Getting Rid of the College Loan Repo Man
Our current system for collecting student loans makes no distinction between deadbeats who cheat and the much greater numbers of people who just don’t have the money to repay. As predatory debt collection agencies ruin the lives of more and more Americans, we are ignoring an easy and fair solution.
Gregory McNeil, 49, is living out his days at a veterans home in Grand Rapids, Michigan. His room is so cramped he can barely fit his twin bed, dresser, and the computer desk he had to sneak in because it was against regulations. His only income comes from the Social Security disability payments he began receiving last year after undergoing quadruple-bypass heart surgery. These payments go directly to the veterans home, which then gives him $100a month for his expenses. McNeil fears that if he leaves the home, the government will seize a portion of his Social Security to pay off the federal student loan he defaulted on two decades ago. “This veterans home may become my financial prison,” he says. “And this is no way to live.”
McNeil’s fears are well grounded. For years, private collection companies acting under contract with the U.S. Department of Education have hounded him. The government garnisheed his wages for a time, and threatened to sue him. He says he always wanted to repay, but has never had the income he would need. Meanwhile, interest continues to accrue on his debt, and has already tripled the amount he owes.
McNeil’s troubles date back to the late 1980s, when, after leaving the Navy, he decided to go back to school to study electronics. He borrowed about $15,000 in federal student loans to attend a local branch of National Education Centers, a for-profit trade school chain that claimed an exceptional track record in helping students find employment. He soon realized, however, that the training was much less than advertised. And he discovered that the company—which later shut down, due in part to a high default rate among its former students that threatened its access to federal funding—would do little to help him find a job. “They considered you placed if you were flipping burgers part time at McDonald’s,” he says.