The Balance is here to help you navigate your financial life. To that end, we track the money-related questions you most search on Google so we know what’s on your mind. Here are the answers to some of your most recent inquiries.
Why are student loan servicers quitting?
Because it’s not worth the trouble, they say.
An estimated 92% of all student loan debt is owned by the government, but the feds don’t send out bills or answer customer service calls. That job is outsourced to private companies who contract with the Department of Education. However, three of the biggest companies—Navient, Granite State, and FedLoan—have announced recently that they’re getting out of the business, which means the borrowers assigned to them are being transferred to other companies.
Because the U.S. government’s student loan program is so astoundingly complex and costly to manage, industry representatives say companies have recently decided they’re simply not paid enough to cover their costs. For example, with various kinds of deferments and forbearances, student loans can be in one of about 40 different payment statuses. That complexity means it’s more expensive to train employees, create computer systems, and resolve problems.
The Department of Education admits the system is overly complex and inefficient, and it’s in the midst of a multi-year “Next Gen” project to streamline the program, but there’s no date yet for when this will be complete.
And there’s another source of headaches for companies—lawsuits. Government agencies have pursued claims against some loan servicers on behalf of borrowers who say they’ve been mistreated.
Why are mortgage rates rising?
Mortgage rates are rising because the Federal Reserve said it is about to start tightening the money supply, first by cutting back its bond purchases and then, at some point, raising benchmark interest rates. Though mortgage rates are independent of the Fed’s benchmark rates, fixed rate mortgages tend to track yields on 10-year Treasury notes, which are in turn influenced by investor concerns about the Fed curtailing its easy-money policies in order to control inflation.
When the pandemic struck last year, the Fed supported the economy by slashing benchmark rates to near zero and embarking on a massive bond-buying program that included mortgage-backed securities. The moves flushed the economy with cash and kept money cheap so people could borrow and spend when brick-and-mortar businesses shut down to slow the spread of COVID-19. More than a year later, the economy is in recovery and inflation has accelerated. The Fed says it’s nearly time to start letting the economy stand on its own.
Do evictions show up on credit reports?
With more renters facing removal from their homes after the end of a federal, pandemic-era eviction moratorium, this question is especially timely. The good news is, an eviction itself won’t appear on your credit report with the three big credit bureaus: Equifax, Experian, and TransUnion. But it could trigger consequences that would show up on your report.
For example, your landlord could decide to seek payment by “selling” your past-due debt to a third-party collection agency, which then would try to collect the debt from you. If things reach that point, the existence of the collections account could stay on your credit report for up to seven years (dating back from the original missed payment to the landlord).
f your debt does go to a collection agency, that hurts your credit score. Paying it off, however, could help improve your score, depending on how quickly you pay up and the type of scoring model used by the credit-reporting agency.
Despite the end of the eviction ban, there are still programs available to help financially struggling tenants settle their housing debts. The federal Rental Assistance Finder website lets you pick the city and county where you live, and then find out which state or local programs can help pay rent and utility bills you might owe.