An American defaulted on a student loan direct from the U.S. Department of Education every 28 seconds over the past year. But nearly all of those more than 1.1 million defaults were avoidable—because almost every borrower is eligible for a repayment plan based on affordability.

Too few borrowers in distress know they can reduce their payments simply by sharing a few recent pay stubs or a copy of their most recent tax return. Something in the repayment system is clearly broken, and so last month federal education officials moved to scrap it—slowly.

While the Education Department hopes that in a few years loan companies to which it outsources collections will prioritize showing debtors how little they can pay to remain current over collections, the Consumer Financial Protection Bureau last week told those same collections contractors that the transition needs to happen now.

The industry viewed that as a threat.

Federal income-based repayment plans, which allow just about all of the roughly 42 million borrowers with federal student loans to make monthly payments based on how much they can afford, rather than how much they owe, are at the core of the issue. These income-based plans are meant to help decrease the number of borrowers in arrears—which now hovers at one in four of the borrowers that owe their share of the $1.4 trillion total student debt balance in the U.S.

However, according to a new report by the Consumer Financial Protection Bureau, loan servicers often take several weeks, sometimes months, to process applications that should be reviewed within 15 days. Applications are rejected without explanation, sometimes unfairly. Paperwork is frequently lost. And sometimes the Department of Education's loan contractors deny a borrower’s application because their circumstances have changed while waiting for the paperwork to be processed.

The result is that millions of distressed borrowers may fall further behind on their payments as their balances continue to grow.

John L. Culhane Jr., a partner at Ballard Spahr who represents financial institutions in their dealings with the CFPB, said the bureau can sue any company that it determines uses unfair, deceptive or abusive practices against borrowers. Loan servicers "should view [the bureau's report] as what the CFPB expects to see" when it comes to their behavior enrolling borrowers in income-based repayment plans, Culhane said.