The wave of defaults may also inflict costs on taxpayers. Sending debts to collection comes with administrative costs, says Nicholas Hillman, a professor of education at the University of Wisconsin-Madison. “There are inefficiencies in the loan repayment system and the collections system,” says Hillman. “So it’s expensive.” Hillman stressed, however, that the alternative to collections—allowing borrowers to forgo debt payments, effectively canceling the loans—would be far more costly for taxpayers.
Office of Strategic Communication