This is the second of a weeklong series about student loan debt.
Come to http://www.studentloanjustice.org to find out more.
The federal student loan system has become fundamentally predatory due to the Congressional removal of standard consumer protections, combined with congressionally sanctioned collection powers that are stronger than those associated with all other loan instruments in our nation's history. These actions by Congress have, predictably, created an inherently predatory, state-sponsored lending and collection system where the motivations of the various functional elements of the system are fatally misdirected. The system that has resulted promotes inefficiency in administration, unchecked inflation, bureaucratic malaise and conflicted oversight. Moreover, the resulting system promotes needless and expensive complexity and redundancies, fails to encourage academic excellence, and ultimately, promotes delinquency and default.
Importantly: this problem exists across both Direct Loan (DL), and Federal Family Education Loan (FFEL) Programs. In the public interest, the consumer protections that were removed by Congress must be restored by Congress at the earliest opportunity. By returning these consumer protections, the motivations of the system's functional elements will be reoriented such that most, if not all of the deficiencies mentioned above will go away over time.
While this system has been extremely lucrative for a few individuals, it causes massive harm not only to borrowers and their families, but also to non-borrowing students and their families, due to the dramatic inflation that the system promotes. The nation suffers a massive cost due to the large amount of wealth trapped in this system, the quality of the education received by the citizens, and the public's opportunity cost associated with the materialistic career paths that citizens are forced into at the expense of public interest work, and entrepreneurship.
Here is just one of millions of examples of the Harm done to decent citizens by this predatory lending system. Come to StudentLoanJustice.Org to find out more.
Patricia
From 1989 to 1992, I borrowed a total of $22,625. By about 1994, after paying approximately $3,643.81 to AFSA Data Corporation towards those loans, my loans were placed in default. In 1995, I was contacted by an employee of Diversified Collection Services, Inc., named Jane Cook,
who told me that she could consolidate my loans and reduce the overall interest rate on my loans at no charge, and there would be no fees whatsoever to do that. My balance at that time, according to Diversified Collection Services, Inc., was $25,740.37. I agreed, and signed the
paperwork that she mailed to me in May. In September, I received a statement by Southwest Student Services Corporation, the company that had purchased the loan, which showed a balance of $30,201.89. I contacted Southwest Student Services Corporation immediately, and was told that Diversified Collection Services, Inc., had charged a collection fee to consolidate my loan, and sent me a letter stating that. I asked an attorney to contact Southwest Student Services Corporation to offer $25,000 to settle the dept, but they refused, and demanded the entire
$30,201.89. Since then, I have been contacted by numerous collection agencies, and each time I explain in writing that I do no owe the amount they are demanding. Each time another collection agency becomesinvolved, they apparently tack on a fee.
According to the U.S. Department of Education, as of January 2, 2009, I owe $96,582.39. If I overpay on my taxes (I make quarterly payments), they keep it. They also kept my $600 stimulus check last year. I have written to the U.S. Department of Education on numerous occasions, even to the Office of Ombudsman, but they still insist I owe that amount. I have provided copies of correspondence, copies of the loans I have received, a printout showing the loans I received from the school, a copy of the loan consolidation agreement, a letter from Diversified Collection Services, Inc., that states that any collection costs that have been added to my loans will be waived, the letter from Southwest Student Services Corporation that states that I was charged a consolidation fee by Diversified Collection Services, and even the printout from the National Student Loan Data System that shows that I borrowed $22,625. I have even asked to attend hearings, but they have refused to allow me to attend. If there is anything you can do to help resolve this issue, I would be extremely grateful. Thank you