Fee Worthy: Trump Won't Protect Student Loan Defaulters As Obama Did

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Fee Worthy: Trump Won't Protect Student Loan Defaulters As Obama Did

Mar, 28th 2017

Some student loan companies may now have more leeway to charge fees to borrowers trying to get out of default, thanks to a directive issued Thursday by the Department of Education.

The announcement reverses guidance provided by the Obama administration, which prohibited guarantee agencies — companies that issue and collect certain types of student loans that are backed by the government — from charging a defaulted borrower collection fees if he or she entered into an agreement to cure her default within two months.

When borrowers with federal student loans default on their student loan debt it can be a credit-ruining event that puts their Social Security check, tax refunds and wages at risk of garnishment. But the government does offer options for them to get out of default, including through a process called rehabilitation, which requires defaulted student loan borrowers to make nine on-time payments in 10 months

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