How the USPS could help solve the student loan default problem

Writing for the Fiscal Times, David Dayen suggests that the USPS might have a role to play in resolving the student loan default crisis:

Last week, the Education Department renewed its contracts with private student loan servicers, claiming they will rework incentives to reward good borrower outcomes. But the best practice here is staring Education officials in the face. If they’re concerned about up-front servicing costs — a weak argument considering they already spend $1 billion a year on servicers — they could always farm it out to the U.S. Postal Service, which already has the employees and physical space to do the job. This could line up with a potential post office foray into offering financial services, as outlined in a recent USPS Inspector General report. The ubiquity of post office branches, particularly on college campuses, would allow for face-to-face counseling and consultation. Not-for-profit postal loan servicers would not have incentives to push customers into default. And the whole enterprise would fulfill the Postal Service’s mission to promote commerce and economic growth.

Read more: How to Stop the Epidemic of Student Debt Defaults | The Fiscal Times.

  • MrZip

    Quaint idea. Why would the author think that the USPS has the “…employees and physical space…” Yes, they could easily take payments via the retail counters, but they’re not going to do it for free. And then there is the “..face to face counseling…”, would you take financial advice from the Postal Service? I don’t think that the USPS would accept the counseling part of the program. That would entail training employees in financial counseling when it may only be needed in a rare case (in any one post office). I don’t see a lot of upside potential for the USPS.

    Just my 2¢

  • Liam Skye

    All very good points to be sure, MrZip, but when I did the student loan thing for my child we just put our information on the FAFSA website with no face to face or financial counseling whatsoever and the magic box decreed what we could receive. Maybe it would be approached more like getting a passport where only certain employees at certain offices have the necessary training and you might have to do it by appointment.