At a time when borrowers are increasingly struggling to pay off their debts, a new monopoly is coming to federal student loans that could be challenging for the debt-holders and risky for the government.
The Trump administration has put its stamp on a plan to consolidate servicing of more than $1 trillion in federal student loans. Where there used to be nine companies doing it, now there will be just one.
The idea is to save the government money and simplify customer service — goals initially pursued by the Obama administration in what would be one of the largest non-military government contracts. But critics worry that consolidating so much market power in a single servicing company is risky, with echoes of the too-big-to-fail institutions that fueled the 2008 housing crisis.