According to the Federal Reserve Bank of New York, more than 44 million people in the U.S. are living with student loan debt; it adds up to more than $1 trillion owed.
Student loan debt is the second highest kind of debt in the nation, behind mortgage debt and according to the U.S. Department of Education, about eight million borrowers have given up paying on more than $137 billion.
National figures show the government’s efforts to help some borrowers get back on track may be going to waste and in some cases is costing the government more money than they are collecting. For example, according to an NBC 7 Investigates analysis of government figures, under the U.S. Department of Education Rehabilitation Program, the department usually pays $38 to collect $1 of student debt.
For a borrower, once a loan is in default, it can get rehabilitated. Once in the loan rehab program, borrowers pay a minimal amount toward their loans for nine months, with most paying as little as $5 a month, according to debt settlement attorney Dan Gamez.
After rehabilitation, the loans are in good standing.
"It's like a reset button was hit," Gamez said. "You get benefits back, you get forbearance, you get deferment you get an option of going to income based repayment plan."
The government pays debt collectors up to $1,700 for each borrower’s loan that goes into rehab. The debt collector gets to keep that money even if the borrower defaults after rehabilitation.
According to Gamez, 90 percent of those eligible for an income-based repayment plan after rehabilitation do not enroll in one, keeping them tied to their original loan terms that usually have higher monthly payments.
"If you went from paying $5 a month in a rehab to being in a standard repayment plan, your repayment could be $600-700 a month right off the bat," Gamez said.
Rep. Susan Davis (D-53 Dist.), is a senior member of the U.S. House Committee on Education and the Workforce. She said she thinks it’s confusing for students.
"I think we have to look at how those loans were set up and why students aren't able to resolve them a little more efficiently," she said.
Davis, along with Reps. John Sarbanes (D-Md.), Gregory W. Meeks (D-N.Y.), and Raúl M. Grijalva (D-Ariz.) has called on U.S. Education Secretary Betsy DeVos to review the Department of Education’s Public Service Loan Forgiveness (PSLF) program.
She told NBC 7 Investigates she has yet to receive a response from the Education Secretary.
The Consumer Financial Protection Bureau has filed suit against Navient, one of the largest loan servicers. The lawsuit accuses Navient of failing borrowers at every step of the repayment process in order to save money.
Navient denied the allegations and in a statement to NBC 7 Investigates said the company has helped more than 12 million borrowers navigate loan repayment and "...borrowers we service are 31 percent less likely to default and 49 percent of loan balances we service…are enrolled in income-driven repayment."
Click here to read the entire statement from Navient.