Student Loan Debt Collector Gets Paid $454,000 In Taxpayer Money

Debt collectors may have a worse reputation in the eyes of the public than members of Congress, ambulance-chasing lawyers and even sleazy tabloid journalists. And some recent headlines won't improve their standing anytime soon.

The earnings of some student-loan debt collectors raised eyebrows when it was revealed this week that some of them make over $450,000, more than twice the pay of the U.S. Secretary of Education. Seven employees at Educational Credit Management, a Minnesota nonprofit group that works with the government to collect on loans in default, earned more than $400,000 through commissions up to 31 percent, reports Bloomberg News. ECM, whose CEO Richard Boyle earned $1.1 million in 2010, is one of 32 groups that oversee student loans for the government.

One of the debtors contacted by ECM is Susan Raposa, a special-education teacher in Massachusetts, who is struggling to pay off her $47,000 student loan balance. "I absolutely want to pay my fair share," Raposa tells Bloomberg News. "But I'm going to live poorer than people on welfare."

With total student loan debt in the country recently soaring above $1 trillion, the debt-collection industry has come under fierce scrutiny. Last week, Senate Republicans blocked a bill that would have frozen student loan interest rates before they are set to double on July 1 due to their objections to tax increases proposed to offset the cost.

Complaints against student loan debt collectors are increasing, according to a report by the National Consumer Law Center. Last year, the number of complaints (1,406) received by the Department of Education increased by 41% over 2010.

And the NCLC faulted the Department of Education for failing to provide effective oversight of collectors, many of which do not have their own process for responding to complaints. The agency has "abdicated its responsibility to uphold the borrower protections" by creating financial incentives for collectors that encourage high collections at the expense of debtors.

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• 11. Comcast

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• 9. JPMorgan Chase

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• 1. AIG

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Comments

[Mike HeXt]

01:13 PM on 06/11/2012

Trace these also back to the for-profit colleges... you see almost the full picture of the subprime scam that has been going on in tandem with the housing market scams.

[JD Painterguy]

02:51 PM on 05/20/2012

The Debt Collector Company, called GC Services, charged forty thousand dollars in collection costs, or rather 18.25 percent of my student loan principal balance.

That was in 2009, and it made my student loan debt go from 220K to 260K in one fell swoop.

That was when the loan was placed out of reach and beyond any hope of my ever paying it off.

GC Services ought to be investigated. They could be in bed with Sallie Mae.

www.esqpainting.blogspot.com

[Iwasderelict]

08:13 PM on 05/19/2012

So that's where my college loan interest payments go to....

[hoapres]

01:29 PM on 05/19/2012

The book is out of print as it is from 1971 by Caroline Bird "The Case Against College". The thesis was that most jobs don't require college and that if everybody gets a college degree then college is nothing special.

Very few just want to come out and say that college from at least a finanical point of view is likely to be a waste of money.

Unless you are in learning for the sake of learning itself or perhaps the few fields which require college for professional licensure e.g. attorney or doctor then you are not likely to recoup the investment.

Since college is no longer special, it is NOW becoming VERY IMPORTANT to graduate from the BEST possible school in your field.

The job market is SO COMPETITIVE even in the so called HOT FIELDS that unless you are a graduate of a TOP 10 school then your chances of getting an entry level job are remote.

I have been involved in many hiring decisions for entry level software engineers and IT people in Silicon Valley and contrary to popular belief have NO TROUBLE in finding QUALIFIED applicants for jobs.

I see UC Berkeley, Stanford, MIT, then you get an interview. If I don't see a TOP 10 school then you don't. If you are applying for a software engineering job then contribute to an open source project along with getting practical work experience before you graduate.

We don't need more college graduates.

We need more jobs.

[moevaughn]

05:18 PM on 05/19/2012

The Bird book sounds like a good read. Thanks!

[PAsteelers]

09:30 PM on 05/19/2012

No it is not a good read. Its a thinly disguished tpublican idea to keep whole generation in blue collar jobs so they will not expect to earn a little more than mininium wage.

[PAsteelers]

09:29 PM on 05/19/2012

THis the repugs argument against a good college education. THey have been trying to push this crappy idea for years. THe fact is that they just want the electorate uneducated because the ignorant tend to vote repub.

[Cherokee Charlie]

02:13 PM on 05/21/2012

"Keep the people ignorant so they will work in our textile mills"- ignorance is the greatest weapon the GOP can wield.

[moevaughn]

10:52 AM on 05/19/2012

Attn: ECM
Hire everyone with college degrees paying off their student loan debt. Of course, since we all would then be able to pay off our debts, we would be putting ourselves out of our own jobs. (It would be worth it though.)

[amgnme]

05:41 PM on 05/19/2012

On the surface that makes sense and I would have agreed with you when I was struggling to pay off my own student loans. But now, after my experience, I am sacrificing a lot and selling off personal property so that my daughter will not have student loans when she graduates. It wouldn't be fair if she was denied a job just because she doesn't have student loans to pay off.

[moevaughn]

07:46 PM on 05/19/2012

Everyone should have a good job, that's for sure. Actually the student debt burden could be solved just by doing away with compounding interest. Everyone would pay back what they actually borrowed plus a reasonable, simple interest rate. Instead many are paying double or triple (and more) what they were originally loaned. I hope that wasn't the case with your own student loans.

[Mikecheryl]

06:36 PM on 05/18/2012

AMERICANS SHOULD STOP PAYING TAXES, UNTIL WASHINGTON AND/OR OUR TOWNS THAT WE ALL LIVE IN LEARNS HOW TO MANAGE OUR HARD EARNED MONEY!

[rmayynrd]

06:23 PM on 05/18/2012

students should apply to debt collector jobs

[Mike HeXt]

01:11 PM on 06/11/2012

I did. It was scummy and I watched the collection laws get broken often by fellow collectors.

I left after a few months as one of the top collectors being honest.

[Danny Adams]

05:51 PM on 05/18/2012

Oh yes, I remember ECM. When they took over my student loan a few years ago I discovered with my first bill that they'd hit me with a 30% fee--30% of what had been my loan total at that point, I mean. That charge wiped out all the payments I'd made in the six years I had the loan.

[Pierre99]

03:52 PM on 05/18/2012

TEXT CORRECTION:

CHANGE: Debt collectors may have a worse reputation in the eyes of the public than members of Congress, ambulance-chasing lawyers and even sleazy tabloid journalists. And some recent headlines won't improve their standing anytime soon.

TO: Members of Congress and even the sleazy White House errand boys and girls who operate this site for the benefit of the President may have a worse reputation in the eyes of the public than ambulance-chasing lawyers. And some recent headlines won't improve their standing anytime soon.

[Danny Adams]

05:53 PM on 05/18/2012

I have to say I'm impressed how smooth the handovers of media outlets shilling for presidents goes when the Oval Office changes hands. Fox shilling for Bush, then HuffPo for Obama with barely any transitional pains. I'll be interested to see how quick the White House mouthpiece changes back to Fox if a Republican wins in November.

[hoapres]

02:43 PM on 05/18/2012

You will see ITT Tech, Devry University, University of Phoenix, etc. offer a 4 year degree in debt collection to prepare students to enter "the booming debt collection business".

[noavailusernames]

02:31 PM on 05/18/2012

They make more than the Sec. of Education. So? They are getting taxpayer money back. Ungrateful Americans think taxpayer money falls out of the sky and debts to taxpayers are meaningless. Student performance AFTER the Dept. of Education was created is WORSE. There should be no Secretary or department of education.

[Caryn Banker]

08:33 PM on 05/18/2012

Most student loans are from private lenders, (banks) but 'guaranteed' by the govt. Which only means that legally your loans are like taxes, they cannot be discharged in bankruptcy and your wages can be garnished to collect. This is different from other loans and credit card debt. And the student loans, like housing loans were and are bundled and sold repeatedly to other banks and investors.

So most of the time, it's not 'taxpayer' money. It's investor money; ultimately, it's often the same people, if you have retirement funds or other financial savings/investment it's probably wrapped up in this, but in the private sector.

[hoapres]

09:15 PM on 05/18/2012

The new loans are straight from the Feds. New Private student loans is almost nonexistent.

[snjpage1]

02:28 PM on 05/18/2012

In a lot of other countries if a high school student gets a certain grade on what is similar to the SAT's the government pays for them to go to college.

[joyceches]

02:16 PM on 05/18/2012

test

[montgomeryjhn]

02:15 PM on 05/18/2012

That's like bounty Hunter

[MiMi LLawsonn]

01:42 PM on 05/18/2012

This is UNREAL.....these debt collectors really get this kind of money?????????????????????
Something is very WRONG about this entire article....I worked for Wendover Financial Services, an EDS company....I had carpal tunnel problems with both hands...I filed a workers compensation claim...I had my first left hand surgery on 12/13/2005 and was laid off on 12/15/2005....2 days after I had surgery....the company provided me a severance package but I did not get my disability benefits and the company eventually denied the worker's compensation claim as well...(WRONGFULLY DENIED IT - I might add) it was appealed and it went to the NC Supreme Court...which refused to hear the case. http://ireport.cnn.com/docs/DOC-647077....I got SHAFTED by the company....HP bought the company out in 2008....so I wonder just how many more people will get screwed by this company?

[DA5050]

02:20 PM on 05/18/2012

Sorry to hear that.They are way out of hand.Workers are considered expendable in most cases and have to pay out the ying yang for legal representation that is usually decided before you ever get to court.Serfdom,alive and well in the 21st century,who'd a thunk it.