A 16 percent outrage

Paying off student debt is hard enough

President Barack Obama’s Education Department said defaulting borrowers who quickly got their federally guaranteed student loans back on track couldn’t be slammed with a 16 percent collection fee. Last month, President Donald Trump’s Education Department said: Never mind.

It thus offered a windfall to the private companies that get to help run this government program. But it added to the burden of struggling borrowers.

The Obama administration set out its rule in a “Dear Colleague” letter in 2015. So, unlike a formal regulation, the rule didn’t have to be offered for public comment before it was issued. And that, the Trump administration said in the “Dear Colleague” letter rescinding the rule, was the problem: The rule “would have benefited from public input.”

The public certainly commented when the rule was withdrawn. It generated so much outcry that the companies that are now allowed to charge the fee — known as guarantee agencies — quickly announced they won’t actually charge it.

That outcry was justified. This fee is inhumane: The people subject to it are already struggling with debt. Making the debt larger makes their problem worse.

There’s no good reason to let the agencies charge so much. Collecting from people who quickly enter repayment agreements and keep them is not difficult or expensive. And there’s no free-market argument here: This isn’t a private contract; it’s a government program 26 companies are allowed to make money on.

The Trump administration invited government contractors to try to squeeze even more money out of people who were already having trouble paying what they owe. This is unconscionable.