There are several ways the federal government, specifically the Department of Education, could help ease the problem of student loan debt for millions of borrowers. One of the major problems is the way in which the Department is lenient in theory but not in practice. While the Department has official policies that appear to provide support for student debtors who find themselves in difficult personal situations, anecdotal evidence has shown that the actual execution of these policies leaves something to be desired.

One such significant problem is the actual relief the department grants to those with serious illnesses or long-term disabilities, which includes loan forgiveness programs that are on the books but seem to be ineffectual. Furthermore, bureaucratic inefficiencies within the department appear to cause a great deal of trouble for disabled or ill borrowers who try to seek loan forgiveness. A recent investigation by ProPublica and The Center for Public Integrity blasts the department, asserts that the system “is broken,” and adds, “these borrowers, whose ailments often make it hard for them to navigate a complex bureaucracy, confront a byzantine system that has resulted in many applicants’ being rejected for unclear reasons, and has led many others to simply give up. Despite demands for improvement from Congress, the courts, and its own internal watchdog, the [department] has repeatedly failed to heed basic recommendations for fixing the process. Since the publication of their report on February 13, 2011, the department responded immediately and has promised to make changes. How those changes will be implemented, however, remains to be seen.

That issue may be related to the argument made by Deanne Loonin at the National Consumer Law Center that the department has an orientation towards lenders and collectors, not borrowers, due to its use of collection agencies. The problem with collection agencies is that their primary motivation will always be to collect, rather than to consider borrowers’ best interests and extenuating circumstances.

To resolve these execution issues, the Department of Education may benefit from taking a page out of the IRS’ book. For instance, Loonin suggests that the department rid themselves of collection agencies, just as the Treasury Department did in 2009 with contracts for the IRS that had been handled previously by private agencies. As Loonin correctly states, “the ‘helpers’ can never come from the collection industry.” When it comes to helping taxpayers with medical problems, the IRS is again ahead of the Department of Education. Leniency towards taxpayers with personal difficulties was a driving factor in their 2009 internal overhaul. The announcement first states that the IRS will postpone the process of collections, explaining “employees will have greater authority to suspend collection action in certain hardship cases where taxpayers are unable to pay. That includes instances when the taxpayer has recently lost a job, is relying solely on Social Security or welfare income or is facing devastating illness or significant medical bills.” The Department of Education could reduce the stress of student borrowers seeking relief by evaluating cases on a more personal basis.

To be fair, the department recently launched the Income Based Repayment Program (IBR) to help struggling borrowers with a more flexible repayment plan. A Questions & Answer pamphlet published by the department on January 5, 2010 describes the program as such: “if you qualify for IBR, your required monthly payment will be capped at an amount that is intended to be affordable based on your income and family size.” However, IBR is only available to borrowers who have Federal loans – either Direct of Guaranteed (otherwise known as FFEL) – and that is its most significant limitation. Private loans cannot be included when one enrolls in IBR. According to a 2009 report published by The Project on Student Debt, which is operated by The Institute of College Access and Success, “the percentage of all undergraduates with private loans has risen dramatically from 5% in 2003-04 to 14% in 2007-08, and the number of private loan borrowers increased from approximately 935,000 to 2,946,000.” If tuition continues to increase, and all indicators suggests that it will, prospective and current students will find themselves taking out additional private loans. Expanding the program to include private loans could help students who have had to take out private loans as well. Of course this would entail long-term, strategic planning to forgive loans at the end of the 30 year payment period for IBR, but it is a step in the right direction.

While the department and the IRS seem to offer similar benefits, such as helping financially troubled people, anecdotal evidence from student debtors has shown that the department is less lenient in practice. In light of the department’s recent response to the ProPublica investigation, it seems that they have an interest in improving the perceived lack of leniency. The response was an encouraging sign and suggests the department willingness to acknowledge failure. However, the next step is to put those promises into action, so that struggling borrowers may be granted the leniency and relief they deserve.