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: CL&P BlogPrivatization of federal student loans
By Scott Michelman
Most of the time the contributors to this blog are writing as legal practitioners and academics, describing trends we see in the law or issues we encounter in our work. This one is a little more personal, so I'm blogging this one as a consumer as well as a Public Citizen lawyer.
Last week, I -- along with many other borrowers, to judge by the internet traffic on this issue -- received notification both from the federal Direct Loan program and from a company called EdFinancial that my student loans under the federal Direct Loan program have been transferred to, and will henceforth be serviced by, EdFinancial.
I have a number of concerns here.
First, at the broadest level, this is yet another troubling extension of the trend toward privatization, with its attendant risks and injection of the profit motive into public services.
Second, and on more of a personal note, I found the whole transfer process rather jarring, since the first thing I have to do on the EdFinancial website to set up my new account is give them my SSN. I think this is actually a legitimate site, but it sure feels like a scam. Which leads me to...
Third, once again on a more general level, I'm sure I'm not the only person to whom this feels like a scam. I fear other borrowers will probably ignore it for that reason and might miss a payment as a result. I note that all correspondence I received from Direct Loans and EdFinancial was via email; I never received a letter or anything on official Department of Education letterhead that might lend a little more credibility here.
According to the blog DL Insider, this privatization is a broader trend and implicates more companies than EdFinancial. See here for their understanding, as of January.
Fellow bloggers, any reactions, or advice?
Full post as published by CL&P Blog on May 14, 2012 (boomark / email).
Private Student Loans: A Last Resort Thats Too Often Used First
Private student loans are more expensive, riskier, and come with fewer borrower protections than federal student loans. Nevertheless, almost two-thirds of the undergraduates who took out private student loans during the 2007-2008 school year did so without first obtaining the maximum federal loans for which they were qualified...
Student Loans Not Forgiven Upon Student's Death
After completing three years towards his degree, Christopher Bryski died in July 2006. He left behind federal student loans, private student loans, and two small credit card bills. Upon receiving a death certificate, the federal student loans and the credit...
Senior citizens continue to bear burden of student loans
New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt...
What can I do about my student loans
Student loans are becoming more and more troublesome. People essentially mortgage their lives when they take out student loans. Student loans are not dischargeable in bankruptcy. Let’s say that again...
Private Student Loans
Private student loans are awful. Terrible. Heinous. Am I clear on this? We think of student loans as regulated by government and inherently fair to the student. This is not true for private student loans...
Man Who Lied to Get Federal Student Loans Convicted and Sentenced
(Source: Student Loan Blog by Shannon Rasberry) - A Georgia man was convicted in federal court Friday of lying in order to obtain almost $30,000 in federal student loans (?Decatur Man Sentenced for Student Loan Fraud,? The Atlanta Journal-Constitution, July [...
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