Two debt collectors said in separate statements this week that they will not assess collection fees on defaulted student loan borrowers who quickly enter repayment, despite new guidance from the Department of Education.
Both Great Lakes Higher Education Corporation and TG said they would maintain existing practices of not assessing debt-collection fees when borrowers enter repayment plans within 60 days of a default notice.
The Department of Education issued a notice on March 16 that it would rescind Obama-era guidelines restricting loan servicers from charging those defaulted borrowers fees up to 16 percent of their total balance. The decision won't affect borrowers of federal direct loans but could impact individuals with federally guaranteed FFEL loans, which make up almost half of total outstanding student loan debt.
“Many student loan borrowers already have a difficult time managing their loan obligations," said TG President and CEO James Patterson. "At TG, we want to help them successfully repay their student loans. Adding more fees does not help their situation.”