “15 to finish,” or 15 credits so that they graduate in four years, thereby minimizing their loans. Peer-to-peer counseling and a service that contacts students post-graduation about their repayment options are two other ways the school is trying to secure its graduates’ future.

“We’re just very concerned about students and student loan debt, and our administration is very concerned,” says Kennedy.

He adds, “Anything that colleges can do to raise awareness about student loans is a very positive thing.”

Remember, defaulting on a student or any other type of loan seriously damages your credit score, and because student loans are rarely discharged in bankruptcy, the debt can beat down on you for decades. (You can see how your student loans are currently impacting your credit scores for free on

There are some options for people who are behind on payments to get back on track, though. To get out of default, you can combine eligible loans with a federal Direct Consolidation Loan, or you can go through the government’s default rehabilitation program. If you make nine consecutive on-time payments (the payments can be extremely low), your account goes back into good standing, and the default is removed from your credit report.

An example of the school’s loan letter is below:

Loan-Debt-Letter-example-1 Loan-Debt-Letter-example-2

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If Average Student Loan Payment Amounts Are ‘Affordable,’ Why Are So Many Past Due?


Math is infinite.

Conjure up the largest number you can you can imagine and multiply that value by itself over and over again. You still wouldn’t reach an endpoint because there is none.

I thought about all that as I read Dr. Joel Elvery’s intriguing article on student loan debt in a recent issue of Forefront, a publication of the Federal Reserve Bank of Cleveland.

According to Dr. Elvery’s calculations, the average monthly installment for student loan borrowers between 20 and 30 years old amounts to a very manageable $351 per month. I use the words very manageable because that payment represents less than 9% of the average pre-tax starting salary for recent college graduates, as reported by the National Association of Colleges and Employers ($48,127 for 2014 grads, or $4,010.58 per month).

As such, it would be perfectly reasonable to ask, “Then why the big deal about student loan debt?”

I reached out to Dr. Elvery for a bit more detail behind the numbers. He wrote that the data for his analysis was drawn from the Federal Reserve Bank of New York’s Consumer Credit Panel.

This is the same FRBNY that recently reported how education-related debts that are 90 or more days past due totaled 11% of the nearly $1.3 trillion in loans that are currently outstanding.

It is also the same FRBNY that acknowledges in a footnote that this percentage rate is understated by roughly 50% (because only about half of these debts are actually in repayment), which makes the true percentage of student debts that are over 90 days late closer to 22%. And that doesn’t even take into account loans that are between 30 and 90 days past due (which, frankly, is the proper way to measure delinquency). Nor does it take into effect loans that are in temporary forbearance because the borrowers are unable to make the payments.

All told, the percentage of troubled student loans that are currently in repayment is actually closer to 40%.

No matter how you do the math, though, the fact remains that student loan payment delinquencies are significantly higher than for any other forms of consumer debt — the raw 11% statistic is nearly three times that of credit card obligations that are similarly uncollateralized.

So a better question to ask might be: Why are so many borrowers having so much trouble when the average installment payment amount appears to be so reasonable?

As Dr. Elvery explained in our email exchanges, his calculations involved a certain amount of data “cleaning” to address what he describes as “high outliers and other noise.” He offers as an example the process of estimating what borrowers would normally pay on loans that are 90 or more days past due; loans he terms as “in default.” His rationale for these downward adjustments is that the contractual payments on loans that are declared to be in default typically increase as a result.

Generally speaking, that’s true, but not in this case.

Unlike all other forms of consumer finance, student loan defaults are actually measured at 270 or more days past due. Consequently, the monthly payments are likely to remain unchanged until that time, which means that Dr. Elvery may have adjusted payments that didn’t need to be adjusted in the first place.

On the other hand, Dr. Elvery elected to include loans with zero payments due, even though these could represent debts that are in deferment (because the borrowers are still in school) and in forbearance (because the borrowers are unable to meet their contractual obligations).

Simply put, by excluding some high-value outliers and including certain zero-value payments, Dr. Elvery may have inadvertently excluded data that could have contributed to a fuller explanation.

Given the infinite nature of math, the most enlightening analysis is sometimes accomplished with the least amount of tinkering.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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9 Things Everyone Should Know About Student Loans Before They Graduate


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The Ugly Truth About the Federal Direct Student Loan Program

federal Direct student loan

The Department of Education recently published a series of performance summaries for its Federal Direct, Federal Family Education and Perkins student loan programs. A little more than $1.2 trillion is due from roughly 42 million students, who owe an average $29,000 each.

The most comprehensive of these reports pertains to $855 billion in Federal Direct loans, of which $440 billion is in routine repayment. That’s “routine” in that it excludes loans in deferment, forbearance or default, yet 15%, or $66 billion, of the remainder are 31 or more days past due. That’s a horrendous statistic, particularly for a “scrubbed” portfolio like the one just described, and considering the delinquency rate for credit card balances — i.e., debts that are comparably unsecured, or uncollateralized — stands at 2%, plus a little decimal dust.

It also significantly understates the extent of the problem.

Of the $88 billion in deferment, $12 billion represents loans to borrowers who are currently unemployed or suffering other economic hardships; another $97 billion of loans are in forbearance, $56 billion are in default and $6 billion are characterized as “other.” That’s another $171 billion in past-due debt, which, when added to the aforementioned $66 billion of past-due accounts in the “routine” portfolio segment, amounts to $237 billion out of an adjusted total of $611 billion ($440 billion plus $171 billion).

In other words, nearly 40% of all Federal Direct loans qualify as troubled debts of varying degrees.

That doesn’t even take into account the increasing number of loans being granted relief under the government’s various income-based repayment plans, such as IBR and Pay As You Earn (PAYE). If not for that support, the delinquency rate could very well soar by an additional 10% to 20%.

Clearly, it’s a public and private sector engendered fiasco. The only logical course of action is to break apart the problem: address the loans that have already been made, and revamp the program going forward.

A portfolio in which nearly half the loans are past due, in default, deferred, in forbearance or require significant restructuring is one that was improperly conceived. Although it makes a certain degree of sense to link installment payments to household income (as the government is now doing), the process is awful: The onus is on individual borrowers to ask for and ensure they receive the help they need, year after year.

What I’ve just described is the definition of a portfolio that’s “managed by exception” as opposed to one this is “actively managed.” It’s the difference between waiting for the phone to ring instead of making the call in the first place.

Given the magnitude of the problem, the government has no choice but to restructure all existing contracts by extending repayment durations and adjusting interest rates to the current rate for new Federal Direct loans.

Doubling Loan Terms: A First Step

Specifically, the standard 10-year (120 months) loan term should be doubled to 20 years (240 months) for loans in repayment, less twice the number of monthly payments that have been made to date (since we’re talking about doubling the original duration). Borrowers should also have the right to accelerate their loan at any time without incurring a penalty.

For example, suppose a student accumulated $30,000 in debt with a 6.8% interest rate. The monthly installment comes to $345.24. Also suppose the student commenced his repayment two years ago. At this point, his balance would be $25,508.

Now let’s take that balance and spread it out over an additional 192 months (240 months less 48 months, which represents twice the 24 months that have been repaid) and finance it at the current 4.29% rate for Federal Direct loans. The monthly installment would be nearly halved to $183.36.

And should this borrower have the ability to continue making payments at the original amount of $345.24 per month, the reduced interest rate would cause his repayment term to contract to 74 months instead of the originally remaining 96 months.

No more pandering for relief, no more follow-up calls to confirm it was done correctly, no more marking the calendar for annual requalification. Not only would rates of delinquency, default, deferment and forbearance decline because the payments would become more affordable, the government would save money with subcontractors paid large bonuses for remediating problems caused by misguided loan structuring at the start.

Now, to address the program going forward, a 20-year repayment term is just the first step.

How to Make Better Loans Moving Forward

Loan approvals should be based on projected post-graduation financial capacity. Routinely reported average starting-salary levels for recent graduates could be used for this purpose. Also, the ability to discharge education-related debts in bankruptcy should be restored, if only to disabuse public-sector policymakers and private-sector lenders of the notion that student loan borrowers have no choice but to repay however much debt they saddle them with.

Finally, at whatever point the government decides (or is compelled by Congress) to begin divesting the immense amount of Federal Direct loans on its balance sheet, it should do so as principal rather than through private-sector intermediaries. By that I mean as long as the government continues backstopping these loans, it is entitled to dictate standards for transactions moving into the private sector. In particular, the must ensure financially distressed borrowers are identified early and dealt with forthrightly, wherever these divested contracts end up. Anything less will put taxpayers at risk.

At that point, our attention should turn to the reason we have this problem in the first place: the price of tuition.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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The Way You Pay Your Student Loans Is About to Get Easier… in 2020

Earlier this week, the Department of Education announced that it’s taking steps toward making a web portal that will make paying student loans a little bit easier. And if you’re one of the 43 million Americans who understand the turmoil of student loans, any relief is welcome.

But don’t hold your breath — this update won’t be happening any time soon.

According to an email from a U.S Department of Education spokesman, the process of developing the portal is still under discussion and they won’t award a new contract to a management team for a while, as the existing servicing contracts don’t expire until 2019.

Improvements Are Coming...

The spokesman told the department used community and administration feedback from the past 2 years to conclude they needed to make this change. This input helped establish the goal of the new platform, which is to create a unified experience for borrowers, giving them a single point of entry (instead of a separate one to repay each lender) to manage their loans. This is expected to include the ability to make payments, review repayment options and find general information about student loans.

The announcement of this new portal came via a Department of Education blog post and follows years of complaints about the confusion that comes along with repaying these loans. The new platform is reportedly going to simplify the process of paying student loans, as well as to provide uniform information from all lenders to help simplify the details and avoid misinformation.

Currently, anyone paying student loans has to log into their loan servicer’s website to make payments, but many borrowers have multiple loans with different servicers. Adding to the potential confusion around student loans, loans can be transferred to a different servicer, so borrowers can easily lose track of whom they’re currently supposed to pay. The new platform will reportedly aim to limit this, giving borrowers an easier main point of contact to deal with instead of trying to keep it all straight themselves.

According to the blog post, written by U.S. Under Secretary of Education Ted Mitchell, the platform will “make sure all borrowers are getting the customer service they deserve, by challenging the industry to compete to provide world-class service to our Direct Loan borrowers.”

The department is going to set up standards for what lenders should be telling borrowers about the repayment programs. A Consumer Financial Protection Bureau report from September showed that there are often servicer errors that hurt students, like not fully explaining options or setting someone up with a different plan than agreed upon. The new platform may be able to reduce the risks of these sorts of errors happening.

…But Not for a While

Once this platform is finalized and gets up and running, which is likely not going to be for at least another 4 years, borrowers will be notified of the change and redirected to the single portal to repay their debts. The spokesman said the Education Department will then be the common brand for these communications and borrowers will no longer have to to use multiple outlets to make payments.

Until then, it’s business as usual for repaying any student loans you may have. While paying them all in one place one day may add an element of convenience, it doesn’t make the dread of having to pay these loans any better. However, it’s important to continue doing so, on-time, so you don’t harm your credit. To see how your student loans are affecting your credit, you can check out your free credit score, updated monthly, on

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The Wrong People Are Managing Your Student Loan Debt

Senators Patty Murray (D-Wash.), Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) received some disturbing news on leap year day 2016.

That’s when the U.S. Department of Education’s Office of Inspector General officially informed the senators that it had determined that the Education Department had failed to properly audit certain student-loan serving companies’ compliances with the Servicemember Civil Relief Act (SCRA) — a failure that appears to have resulted in the department’s unconditional renewal of the subject companies’ contracts.

Among other things, the Inspector General’s report cites statistical errors, improper sampling and review process errors on the part of the department, and its failure to take appropriately corrective actions when called for.

Now, from this damning disclosure some might infer that there’s a malevolent scheme afoot to enrich private sector enterprises at taxpayer — and borrower — expense. But let’s not confuse abject incompetence with willful duplicity.

Clearly, public-sector policymakers are no match for private-sector experts. The same folks that know loans that are temporarily accommodated with skipped or reduced payments may bypass the delinquency reports and contracts that are retroactively adjusted might dodge an out-of-compliance citation. They also know that the interests of financially distressed borrowers of government-guaranteed loans that have since been securitized run contrary to those of the investors who now own those debts. And they know how to earn even more money when loans that are serviced by one entity end up at an affiliated firm charged with collecting on the contracts that defaulted while on the former’s watch.

So while the IG’s letter may be focused on SCRA violations, it’s not unreasonable to view these findings as a broader indictment of the Education Department’s seeming inability to competently administer all of the nearly $1 trillion worth of education-related loans that currently reside on its balance sheet.

The reason this is important — apart from the obvious — is that at some point, the political tide will turn and the feds will once again look to the private sector for liquidity, as it had before the Obama Administration discontinued the Federal Family Education Loan in program in 2010 in favor of the current Federal Direct loan program.

When that happens — and I believe the time for that is at hand — unless the Education Department has its act together and can properly administer the administrators, the nightmares that today’s debtors continue to experience will be visited upon the next generation of borrowers.

To that end, there’s been a lot of talk about curtailing the flow of financial services professionals into public policymaking positions — fox in the henhouse, and all that. But not as much about those who leave public service for positions in the private sector, where they are able to put to profitable use their knowledge of how to work with — or around — the rules.

Perhaps instead of populating the Education Department with career public-sector policymakers, it would do better to recruit private-sector experts who can use their bona fide operational experience to guard the henhouse.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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