Trump Reverses Obama-Era Protections on Student Debt
According to a Tuesday analysis from the Consumer Federation of America (CFA), millions of Americans have fallen behind on their student loans. The data, obtained from the U.S. Department of Education, reveals 42.4 million people in the U.S. owed $1.3 trillion in federal student loans by the end of 2016. Since 2013, the average amount owed per borrower increased by 17 percent.
Back in 2015, the Obama administration issued a memo that prevented debt collectors from charging high interest rates on overdue student loans. So long as the borrower entered the government’s loan-rehabilitation program within 60 days of defaulting, agencies of the old, bank-based Federal Family Education Loan Program (FFELP) were forbidden from charging up to 16 percent of personal and accrued interest. Still, some lawmakers argue that debt collectors continue to impose these fees, despite the Obama regulations.
This request was short-lived. The Department of Education revoked the Obama guidelines on Thursday and instructed guarantee agencies (companies that issue government-backed student loans) to collect on defaulted debt.
One of the main criticisms from the Trump administration, as stated Thursday in a “dear colleague” letter, was that the Obama memo lacked public input. Only time will tell what the public has to say about the new administration guidelines.Herman4747, Gryneos, Mom Cat and 8 othersbroiles, 7wo7rees, NV Wino, xynthee, wilsonbooks, PADemD, Lynetta, glinda like this
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