Dept. of Education uses shady debt collectors to hunt down student borrowers

[marmar]

We know that over 20% of student borrowers are in default thanks to a recent report from the New York Fed.

But a chilling new report from Bloomberg now details exactly what those defaulting borrowers are facing--at the hands of the government.

Education Department contracts -- featuring commissions of as much as 20 percent of recoveries -- encourage collectors to insist on high payments. Former debt collectors said they worked in a “boiler-room” environment, where they could earn bonuses of thousands of dollars a month, restaurant gift cards and even trips to foreign resorts if they collected enough from borrowers.

In failing health, after contracting hepatitis from a blood transfusion, Campos pleaded with Pioneer, owned by SLM Corp. (SLM), the nation’s largest student-loan company better known as Sallie Mae. He left a $40,000-a-year job at the Massachusetts health department when he got too sick to work and waited for a liver transplant. The 52-year-old former busboy, a naturalized U.S. citizen from El Salvador, earned bachelor’s and master’s degrees in the 1990s from Cambridge College in Massachusetts.

These are private, for-profit debt collectors, pocketing a chunk of change from the Department of Education to harass, hound, and browbeat student borrowers into forking over the cash, ASAP. Bloomberg notes, too, that several of them have gotten in trouble for their slightly-less-than-ethical business practices: "Within the past 17 months, three companies working for the Education Department -- including one that is majority owned by JPMorgan Chase & Co. (JPM)’s private-equity arm -- settled federal or state allegations of abusive debt collections." .....................(more)

The complete piece is at: http://www.alternet.org/newsandviews/article/872887/obama%27s_dept._of_education_using_shady_debt_collectors_to_hunt_down_student_borrowers/

[freshwest]

1. Disgraceful, inhumane. K & R for action needed. Thanks, marmar.

[LiberalFighter]

2. I wonder what other shady crap Arne Duncan pushes?

[dixiegrrrrl]

3. Did you know that the banks are securitizing student loans?

Just as they did mortgages?

And Citibank suddenly stopped trying to collect non-performing loans, all of a sudden.
Turns out the paperwork trail for the student debt is every bit as messed up as the mortgage paperwork trail.

Which means, the chances are VERY high that the boiler room debt collectors do not have proper paperwork to support their claim on the loans.

The FIRST thing anyone should do, after a debt demand is made, is to tell the collector to send proof of the debt.
By law, they have to when asked to, and they have to STOP bothering you until you get that proof.