By Kara Baskin
law briefs
Federal policies designed to make student loan payments affordable should have resulted in much lower default rates, says Suffolk Law Research Professor Kathleen Engel. “That hasn’t happened, and I wanted to understand why.”
The result is her recent paper “Student Loan Reform: Rights Under the Law, Incentives Under Contract, and Mission Failure Under ED,” co-authored with Prentiss Cox of the University of Minnesota Law School and published in the Harvard Journal on Legislation in February 2021.
Engel, who specializes in consumer financial markets, including student loans, found that servicers often fail to tell borrowers their rights, leading them into more debt. She warns that U.S. Department of Education policies treat servicers as “bill collectors,” not as entities designed to ensure that borrowers are able to exercise their congressionally created rights.
Her piece proposes the creation of a federal agency devoted to implementing the student loan program to ensure that borrowers understand and exercise their right to affordable payments.
“If the servicers aren’t responsive and helpful, borrowers should file complaints with the Consumer Financial Protection Bureau and Federal Student Aid,” she says.
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winter 2023
Photograph by Michael J. Clarke
