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ICYMI: Unrepaired Education Department System Leaves Thousands Stuck in Default

Student loan borrowers continue to come forward with troubling stories of the problems plaguing the Department of Education’s management of the Direct Loan Program and, worse, the Obama administration’s seeming inability to address widespread complaints.

An article in today’s edition of The Chronicle of Higher Education describes the myriad challenges borrowers confront with the Direct Loan Program:

Karla De La Torre kept her end of the bargain.

After defaulting on her federal student loan, she entered into a "rehabilitation" agreement with the collection agency and made the required nine on-time payments toward the debt. According to the agreement, her loan was supposed to be restored to good standing last September.

Instead, Ms. De La Torre is stuck in default, the victim of a systems glitch that is taking the Education Department months to correct. Her collection agency told Ms. De La Torre, an executive assistant whose husband was laid off a year and a half ago, that she has to keep paying until the problems are fixed, and it can't say for sure how long that will be.

"I was told the beginning of the year, then April, and then May," said Ms. De La Torre, who graduated from California State University at Long Beach in the mid-90s. "I'm beginning to think it's never going to happen."

Four months after The Chronicle broke news of widespread problems with the Education Department's new debt-management system, tens of thousands of defaulted borrowers remain in financial limbo, unable to clear their credit histories. Meanwhile, delays in issuing wage-garnishment orders continue to cost the government millions in lost recoveries each month.

Read more…

House Education and the Workforce Committee Republicans are interested in hearing from borrowers and institution officials who have experienced difficulties with the Direct Loan Program. To share your story, click here.

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