Obama consolidating loans

The first thing to know about the forgiveness program is that Congress did not, initially, want all public servants to receive it. In practice, President Bush signed the forgiveness program into law on Thursday, Sept.

Instead, lawmakers limited eligibility to people with a particular kind of loan, called a Direct Loan. L.), under which the federal government paid private banks to lend students money and then reimbursed banks for 98 percent of any loans that went bad. 27, 2007, as part of a larger package of overhauls that received relatively little news media attention.

Income-contingent repayment loans weren’t very popular. If you don’t have much money, 20 percent of discretionary income is still a lot, and 25 years is a long time.

That difficulty would trigger a series of choices among myriad options, most of which — forbearance, deferment, graduated plan, extended plan, graduated extended plan, or just missing some payments — would not qualify as one of the necessary 120 payments. Not the Department of Education, which subcontracts the work of helping borrowers to “loan servicing companies.” Unfortunately, the servicers didn’t prove up to the task.

The answer lies in the convoluted story of the federal government’s efforts to help people who are struggling to repay their student loans, even as it continues to make nearly all of the loans in the first place.

The end of that story suggests that Democrats competing to help teachers and other public servants with loans may be about to spend hundreds of billions of dollars to fix a problem that is already on the way to being solved.

In short, there’s a very good chance that they would at some point in the next decade make ineligible payments, or no payments, or that the eligible payments they did make would be on an ineligible loan. Loan servicers are paid a flat rate per borrower for processing loan payments and helping people navigate the repayment process.

That means that the more time and effort a borrower requires, the less money the servicer makes.

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