End Draconian Collection Policies
Deanne Loonin is the director of the National Consumer Law Center’s Student Loan Borrower Assistance Project and the author of "Student Loan Law."
Updated May 12, 2012, 10:50 PM NY Times opinion
The government doles out student loans with little or no credit requirements and minimal accountability for participating schools. High-rate private loans exacerbate the burden. Yet there is no safety net or second chances for the huge numbers of students who do not complete their educations, leave with worthless certificates or are otherwise unable to repay their debts.
One thing we must do is rethink the draconian collection policies that leave vulnerable students with nowhere to turn. The government has extraordinary powers to collect federal student loans, far beyond those of most unsecured creditors. The government can garnish wages without a judgment, seize tax refunds (even earned income tax credits), seize portions of federal benefits like Social Security and deny eligibility for new education grants or loans. Even in bankruptcy, most student loans must be paid. Unlike any other type of debt, there is no time limit on collection.
The government has consistently favored school, lender and collection industry profits over the needs of struggling borrowers.
Debt-burdened borrowers must be given the opportunity for a fresh start, to finish school if they are able and to try to climb the economic ladder. Balancing collection for taxpayers and relief to borrowers can be difficult, but the government has consistently favored school, lender and collection industry profits over the needs of struggling borrowers.
It is time to eliminate the Social Security and EITC offset programs. Policymakers must also restore the statute of limitations for student loan collections and expand the safety net, including bringing back bankruptcy relief for financially distressed borrowers and giving federal student loan borrowers more than one chance to get out of default.
