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Government education loan defaults: What happens just after borrowers standard and exactly why

Government education loan defaults: What happens just after borrowers standard and exactly why

Range costs you to definitely individuals shell out inside standard are going to be highest, much like the common narrative claims, or they can be minimal to help you nonexistent. step three That’s because the federal government features erected an elaborate selection of choices and guidelines having borrowers during the default. Such rules are counterintuitive and can include depraved bonuses to own consumers in how they take care of their defaults. Rougher penalties is implemented on consumers whom rapidly repay its loans entirely just after defaulting than to the people who participate in a lengthy, bureaucratic “rehabilitation” processes but build no improvements inside the settling its expenses. Continue reading