What's happening is that lenders are saying "we'll pay back your loan and offer you a lesser interest rate". So they pay the government the 200,000 you owe at 6

What's happening is that lenders are saying "we'll pay back your loan and offer you a lesser interest rate". So they pay the government the 200,000 you owe at 6.9% APR and then send you a bill for the 200,000 with a 4.4% APR. The USG loses all the interest since everything is paid back immediately and these lenders pocket your 4.4% APR. It seems like a win win win for everyone since the government gets paid back everything, the student has a lower interest rate, and the lender pockets the 4.4% annually but when there are so many lenders doing this it essentially cheats the USG out of all interest they'd earn on these loans.