We wrote in December about operational breakdowns at the Department of Education, focusing on the Department’s failure to properly place borrowers in “forced consolidation” into IBR. Shockingly, the Department has yet to fix this problem. Department staff now tell us it will be resolved some time in 2012, hopefully by May.
The response has been unacceptably slow, particularly given how important it is to help borrowers coming out of default transition smoothly into repayment. It is also far from the only operational problem at the Department.
The Department switched to a new debt collection and management system last year. A December 2011 article in the Chronicle of Higher Education notes that the Department had previously sought proposals to develop the new debt management system, but pulled the request after Affiliated Computer Services (ACS) agreed to provide it free. A Department spokesman quoted in the article states that the department expected delays with the rollout of the new system, but acknowledged that the “extent of the disruption was greater than we anticipated.” The Department continues to post notices about the new system and has even given instructions to borrowers about how best to deal with the expected glitches.
We are seeing these problems with our own clients and hearing from many other borrowers about their frustrating experiences. The stakes are high—Some borrowers are facing costly delays in getting out of default, others may be inadvertently kicked out of IBR or other programs due to operational breakdowns.
We urge borrowers to send information about your experiences to us and to the Department so that they know the full extent of the problem and how much damage it causes to borrowers.
The December Chronicle article reported, among other problems, that the new system is not set up to process borrowers coming out of rehabilitation into repayment. Borrowers may be stuck in limbo, unable to go back to school or rebuild credit, simply because the Department cannot move rehabilitated accounts from one side of the agency to another.
We have heard from borrowers like these: (reprinted verbatim)
“I had a student loan that was in default. I contacted Department of Education to get on the program to get my loan out of default. I have been making payments since December 2010, and my loan was suppose to come out of default after nine months of consistent payments. The month that my loan was suppose to come out of default the Dept of Ed started saying they changed over to a new computer system and therefore they are unable to take anymore loans out of default even though you have met the requirements of the program. The Dept of Ed also wants everyone to continue to make their payments that were only supposed to be for a nine month period.”
“ i have three loans that were defaulted on, i did the rehabilitation program with Pioneer credit recovery. I made my 9th payment in November of 2011 to complete the program. I do not have a buyer yet, so i just made my 10th payment (december 2011) my federal tax return still shows a offset, i called Pioneer and they said they are waiting for the Department of education to buy the loan back and the offset will be removed, but when i call the department of education they say that Pioneer can have the offset removed. I really need my taxes this year, i have a family and am just making it. My family had nothing to do with my old student loans. I just want my offset removed.”
The government can and must do better.