This week, while analysts debated the seriousness of the student debt crisis, one statistic went unchallenged: Student loan defaults are at their highest rate in 20 years, affecting over 7 million borrowers.

Delinquent borrowers carry higher debt-to-income ratios and damaged credit scores, making it difficult to make large credit purchases, clear rental applications, or even pass a job interview. Lower household formation, decreased net worth, and greater financial stress can all follow.

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There’s no real reason for student debtors to default, though. Student debt can be collected in a multitude of ways (even through Social Security payments) and cannot be discharged in bankruptcy, so you can’t shake the payments. And the government offers a number of programs to help avoid default, including hardship deferrals and repayment options tied directly to income, effectively forgiving payments if the borrower loses their job. It would be better if this were done seamlessly through employer withholding, but there are enough alternatives out there that almost nobody should be defaulting, and certainly not 7 million borrowers. So why are there so many defaults?

Two researchers from Elon University and the University of Michigan looked at this question, and found their answer in the for-profit companies that service student loans. Eric Fink and Ronald Zullo allege that financial incentives tilt servicers away from helping borrowers and toward maximizing profits. They propose a federal alternative, where the government collects payments and advises borrowers themselves. This would improve the borrower experience, reduce defaults, and save money.

The report, funded by Jobs With Justice, a coalition of faith, community, labor, and student groups, notes that the student loan program was largely federalized in 2010, something President Obama routinely boasts about in speeches. “We said, let’s cut out the middleman,” Obama said recently, describing how the government shifted from guaranteeing loans issued by private banks to simply issuing the loans themselves.

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But that didn’t eliminate the middleman, it just shifted it. The Education Department issues student loans directly, but it contracts with four private companies — Navient (formerly part of Sallie Mae), FedLoan Servicing, Great Lakes Educational Loan Services, and Nelnet — to service the loans. These companies process payments, communicate with borrowers and assist with loan modifications. Last year, the Education Department paid servicers more than $1 billion in fees.

It turns out these private servicers don’t perform well for borrowers, argues Chris Hicks, the Debt-Free Future campaign organizer for Jobs With Justice. “What we see in student loan servicing is similar to what we saw in mortgage servicing,” Hicks said, referencing the incompetent and often illegal behavior in the mortgage industry. Servicers fail to notify borrowers about different options to avoid default. They lose paperwork, miscalculate incomes, and intentionally miss deadlines to enroll in these programs, Hicks claims.

As a result, only 2 million student borrowers are currently enrolled in alternative repayment plans, while 7 million are in default. Meanwhile, servicers have been accused of additional abuses, such as pushing debtors into plans that increase their overall burden, illegally blocking payments from accruing to loans with the highest interest rates and harassing borrowers when their co-signers die. The Consumer Financial Protection Bureau (CFPB) has repeatedly fielded complaints about student loan servicers, as has the Federal Student Aid section of the Education Department. And the Justice Department recently fined Sallie Mae and its former loan servicing unit Navient $139 million for improperly overcharging service members.

The Education Department would argue that their contracts with servicers try to properly align incentives by rewarding servicers more for keeping borrowers current on their loans. However, this relatively minor incentive (the difference in payment between a current borrower and one 60 days delinquent is a mere 28 cents a month) is dwarfed by the expense of effective, responsive servicing.