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Obama Cuts Student-Debt Collector Commissions to Aid Borrowers

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The commission for collecting on overdue student loans has dropped from 16% of the entire loan amount to 11%, a move that is expected to reduce the incentive for collection agencies to push large payments instead of more affordable plans such as the Income Based and Income Contingent plans.

 

From Bloomberg: http://www.bloomberg.com/news/2013-03-19/obama-cuts-student-debt-collector-commissions-to-aid-borrowers.html

 

 

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So what exactly does this mean?  

It's supposed to mean that collectors will not be incentivized to push for big payments, and instead inform debtors of other, more affordable options to repay their loans.  However, only time will tell if that happens.

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