Government Asks Student Loan Borrowers in Default to Pony Up

Student Loan Girl — Mon, 16 Feb 2009 22:02:00 GMT

Americans who have failed to repay their federal student loans may soon find themselves facing litigation, The National Law Journal reports (“Government Cracking Down on Unpaid Student Loans,” Feb. 13, 2009).

The U.S. Department of Justice has contracted with Teller, Levit & Silvertrust, P.C., a collections law firm that specializes in creditors’ rights and commercial litigation, to recover defaulted college loans — some taken out almost 30 years ago. The collections firm is expected to file as many as 20 new cases a week in early 2009 against borrowers who are delinquent on their federal student loans.

“The government pursues recovery of money it’s owed,” said Randall Samborn, a spokesman for the U.S. Attorney’s Office for the Northern District of Illinois, the federal court in which the cases were filed. “Unfortunately, student loan defaults are a voluminous source of litigation.”

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Debt Collection Agency Adding Hundreds of Jobs

Student Loan Girl — Tue, 18 Nov 2008 17:21:00 GMT

Premiere Credit of North America, a debt collection agency based in Indianapolis, is a bit of an anomaly in today’s down economy — it is thriving at a time when many businesses are cutting back their workforces and many debt collection agencies are losing money to cash-strapped consumers who can’t pay up.

Premiere Credit, which specializes in collecting unpaid student loans and government debt, has been performing so well that it’s looking to add nearly 300 employees to its 250-person staff, reports Erika Smith of The Indianapolis Star (“Debt Collector Premiere Credit to Expand, Add 300 Jobs,” Nov. 13, 2008).

To accommodate its growing business, Premiere Credit is also preparing for a $4 million expansion of its headquarters and is planning to open a second operations center (“Indianapolis Debt Collection Firm to Expand,” Chicago Tribune, Nov. 12, 2008).

The company, which manages more than 700,000 accounts valued at more than $1 billion, is scheduled to receive about $2.5 million in performance-based tax credits from the state, as well as up to $200,000 in training grants.

Student Loans Make Up 40% of Company’s Debt-Collection Business

Premiere Credit CEO David Hoeft attributes the company’s growth to its four-year contract with the U.S. Department of Education, which currently accounts for 40 percent of its business. While the number of delinquent college loans isn’t growing — the student loan default rate has remained steady at 5 percent over the last few years — Premiere has snagged a greater proportion of collection work, Hoeft said, and, with the help of an expansion to its Education Department contract, Premiere’s student loan debt collection business is expected to grow even more.

Debt collectors have a much easier time collecting government-backed student loans than unsecured debts like credit cards, which are not tied to an asset. Federal student loans can forcibly be repaid in a number of different ways and debt collectors have more legal leeway to track down debtors.

“There’s no statute of limitations on collection efforts. [Federal student loans], more often than not, can’t be discharged in a bankruptcy,” Smith writes. “Collection agents can garnish wages, tax refunds and Social Security payments, and they can access a federal database of new hires that makes it easier to find employed people who can pay.”

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Student Loan Blog : unpaid student loans

Government Asks Student Loan Borrowers in Default to Pony Up

Debt Collection Agency Adding Hundreds of Jobs