Debt collectors benefiting from contracts for federal student loan recovery

With soaring debts on federal student loans, the government has been forced to rely on private debt collection services to retrieve some sort of payment. However, complications may arise in terms of the amount collectors are demanding. Nonetheless, roughly $67 billion worth of federal student loans are currently in default. At the behest of President Barack Obama, the Department of Education has been forced to hire a virtual "army" of debt collectors in recovering public dues. Debt collection firms helped the government recover some $11.3 billion in defaulted loans during the year ending September. 30. Officials now expect to recover 85 cents on every dollar that defaults, according to Bloomberg. "The debt collectors made out well, too," reports John Hechinger for the source. "Based on a review of government contracts and Education Department data, the private companies - working directly for the government and through state agencies - received commissions of about $1 billion in the year through September." As Mandi Woodruff points out for Business Insider, the chief advantage of government-backed student loans is the array of repayment options available to borrowers after they've graduated. Debtors merely need to be proactive about leveraging these resources.