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Federal Student Loan Delinquency and Default: What to Know

“I’ve been working in the student loan industry for decades, with thousands of borrowers on both the compliance and advocacy sides. I can count on one hand the number of people who couldn’t be helped,” says Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that provides free advice and resources to student loan borrowers. “There’s almost always a solution to help keep people from defaulting on their federal student loans.”

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People who work at the Office of Federal Student Aid already stay up late.

“It’s not uncommon for them to have meetings at 10 o’clock at night,” said Betsy Mayotte, president of the Institute of Student Loan Advisors.

She’s been to some of those late-night meetings. “There’s so many really enormous projects in the air that have very limited timelines to get done, and they’re under a lot of pressure to get those done,” Mayotte said.

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“I feel like I went through the all the stages of grief over this yesterday,” said Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit that offers free loan advice and dispute resolution. “It’s unfair.”

She said she thinks the department felt it had to sacrifice those borrowers to save the overall program in the face of legal challenges, but that doesn’t make it feel any less unfair to those affected by the change. She, like others, had been advising some borrowers that it might not make sense to consolidate loans right away, she said. With interest rates higher than in recent years, and a deadline for consolidation that was not imminent, it didn’t seem urgent to take action.

Mayotte said she has heard from many borrowers who are extremely upset. “The last 24 hours have been some of the worst of my career,” she said. “They’re angry. They’re crying … literally crying. They feel duped. They feel taken advantage of.”