September 10, 2012
NY Times: Debt Collectors Cashing In on Student Loan Roundup
New York Times: Debt Collectors Cashing In on Student Loan Roundup:
At a protest last year at New York University, students called attention to their mounting debt by wearing T-shirts with the amount they owed scribbled across the front — $90,000, $75,000, $20,000.
On the sidelines was a business consultant for the debt collection industry with a different take. “I couldn’t believe the accumulated wealth they represent — for our industry,” the consultant, Jerry Ashton, wrote in a column for a trade publication, InsideARM.com. “It was lip-smacking.”
Though Mr. Ashton says his column was meant to be ironic, it nonetheless highlighted undeniable truths: many borrowers are struggling to pay off their student loans, and the debt collection industry is cashing in.
As the number of people taking out government-backed student loans has exploded, so has the number who have fallen at least 12 months behind in making payments -- about 5.9 million people nationwide, up about a third in the last five years.
In all, nearly one in every six borrowers with a loan balance is in default. The amount of defaulted loans -- $76 billion -- is greater than the yearly tuition bill for all students at public two- and four-year colleges and universities, according to a survey of state education officials.
To get the money back, the Department of Education last fiscal year paid more than $1.4 billion to collection agencies and other groups to hunt down defaulters.
Unlike private lenders, the federal government has extraordinary tools for collection that it has extended to the collection firms. [One student loan borrower] has already had two tax refunds seized, and other debtors have had their paychecks or Social Security payments garnisheed. Over all, the government recoups about 80 cents for every dollar that goes into default — an astounding rate, considering most lenders are lucky to recover 20 cents on the dollar on defaulted credit cards.
While the recovery rate is impressive, critics say it has left the government with little incentive to try to prevent defaults in the first place.
(Hat Tip: Ann Murphy, Mike Talbert.)
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The public’s UC Berkeley harvests family savings, Alumni money, taxes. Cal. is nationally ranked #1 public university total academic cost (resident) with Provost, Chancellor’s goal to ‘charge resident Californians higher tuition’. UC Berkeley tuition is rising faster than costs at other universities.
Cal ranked # 2 in faculty earning potential. Spending on salaries has increased 29% in last six years (Did you receive a 29% salary increase?). Believe it: Harvard College less costly
University of California negates the promise of equality of opportunity: access, affordability is farther and farther out of reach. Self-absorbed Chancellor Birgeneau, Provost Breslauer are outspoken for Cal. ‘charging residents much higher’ tuition.
Birgeneau ($450,000) Breslauer ($306,000) like to blame the politicians, since they stopped giving them their demanded funding. The ‘charge instate students higher tuition’ skyrocketed fees by an average 14% per year from 2006 to 2011-12 academic years. If Chancellor Provost had allowed fees to rise at the same rate of inflation over the past 10 years they would still be in reach of most middle income students. Breslauer Bergeneau increase disparities in higher education and defeat the promise of equality of opportunity.
Additional state tax funding must sunset. The sluggish economy and 10% unemployment devistate family savings. Simply asking for more taxes to fund expensive Cal.senior leadership, old inefficient higher education practices, excessive faculty staff compensation and burdensome bonuses, is not the answer.
UC Berkeley is to maximize access to the widest number of Californians at a reasonable cost. Birgeneau’s Breslauer’s ‘charge Californians higher tuition’ denies middle income families the transformative value of Cal.
The California dream: keep it alive and well. Fire (honorably retire) hapless Provost George W Breslauer. Birgeneau resigned.
Opinions? UC Board of Regents firstname.lastname@example.org Calif. State Senators, Assembly members.
Posted by: Milan Moravec | Sep 15, 2012 10:59:35 PM