In Prosecutors, Debt Collectors Find a Partner. A Love Letter from Your Student Loan Bill Collector. As I wandered around the crowd of NYU students at their rally protesting student debt at the end of February, I couldn’t believe the accumulated wealth they represented – for our industry.
It was lip-smacking. Economic Shock Wave: 1 in 7 Americans Pursued by Debt Collectors. Photo Credit: Shutterstock February 28, 2012 | Like this article?
Join our email list: Stay up to date with the latest headlines via email. I went through the Federal Reserve’s Quarterly Release on Household Debt and Credit released today, and there were two notable trends. The experience of debt collection can be chilling, as this 2007 ABC News report suggests. Consumers around the country have taped threatening phone calls from collectors who have called in the middle of the night, used abusive language and have threatened to have people fired from work or thrown in jail. One of the characteristics of the new social contract ushered in by both George W. There are now thousands of people legally jailed because they aren’t paying their bills, ie. debtor’s prisons have returned.
This is part of the new social contract. Student Loan Debt Collectors. According to a report from the National Consumer Law Center, “The U.S.
Department of Education (the Department) relies on an increasing number of private contractors to collect the approximately $67 billion in defaulted federal student loan debt.” Moreover, not only is the government on the hook for an increasing number of student loan defaults, but it is paying outside collection agencies huge sums of money to collect these debts: “The Department paid contractors almost $1 billion in commissions in 2011.” Thus instead of providing free public higher education, the federal government is lending students huge amounts of money that they can never pay back, and the result is that the feds have to hire expensive private contractors to collect the cash.
Taxpayers Fund $454,000 Pay for Collector Chasing Student Loans. Joshua Mandelman made $454,000 in a single year as a student-loan debt collector -- more than twice the pay of the U.S. secretary of education.
His boss, Richard Boyle, chief executive officer of Educational Credit Management Corp., received $1.1 million in 2010, including commuting expenses from his ranch in New Mexico. Five other managers each took home more than $400,000. ECMC, a Minnesota nonprofit group, owes its success to an 18-year-old agreement with the U.S. government. The company charges fees to borrowers and earns commissions from taxpayers -- totaling as much as 31 percent -- when it collects on defaulted student loans.
New York Law Grad File Class Action Against Student Loan Lenders For 'Deceiving" Student Borrowers. A law school graduate is suing his student loan lender and servicer over what he claims is a "scheme" to wring additional interest from student borrowers.
Justin Kuehn, 29, a graduate of George Washington University Law School, accuses Citibank, Discover and Discover's subsidiary, The Student Loan Corporation, of "deceiving" borrowers into believing that their monthly payments had been reduced because of an interest rate reduction when the payment toward the principal had just been lowered. He says he hopes his case becomes a class-action lawsuit. Kuehn, who practices commercial litigation in New York City with the law firm Brar Wexler Eagel and Squire, is requesting an injunction and unspecified damages from the defendants for systematically breaching contracts and violating business law. By the time Kuehn graduated from law school in 2007, he had four separate private graduate school loans. His monthly statement read, "The variable interest rate on your student loan has changed. Courthouse News Service. Student Loan Debt. Debt Collection Practices: When Hardball Tactics Go Too Far. Student Debt Is Stifling Home Sales.
Roshell Schenck has a Ph.D. in pharmacy and earns $125,000 a year.
Yet, because she has more than $110,000 in student loan debt, counselors have told her she can’t qualify for a mortgage. “I’d love to buy and can afford to buy,” says the 28-year-old graduate of Lake Erie College of Osteopathic Medicine in Erie, Pa. With lenders scrutinizing college loans more closely than in previous years, it’s almost impossible for borrowers such as Schenck to get approved for mortgages.
“My debt is crushing my chances of purchasing a home.” Last year outstanding education debt passed credit-card debt for the first time, according to Mark Kantrowitz, publisher of FinAid.org, a student loan website. According to a recent Federal Reserve study, only 9 percent of 29- to 34-year-olds got a first-time mortgage from 2009 to 2011, compared with 17 percent 10 years earlier. Palacios says first-time buyers are key to a housing recovery because they allow current owners to move into larger, pricier homes.
Obama Relies on Debt Collectors Profiting From Student Loan Woe. The debt collector on the other end of the phone gave Oswaldo Campos an ultimatum: Pay $219 a month toward his more than $20,000 in defaulted student loans, or Pioneer Credit Recovery, a contractor with the U.S.
Education Department, would confiscate his pay. Campos, disabled from liver disease, makes about $20,000 a year. “We’re not playing here,” Campos recalled the collector telling him in December. “You’re dealing with the federal government. Campos agreed to have the money deducted each month from his bank account, even though federal student-loan rules would let him pay less and become eligible for a plan -- approved by Congress and touted by President Barack Obama -- requiring him to lay out about $50 a month.