Are guarantors required to remit to the Department of Education 8.5 percent or 10 percent of the 18.5 percent in collection costs on defaulted loans being consolidated?
On or after Oct. 1, 2006, when a defaulted loan is consolidated, the guarantor is authorized to assess not more than 18.5 percent of the outstanding principal and interest balance in collection costs. The guarantor is required to remit 8.5 percent of the outstanding balance to the Department of Education, and may retain the remaining 10 percent.
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