Student debt collection is a multi-million dollar predatory treacherous industry that keeps growing. Loan Servicers actively exploit and stomp over the poor students whose chances are rigged by the players appointed by the state, with no or little margin to live debt free.
The history and invention of student loans are not too old, back when the Russians sent their satellite Sputnik up into space, America introduced student loans to encourage higher education. But, today after several reinforcements and negligence of the system, the student loan procedure harbors debt that enslaves graduates and fills the pockets of the already rich with quite some dough.
People have tried to resolve it and failed. The Obama administration, for example, thought that the issue lied in the fact that students need funds and banks charge more interest, they are inefficient and do not have student’s best interest at heart, so back in 2010, the system changed, the middlemen were removed, i.e. the banks and the state began issuing government money directly to students as loans.
And this is how the Department of education became the biggest bank in America. The total amount of student debt that Americans owe exceeds $1.3 trillion.
However, a new issue emerged and that is of loan servicers. These agents are hired or outsourced by the government, they are from the private sector and they operate to make money on the loans, maximize profits and their allegiance to students is next to absent.
Trap or Help?
The loan servicers are hired to help extend not only accurate and true information to students, but also help ensure that the students are able to pay timely, they end up paying the installments in a manner that works for the government and the students and that they do not turn into bad debts either. So, the loan services pretend as they will help, whilst they ensure that the students actively Forebear their loans, instead of making payments and getting rid of the stacked up debt and accumulated interest rate. This works for the loan servicers who are then in business for a longer time and who get to enjoy life, as the students remain stuck with the burden for as long as their lives last or until they die and the debt then belongs to their next of kin and family.
This is not the first industry to be corrupted by middlemen, an outsourced centralized company that fails to fulfill a promise or is too complicated for the government to actually do something.
Why centralized businesses will always fail customers?
More lies, more profit. This equation leads to manipulation of customers. In the government’s defense, there is way too much that the government has to look into, and inherently due to its own structure, of being centrally controlled and monitored, the predatory businesses continue their malpractices.
The technology that can actually save the students and guard their rights is here though. It can be done through Smart contracts and Blockchain-based debt management.
Navient is a traditional, centralized industry operating on profit, it plays around the law and it fails to perform as the state puts it at ‘every step of the debt acquiring procedure’. It takes care of $300 billion dollars in loans, which means that the 1/4of all student borrowers fall into its category. It offers terrible customer service, it misleads and misinforms the debt seekers and it is not accountable to the government.
Millions of borrowers are being driven into default because that is in their best interest to do so – late repayment: more profit.
What is the worse that can happen to you if you don’t pay off their student loans?
If you are a Healthcare worker and you fail to make timely payments, although you wanted to the loan servicer jacked you over, then congratulation is due, your license will be revoked. You can also be arrested by the U.S. Marshalls. There will be an infringement of your statutory rights, there will be no warnings, the legal procedure will be aggressive and destroy your life point blanc, turning it into a court, subpoena, jail time short story.
What can Blockchain do that regular Student Debt Servicers cannot?
- Ensure timely payments
- Allow and automate loan forgiveness which is currently 0.3% of what was promised to people
- Allow lesser interest rate
- Ensure that debt seekers are given options to choose from and clear cut repayment plans.
And this really is just the start of a debt-free student education industry.