Obama’s Ed Department Looks the Other Way.
Excerpt from BLOOMBERG (March 25, 2012) in an article titled “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. You have no other options.”
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 Obama — requiring him to lay out about $50 a month. To satisfy Pioneer, Campos borrowed from friends, cut meat from his diet and stopped buying gas to drive his 82-year-old mother to doctor’s visits for her Parkinson’s Disease.”
Senator Elizabeth Warren has said that Student Loan collectors have powers that would make mobsters envious [Is there a distinction?].
Now a homeowner can walk away from their loans, as can a farmer, or a businessman. Foreign governments routinely borrow American money in reliance on subsequent debt cancellation. Heck, AIG, the insurance giant, told the Feds that they wouldn’t be able to repay the $ 500 BILLION they were borrowing BEFORE getting the loan. But not students. There is no statute of limitation on the collection of student loans (murder is the only other such “offense” that is never limited by the passage of time). Student loans cannot be discharged in bankruptcy. And, compared to a student debt collector, the IRS is an agency of angels.
Congress has provided several helpful options but the Education Department relies upon its contracts with 23 debt collection companies for contact with student debtors and the collectors don’t tell the debtors that they have alternatives. You see, the companies get CASH, and their employees get BONUSES, when debtors are run through the wringer. The Companies don’t get anything when a debtor is routed to an income-based repayment plan. Needless to say the companies don’t see any reason to be helpful.
President Obama feels their pain and he wishes things could be better but he doesn’t use the power he has to make things better. Instead he maintains a system that enslaves millions of debtors while enriching his buddies in Money Biz.