US Debt Collection Agencies Salivating Over Trillion Dollars in Student Debt

Picture: F.W. Murnau (PD)

Unless you owe money yourself, it  may be hard to understand how quickly having outstanding student loan debt can become an almost unbearable situation. College is expensive, and many young people come to school with a fatal combination of financial naivete and unrealistic expectations of what the job market has to offer a college graduate.

There’s over a trillion dollars in US student loan debt, and it’s a growing industry. Families can on occasion escape from their commercial credit debt: They can foreclose on a home. They can file bankruptcy. Student loan debt is forever, a never-ending all-you-can-bleed buffet for those companies fortunate enough to land contracts from the government.

From RT:

Most US college students hope to land a good job with a high salary after graduation. But for some the reality is very different. Many find themselves faced with insurmountable debt – and a loan industry that’s happy to cash in on their misfortune.

­As the number of people taking out government-backed student loans has soared, so has the number of borrowers who have fallen behind in making payments.

Around 5.9 million people nationwide have fallen at least 12 months behind in their payments. This number has grown by a third in the last five years, according to a State Higher Education Finance survey.

Many who can’t repay their loans feel they have no choice but to default. It’s a decision that can be disastrous – ruining a borrower’s credit and increasing the amount they owe. It can also result in penalties of up to 25 per cent of the balance.

Despite the scary consequences, young adults across America have chosen to default on their loans. And that decision has resulted in a cat-and-mouse game with the government.

“I keep changing my phone number. In a year, this is probably my fourth phone number,” former student Amanda Cordeiro told the New York Times.

Cordeiro receives up to seven calls a day from debt collectors attempting to recover her $55,000 in overdue student loans. But phone calls are just the beginning.

Since the federal government imposes no statute of limitations for collecting loan repayments, escaping the debt is nearly impossible.

“You are going to pay it, or you are going to die with it,” said John Ulzheimer, president of consumer education at

As America’s poor economy causes companies and small businesses to close their doors, the debt collection industry is booming.

Conserve, a debt collection agency in New York, expects to double its payroll in the next three years.

“There is great opportunity,” the company’s president and founder Mark E. Davitt, told the New York Times.

Read more here.


12 Comments on "US Debt Collection Agencies Salivating Over Trillion Dollars in Student Debt"

  1. I’d advise any young person contemplating college to avoid the temptation, unless they had a full scholarship.

    Attend a trade school instead. Learn to do something like repair cars or wire a house. If you have time and resources, learn TWO trades.

    Even if you can’t find a “real” job after you learn a trade, you can set up your own underground business. Maybe you won’t have two Porsches in the garage, but you won’t starve.

  2. When this real world is falling apart, neoclassical economists keep teaching students their fantasies and charging huge money for it.
    Students, do you really believe that studying neoclassical crap you can find a job with these “knowledge”?

  3. Simiantongue | Sep 10, 2012 at 5:37 am |

    Do you ever wonder why universities aren’t just publicly funded? Do you ever get the sneaking suspicion that it’s become a kind of scam?

    • Nirvanasteve | Sep 10, 2012 at 5:00 pm |

      Yes. But it’s an absolute shame that this ‘scam’ is integral for those of us who wish for professions which require a college degree. What else can we do?

      • Simiantongue | Sep 11, 2012 at 2:32 pm |

         “What else can we do?”

        Um, publicly fund universities?

        I’m wondering at what point did the primary purpose of universities cease being educational institutions, instead they’ve become the debt mills of banking cartels. 

    • Jin The Ninja | Sep 11, 2012 at 11:53 am |

      i have a sneaking suspicion even ‘our’ publically funded universities in the north have a for-profit attitude towards education. otherwise 30% of students wouldn’t have crippling student debt.

      • Simiantongue | Sep 12, 2012 at 1:27 am |

         That may be. More and more institutions of higher learning bend to the demands of corporate community. Instead of being centers of higher learning they’re tasked as labor and debt mills for business. Universities feel increasing pressure to put out “useful” graduates.  

        What’s interesting is that language can often clue us in as to frame of mind. Increasingly students are referred to as customers and university presidents as CEO’s. This change in frame of mind to a consumer model translates to real world expectations in the interrelationships between students and university. You don’t treat a customer the same way you treat a student. You have demands and expectations of students to meet criteria. While you pander to customers. As long as a customer is paying their way what does it matter whether they can make a grade or not? What does it matter if they are successful or not, you’ve got their money and that’s what the priority is made in that mindset.

        This consumer model of thinking is reflective of the commercialism of society as a whole. Academia doesn’t exist in a bubble. It’s always existed in some form in schools, like athletics for example. But it was limited in scope. Universities still had a “soul”. Professors were dedicated to teaching, students to learning and researchers to intellectual pursuits. Now a consumerist mindset has pervaded even non profit institutions, this mindset I think could be summed up as the corporate agenda. A singular question is asked by students, professors and researchers alike, where is the profit motive in what I’m doing?

        This is made the overriding priority for various reasons. To ensure the financial success to actors outside the walls of educational institutions. Their priorities are the ones that are increasingly needed to be fulfill first and foremost. They’re not interested in a professors academic excellence, as long as they can keep the debt and labor mill churning out customers who can also meet a minimum criteria. As long as researchers churn out discoveries which corporations can bring to market.

        I had more to this but look it’s too long as it is and I feel that dreariness of sleep coming on too. I’ll start to become even more incoherent. So I’ll sum up by saying,. Yeah I think you’re right. But perhaps a move toward publicly funded universities would allow us more control over the influence companies have. Perhaps not.

  4. Jesus Borg | Sep 10, 2012 at 11:08 am |

    Does anyone know what the consequences of default is, besides just having bad credit and getting your wages garnished?

    • US will become property of China? 

    • Just a guy. | Sep 10, 2012 at 12:31 pm |

      My sister-in-law received student loans for college, which she promptly dropped out of sometime in 2001-2002.  It took nearly 9 or 10 years for it to completely catch up with her, after she had gotten married and squeezed out four puppies.

      Because of the 4 kids aspect, their tax return was usually around 5 grand, give or take.  They went to H&R Block (bad idea in my opinion) and they thought that they were going to be getting this large sum of cash, and already started making plans to spend it.  Ten days after the supposed “Rapid Refund” they still didn’t have any money and H&R Block didn’t have a clue why.  Another five days go by before they are finally contacted and told that the IRS was claiming the entire refund to repay the money she owed for her defaulted loans.

      Fast forward a few years, a foreclosed house, and she gets the idea to go back to school for her Massage Therapy license.  Even with the foreclosure on her credit history (and her husband has worse credit than that) she’s approved for 15 grand in student loans for the Massage Therapy coarse.

      After she finished that, she was given 6 months to start making payments on her student loans.  Five and a half months later she can’t find a job as a Massage Therapist (go figure), and she decides that in order to keep from paying back the loans, or having their tax return taken again for many years, and possible wage garnishing, she goes back to the same school for Business Management and goes in debt another 17 grand.

      Once again she dropped out but it hasn’t caught up with her yet.

      I know, a long response, but after seeing this with my own eyes I don’t think the bad credit thing really matters too much anymore.  She had bad credit when she was approved for the loans, her credit history (and her husband if they checked, I’m not sure) would have showed that they both have a habit of not paying debts, let alone bills.  Still, besides the garnishing and bad credit, I don’t know if anything else will ever happen besides them being in debt forever.

  5. Let the cancer consume itself.  There must be a general strike against repayment of all student loan debt until the laws are rewritten to be fair.

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