| 摘要 | Americans are anxious about rapidly rising levels of student debt. They wonder whether payments are affordable and if financing college with debt will pay off in the end. But recent news headlines suggest another issue is increasingly on borrowers’ minds: bad customer service and shoddy advice during loan repayment. This can leave borrowers feeling confused or cheated, and it can even lead them to incur additional costs.
The view that this is a widespread problem has prompted several states to enact laws aimed at loan servicing. Similarly, several lawsuits that allege borrowers were cheated by bad loan servicing are working their way through the courts. Some in Congress have even called for a national “student loan bill of rights” to guard against bad loan servicing. Of course, today’s hearing also demonstrates interest in the topic among lawmakers.
Nearly all student debt is issued through the federal government’s student loan program, though the government does not actually service the loans itself. Instead, it contracts with private companies (“servicers”) to handle virtually all interactions with borrowers. In fact, borrowers with federal student loans are unlikely to interact with the U.S. Department of Education (the Department) at any point when repaying their loans. Loan servicing companies collect payments, staff call centers, maintain websites, send account statements, and inform borrowers of repayment options. Concerns over the quality and reliability of loan servicing are thus generally directed at the private companies that collect the loans on the government’s behalf, rather than Congress or the Department, who set the repayment terms for borrowers through law and regulation.
There is, however, a risk in automatically blaming loan servicing companies over concerns that borrowers are being treated unfairly. The perceived mistreatment may actually be the result of the design of the loan program itself, not in how loans are serviced. In such cases, Congress and the Department are responsible for the problem—and the solution.
My testimony will focus on this important distinction. To that end, I’ll outline a number of ways in which features of the federal student loan program—all of which are set in statute and regulation—can confuse and frustrate borrowers and even leave them feeling cheated. To the borrower, it often appears that loan servicers designed these problematic policies and practices when in fact lawmakers are often to blame. The matter is further complicated by the fact that these loan policies and mandated servicing practices are meant to benefit borrowers—which they often do. That makes fixing the program challenging, since almost any reform aimed at improving the system could reduce benefits for borrowers.
The examples I will describe serve to illustrate three overarching points:
Of course, there are instances where servicers make errors or provide low-quality assistance to borrowers. My testimony should not be taken as an argument to the contrary. That said, the available data do not allow observers to accurately gauge how widespread loan servicing problems are or whether those problems are the result of the program’s design or something under servicers’ control. Meanwhile, the common narrative about problems in loan servicing seems to assume that the issue is entirely due to factors under servicers’ control. As the examples below will illustrate, those problems could easily be the result of factors outside of the servicers’ control and thus will require policy solutions. |
