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Consumer Law: CL&P Blog
Privatization 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?
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