Phi Beta Cons

Ask a Bureaucrat a Simple Question…..

Ask a bureaucrat a simple question and you’re apt to get an answer that’s just as vague as the thing you asked about. That’s my experience, most recently with the Department of Education.

In this piece I wrote a few weeks back on the federal government’s move to make it easier for students to get their college loans discharged in bankruptcy, I noted that the Department’s “guidance letter” to the holders of loans (i.e., the various companies the government has contracted with to collect the payments) failed to say just what sanctions could be levied against them if they don’t follow the “guidance” to be, shall we say, kinder and gentler with debtors when they resist paying. So, I wrote the the Department, asking how it would enforce its policy preferences. Yesterday, I got my reply, a letter from Gail McLarnon, Senior Director of Policy Development, Analysis & Accreditation Service, which reads:

“We issued the (afore mentioned) Dear Colleague Letter to provide additional clarity to loan holders who are responsible for implementing regulations that govern the process of when student loans may be discharged in bankruptcy. We believe that the guidance in the DCL will permit loan holders to implement their regulatory responsibilities more effectively with respect to undue hardship claims. As indicated in the DCL, any loan holder can consult U.S. Department of Education personnel in an undue hardship case in which specific facts seem to be a close call. However, the Department’s guidance should encourage parties involved in an undue hardship claim to resolve most disputes amicably. We will continue to monitor the treatment of borrowers and conduct of holders as the Department’s guidance is executed. Thank you again for your interest in this critical topic.”

I still have no idea what happens to holders who don’t follow the “guidance.”



George Leef is the the director of editorial content at the James G. Martin Center for Academic Renewal.


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