The Student Loan Borrower Assistance website (which has a wealth of information by the way) has an excellent post on the initial collection tactics by the Department of Education that could be changed to give federal student loan borrowers a chance at repaying their obligations.
Instead of, for example, telling borrowers that must immediately repay tens of thousands of dollars, why not tell borrowers about their federal rights to various types of repayment programs and deferments that could prevent their student loan from going into default.
Here’s the conclusion of this excellent first article in a series on this troubling issue:
Why not try motivating someone by pointing out that there are serious consequences after default, but there are also very realistic ways to avoid it? If the borrower in this case chose IBR [income based repayment] instead, taxpayers would at least have some chance of recovering funds if the borrower’s financial situation improved. And of course, borrowers would be much better off.
The Department must let borrowers know about IBR and other options not just in rote entrance and exit counseling, but in big bold letters when they are about to head over the edge into default. Better yet, use neutral, trained counselors to provide information and advice, not collection agencies and servicers incentivized to spend as little time as possible with borrowers and push them into options that work best for collectors, not borrowers. We need to hear more from the government about this. Why take this approach? Why pay millions of dollars to collection agencies when you could figure out ways to help borrowers avoid default in the first place?