So... here's my experience: Although my student loan is $20k less than I had believed, the realities of 2+ years being unemployed should make it unsurprising to anyone that my loan is now in default. This means that the probability of my receiving a Bachelors degree within the next two years is effectively zero.
Refusing defeat, I devised a WIN-WIN strategy for myself and students at DeVry University's campus in Downtown Oakland, CA:
1. Transfer the 275 units of completed coursework from Stanford University, where I was pursuing a double major in Electrical Engineering and German Studies. [I have multiple reasons for this exceptional and unusual decision.]
2. Complete the few courses necessary to receive my first Bachelors degree.
3. Complete the requirements for receiving my teaching credentials.
4a. Audit courses at DeVry offering suggestions to improve knowledge comprehension.
4b. Assist course instructors with students experiencing temporary learning difficulties with specific subject matter.
4c. Champion policy shifts where DeVry recommends behavioral changes that can improve student success, e.g. the addition of a complete multi-vitamin, multi-mineral supplement to a more balanced, healthy dietary regimen, an aspect of the self-discipline required for self-improvement via education.
I am willing to teach, which might qualify me for loan forgiveness, that certainly will NOT improve the bottom-line of Van Ru collections agency. I asked for assistance from the Dept of Education representative when I telephoned them, this week. "Sorry, you'll have to work out an arrangement with the collection agency," was the response.
What does this mean for my fellow student in the Statistics class, that I had started this past Monday? A simple visualization suggestion appeared to clarify her frustrated desire to successfully make graphical presentations of the statistical datasets for her class assignments. I was flattered, by how quickly she chose me to be her class partner for future assignments.
I'm going to call it the "Think Outside of the Box-and-Whiskers" method. I'll try to develop the concept more fully in a later post.
More on 'Repossessing Your Education' later..., I'm on a training seminar.
There is so much potential for positive change in the student loan programs these days. This is great news for borrowers and we hope Congress and the White House will continue to push for critical changes to benefit borrowers.
By Deanne Loonin
As much as things change, however, some things remain the same for the most financially distressed borrowers. There are good repayment options for many of these borrowers, but unfortunately they often do not get the information they need about their choices or if they do get information, it is often inaccurate or misleading.
The main barrier these borrowers face is that they are forced to deal with collection agencies when trying to resolve problems. It is rarely discussed, but it has become “business as usual” for the federal government, student loan guaranty agencies, and schools to contract with private collection agencies not only to collect, but also to resolve disputes and provide information to borrowers. In both the Federal Family Education Loan (FFEL) program and Direct Lending, private collection agencies are given authority to act on behalf of the loan holder in everything from rehabilitation to providing information about discharges to settling accounts. [Editor's Note: In the FFEL program, the government relies on guaranty agencies to try and prevent delinquent borrowers from going into default and collecting on defaulted loans. Guaranty agencies, however, often hire collection agencies to carry out at least some of these functions. To learn more about guaranty agencies, click here.]
This policy has been a disaster for financially distressed borrowers who are desperate for help. Dispute resolution is, obviously, not the primary mission of loan collection agencies. Debt collectors are not adequately trained to understand and administer the complex borrower rights available under the Higher Education Act, and the government does not provide sufficient oversight of their activities.
There are certainly times when a borrower is uncooperative or has exhausted all options. In those cases, the loan holder may have no choice but to focus on collection efforts. Yet there are many borrowers who want to find a solution, but are stymied because they can’t get past the rude, harassing, and often abusive behavior of a collection agent.
The “helpers” can never come from the collection industry. The Department of Education and other loan holders should acknowledge this fact and move on. The Education Department should terminate its contracts with private collection agencies and hire in-house staff to resolve disputes and collect debts. The Treasury Department made a similar move in March 2009 when it announced that the I.R.S. would not be renewing contracts with two private debt collection agencies working with the I.R.S Private Debt Collection program. The I.R.S determined that the work is best done by IRS employees who have more flexibility handling cases. They decided that this was particularly important in a time when so many taxpayers are facing economic hardship.
We understand there is a balance between the need to collect student loans and the need to assist borrowers. At this point, the balance is way off on the collection end. Whether it acknowledges it or not, the government has chosen high pressure collection over a resolution-based system -- to the detriment of financially distressed borrowers. As the White House and Congress look for ways to reform the federal student loan system, this is an area that is in desperate need of attention.
Deanne Loonin is a staff attorney with the National Consumer Law Center and the Director of the Center's Student Loan Borrower Assistance Project. She focuses on consumer credit issues generally and more specifically on student loans, credit counseling, and credit discrimination. She is the principal author of numerous publications, including "Too Small to Help: The Plight of Financially Distressed Private Student Loan Borrowers," and "Income-Based Repayment: Making it Work for Student Loan Borrowers." Her views are her own and do not necessarily reflect those of the New America Foundation.
Covering For-Profit Higher Education
For the past three years, Higher Ed Watch editor Stephen Burd has played a leading role in helping to expose abuses at some of the nation's largest for-profit higher education companies. Now with the proprietary school sector coming under increasing scrutiny from the Obama administration and a key U.S. Senate committee, here are some highlights of Burd's past coverage:
The Subprime Student Loan Racket, Washington Monthly, November/December 2009
Manufacturing Dissent at the Education Management Corporation, August 31, 2010
Higher Ed Watch Exclusive: Career College Association Strategy Memo Revealed, July 8, 2010
The Art of Spin Career-College Style, May 18, 2010
Students vs. Shareholders at Publicly Traded Career Colleges, March 3, 2010
At Long Last, Department of Education Puts the Interests of Students First, December 3, 2009
The Growing Student Debt Crisis at Career Colleges, September 10, 2009
More Scrutiny Needed of the University of Phoenix's Recruiting Practices, February 19, 2009
Subprime Mess Reaches Higher Ed, January 31, 2008
Easing Restrictions on Trade Schools is a Mistake, November 14, 2007
To read all of our past coverage on for-profit higher education, click here.
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