Debt collection is intensifying for student debtors as the U.S. Department of Education ramps up its collection efforts
The Education Department has contracted a copious amount of debt-collection companies in response to the $67 billion of student loans in default, according to Bloomberg.
The government contracted debt collection agencies and helped the Education Department recover $11.3 billion last year. Government contracts and Education Department data show that debt collectors made about $1 billion in commissions for the recovered $11.3 billion.
Oswaldo Campos, who is disabled from liver disease, was told if he didn’t pay $219 a month toward his $20,000 in defaulted student loans then Pioneer Credit Recovery would confiscate his pay.
“I know I owe this money and I want to pay it back — I just can’t,” Campos told Bloomberg with tears in his eyes.
Not even bankruptcy can save a debtor from student loans, which means they are more difficult to eliminate than credit card debt or delinquent mortgage. Because the government is involved, a borrower can have their tax refunds, Social Security payments and paychecks confiscated as well.
“Student-loan debt collectors have power that would make a mobster envious,” Harvard Law Professor Elizabeth Warren, who helped establish the Consumer Financial Protection Bureau and is now running for a U.S. Senate seat from Massachusetts, told Bloomberg.
Debt collectors received almost 181,000 complaints last year, which has led to intervention from the FTC, which is cracking down on agencies that aren’t obeying the rules.
Three companies that work for the Education Department settled federal and state allegations of abusive collections, according to Bloomberg.
Consumers need to understand their state's statutes governing debt collectors’ ability to sue over old debts, Reilly Dolan of the FTC told ABC News.
- New allegation: John Swallow asked for $120K...
- Forbes article links LDS missionary service...
- Netflix documentary 'Mitt' now has a trailer
- Fourth Street Clinic hires its first staff...
- UTA focusing on rider experience, overall...
- 'Nutcrackers' greet liquor store customers...
- If I got to pick the gifts in ‘The 12...
- Maria O'Mara named new University of Utah...
- Minimum wage debate rages on 24
- Netflix documentary 'Mitt' now has a... 21
- Forbes article links LDS missionary... 19
- New allegation: John Swallow asked for... 19
- Holiday travelers will find gas prices... 4
- UTA focusing on rider experience,... 4
- Federal workers' pensions targeted in... 2
- Has the Fed been fueling bubbles? You... 2