Obama Relies on Debt Collectors Profiting From Student Loan
Woe:
With $67 billion of student loans in default, the Education Department is
turning to an army of private debt-collection companies to put the squeeze on
borrowers. Working on commissions that totaled about $1 billion last year, these
government contractors face growing complaints that they are violating federal
laws by insisting on stiff payments, even when borrowers’ incomes make them
eligible for leniency.
‘Boiler Room’
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.
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.
Debt-collection companies helped the Education Department recover $11.3
billion in defaulted loans during the year ended Sept. 30. The agency projects
it will collect 85 cents on every dollar that defaults, factoring in collection
costs and the time-value of money.
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Welcome to the Church-Run Debtors' Prison
Last thing I remember, I was
Running for the door.
I had to find the passage back
To the place I was before.
"Relax, " said the night man,
"We are programmed to receive.
You can check-out any time you like,
But you can never leave! "
