A December 2011 article in the Chronicle of Higher Education reveals numerous problems with the Department of Education’s online system for managing student loans. Unfortunately, this is not news to our clients and other borrowers.
We have been pointing out operational breakdowns for years, including the Department’s failure to place borrowers coming out of default through consolidation directly into IBR. This is not a mere “technical” problem. The monthly payment is much lower for many borrowers under IBR vs. ICR.
The bottom line is that the Department knows that it is not complying with the regulations and has known for years. The only response we have received so far is that the Department and its contractors will fix this problem for individual borrowers. As for a systemic solution? Who knows?
This problem is only one of many operational breakdowns. The Chronicle article also notes that the new debt management system has not processed loan rehabilitations since August. According to one borrower who wrote us about her efforts to rehabilitate her loan, “I kept my end of the agreement. I am tired, sick, uncaring, and done with this student-loan crap…just simply done with the whole farce of rehabilitation.”
Bureaucractic incompetence may not seem like news, but it should be. Big reforms are needed to create new policies and provide real relief for heavily indebted student borrowers. In the meantime, these borrowers must be able to access existing programs. Unfortunately, too many are losing out because the government can’t seem to get its systems to work.
