Overnight Open Thread (3-27-2013) - Character and Substance Edition | Main | Top Headline Comments 3-28-13
March 28, 2013

NBC: "surging" student loan debt "crushing" the system [Purp]

Well, the cat is out of the bag now.

The U.S. Department of Education said 6.8 million federal student loan borrowers are now in default, representing $85 billion in debt. [$85B? The sequester was how big?] And the department's systems for collecting the bad loans are struggling to keep up.

The Department's Office of Inspector General found in December that more than $1.1 billion in defaulted student loans were stuck in a sort of computer limbo.

"The Department is not pursuing collection remedies and borrowers are unable to take steps to remove their loans from default status," wrote Assistant Inspector General for Audit Patrick Howard in the December 13 report, which blames a system installed in 2011 by Xerox that is supposed to transfer defaulted loan accounts from servicing companies to private collection agencies. Those collection firms have considerable power, including the ability to garnish up to 15 percent of a borrower's wages. But none of that can happen until the accounts are transferred.

So, basically, there's no actual collections actions happening against a billion bucks worth of deadbeat loans because of some "computer glitch".

This looks like a pretty expensive glitch now that its been going on for a couple of years, but I'm sure Xerox is darkening the skies and clogging airports with consultants, TOP MEN, EXPERTS, the freaking PROS FROM DOVER and it'll all be sorted out in a jiffy(*).

(*) In government parlance, a jiffy is roughly about 20 years +/-5yr

Don't panic. TOP MEN are all over this.


Comments seem to be hosed again...NOW you can panic


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posted by Open Blogger at 02:55 AM

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