Every month, approximately 40 million Americans make payments to a company they know almost nothing about.
There are just four major firms contracted by the federal government to process the nation’s student loan checks and after the just-announced merger of two of these firms — Nelnet NNI, -3.46% and Great Lakes — one company will handle more than 40% of all payments.
While it might not seem to matter who processes the payments, these companies have an outsize role in the shape of America’s $1.4 trillion student-loan burden. Though the rising cost of college and stagnant wages are the most cited reasons for our nation’s student debt problems, borrower advocates, law enforcement officials and the Consumer Financial Protection Bureau have said the student loan industry itself is also to blame. These processors can often make the difference for struggling borrowers between successfully paying down a debt or the nuclear option of default.
In an ideal world, no federal student loan borrower would default on his or her debt thanks to the myriad of programs available through the government, but in reality, roughly 1 million defaulted last year — a sign, advocates say, that student loan servicers aren’t doing enough to work in borrowers’ best interests.
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https://www.marketwatch.com/story/one-company-will-now-handle-close-to-half-of-all-student-loan-payments-2018-02-09
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