Nowadays, it seems like everyone is under the pressure of repaying student loans. In fact, this year one of the most popular New Year’s resolutions among 20-year-olds was to pay off all or part of their student debt.
Total student debt has tripled since 2006, and, as of 2011, is now the second-largest form of consumer debt, after mortgages.
Here’s a fast update on all the latest news you might want to know about your student loans
Largest U.S. company is moving away from student loans
Rising debt levels have led more people to be unable to pay their loans, which is bad news for the companies that handle collections.
On Aug. 7, Navient, the largest student-loan management company in the United States, announced it is shifting operations past student loans. A week prior to this, Navient acquired the transportation-management company Duncan Solutions for $80 million. The Duncan Solutions website advertises processing of parking tickets, and toll-violation enforcement and collections, as well as collections on license plate-based debts.
The announcement makes sense when you consider the declining earnings from student-loan debt, coupled with the company’s several recent lawsuits from state and federal financial watchdogs.
Lawsuits over loans are expensive and becoming increasingly common, which is probably the brunt of the motivation for the change. In fact, in January of this year, the Consumer Finance Protection Bureau brought a case against Navient over misallocated payments dating back seven years, as well as purposefully steering consumers away from income-driven repayment plans in order to maximize the company’s profit off the loans.
Student loan forgiveness opportunities in jeopardy
Federal policy regarding student loan forgiveness remains up in the air.
The Department of Education is being sued by some enrollees in the Public Service Loan Forgiveness program for misleading applicants into believing that acceptance into the program meant a guaranteed erasure of their remaining debt after 10 years of payments, rather than the “interim, non-binding” decision that the department claims was made clear. A court date has been set for Oct. 6.
The case could have major implications for people with student-loan debt who are working in public service, but ultimately it’s too soon to tell.
No single servicer for student loans
In the past, the Secretary of Education has advocated a shift to a single company servicing student loans in order to ease oversight. Opposition argued that this decrease in competition would lead to worse, less competitive rates for the consumer. After facing fierce opposition in the senate the week prior, the Department of Education announced on Aug. 8 that the single-servicer plan will be reduced dramatically.
The servicer industry is already very concentrated, divided between a few big players, with Navient currently managing $300 billion of the total. The department plans to create a central platform for data processing and customer service related to student loans without shifting all loan debt to a single servicer.
This should make things a little easier for the 44 million people in the country with student-loan debt, who together owe more than $1.4 trillion.
Takeaway
The state of loans and debt in this country appears to be in flux. With more outstanding student debt than ever before, the demand for debt relief is increasing with passing time. We must all watch the news carefully in the upcoming weeks and months.
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