Student loan collectors turn graduation to nightmare
NKW OKI.I ANS (AH Linda
was the first member of her family
to graduate from college Thu diplo
ma, shu thought. would hu hur lick
ut to the American dream: a Iwtter
futuru than hi>r purvnts had
Along the way, something got lost in the translation
Linda has a degree — and a $20,000 student loan to
repay She doesn't have a job She does have bill collet
tors ( ailing, though. Often.
She say* she's willing to pay. but there's one problem
"What," she asks, "am I supposed to pay with?"
Facing a tight job market, many unemployed college
and trade school students across the country are asking
that same question as they run into hard-nosed collectors
with the monthly bills for their student loans
President Clinton has proposed that the federal gov
ernment loan money directly to students. He would
allow them to pay off the loans after graduation through
national service or a payroll deduction. The adminis
tration says the change would save $1 billion for stu
dents and taxpayers.
Hut there ore thousands ol delinquent loans now
■ aught in the system of bonks and middlemen.
In the case of Linda, who agr«*ed to tell her story only
if her last name was not disclosed, the loan has been
turned over to a professional bill collector in California.
Covernment-bni ked student loans ore issued by various
schools, agencies and financial institutions, often sold to
others and wind up in the hands of collection agencies
Linda's ogem y has taken a tough stand If you go 90
days without making a payment or arranging an alternate
plan, you'll wind up in court
The Louisiana attorney general's offu e currently is
handling about H.2IK) delinquent accounts valued at over
$14 million.
' If we don't collect this money, there won't be any
money to loan to other students." said Chrissie Weath
erford. collie lions coordinator for the office Figures on
M
him many loans art! awarded and how many art* in
default are virtually impossible to compile bet ause ol
the hodgepodge of schools, government agent io«. and
hanks involvetl
But there are strong indications that the ret ent reces
sion has resulted in more defaults The federal education
department said it t.ould not draw any such com lusion
from its data, but others say there's no doubt hard eco
nomit times have driven up the number
"The common profile of a defaulter is a person who
has dropped out of school and dtx»s not have a job.” said
Susan Conner, a spokeswoman for the Indianapolis
ttnsed United Student Aitl Funds, a nonprofit group that
guarantees some loans in Louisiana and other states.
Linda fits half that profile
Like many poor students, she had to get financial help
Hut instead of the job that would turn her life around,
there's !>een nothing hut a steady procession of part-time,
low paying positions after long periods of unemploy
ment since she graduated about three years ago
She still lives at home with her two brothers, both in
high school, and her divert ed mother, who makes $50
a week t leaning a house
Now. there's the collection agency. It calls regularly.
The message, she says, is "pay up now." Because Linda
and her family have moved seven times since her par
ents divorced three years ago, the agency t ails her 80
year-old grandmother
Linda iiosn't given up. At least five resumes go out a
week She's been on K>b-hunting trips to Georgia and Cal
ifornia
"There are so many people trying for a job. There are
50 to 75 people for each |i)b," she said. "You're just a
number."
The problem is not limited to Louisiana, which has
suffered from high unemployment since oil prices i ol
lapsed in the 1980s Offit nils in several other states also
say the recession has driven up the number of defaults.
A 1092 report by the Pennsylvania Higher Education
Assistance Agency estimated the rw ession "added about
42 percent to what would have been our 'normal' default
volume.*'
"I think it's safe to sav enough experts have looked at
the figures and come to the conclusion that in California,
it's u contributing factor," said Dan Parker of the (iali
forma Student Aid Commission
Joe Clayton, the spokesman for the Massachusetts
Higher Education Assistance Corp., agreed.
And although total defaults In New York dropped
from $250 million in 1091 to $218 million in 1992. the
recession still affected the ability of debtors to repay,
said Denyce Duncan, spokeswoman for the state Higher
Education Services Corp
Louisiana's attorney general is giving defaulters a
choice Either make arrangements to pay or go to court.
Those who wind up in court face garnishment of wages,
automobile seizures and loss of income tax refund
che< ks. plus black marks on their credit ratings and the
loss of professional licenses issued hy the state.
Weatherford said the attorney general's office is will
ing to work with debtors, hut that it is up to them to
make the initial contact. Those who are sued have either
ignored warnings or failed to follow through with repay
ment agreements, she said.
"We have some people who owe us thousands, but
they're only paying $50 a month." Weatherford said.
"We know that's all they can pay. You have to be flexi
ble."
That's what Linda wants to do.
"I would pay these people if they would give me a
plan that I could afford. I want them to understand that
I want to pay the loan." she said.
Hut she needs a job. "I know there has to be a way out
of this.” she said. "I'm not going to give up."
It is a far cry from what she expected.
"My parents really believed that if you got a college
degree, you'd have it made." she said. "I believed that,
too."
Clinton’s ‘Summer of Service’ program begins for first 1,500
SAN FRANCISCO (AIM
The pay isn't great, hut Alton
Man ello expet Is to gut more sut
isfm lion helping immunize poor
i hildrvn than delivering pizza
Mari el lo is one of l.Stltl
young men and women going
through lx Kit i amp st\ le training
tins week for President (Hinton's
eight-week "Summer of Ser
vile" program. Clinton hopes it
eventually will expand into a
year-round national lommunity
servii.e program, with I CM) times
as many partii ipanls
"Summer of Servo e" offers
.$4 Jri an hour and Si.000 for
st hoot to those who w ill help
poor t hildren across the coun
try.
"I could bo earning twice as
much delivering pizzas this
summer." said Marcello. 20. of
l.cis Angeles. who will help
immunize < hildren at hospitals
in the city s low income, large
ly muioritv South Central dis
trict.
Kut. Marcello added, "(.row
ing up. seeing all these people in
gangs and going to (ail I'd like
to help them, help them lead
healthier lives, maybe make a
difference
Koliert Toilhet said he'll he
happv to he paid at all
"Volunteer work you just
i ail t afford to do it," said Tell
het. i‘l. a UtmersilN of Georgia
student who will help set up
presi hool programs for under
privileged t hildren in Atlanta.
"I like doing this, hut I'm not
made of monov
The group, from nine stales
gathered at Treasure Island
Naval Base in San Krani isco
Ba> Cool, gusty winds jostled
them as thin spent Monday
morning playing games
designed to leach teamwork and
leadership skills
laughter, cheers and applause
is hoed around the grassy field
Some skipped rope together
Others set up an imaginary elm
trifled fence and helped each
other over it Another team,
blindfolded. maneuvered
around a mped-off«in It*
"The biggest tiling we're try
ing to do is build a sense of com
munity." said Dionne Brown.
20, of Bellefontaine, Ohio.
"We re learning that one person
is not always right or not always
wrong "
This fledgling session is the
prototype for Clinton's $7 -t bil
lion < omnninity-servu e propos
al. which awaits congressional
approval. He hopes to have
25,000 people ages 17-25
involved in community service
year round by 1't‘l-t anil as many
as 150,000 by
Most of Clinton’s jobs pro
gram was left m shambles when
the Senate killed his $10 billion
johs-stimulus bill The president
is still struggling to get Congress
to approve a $900 million pro
gram that would include $300
million for summer jobs for
youths.
Clinton sent Vice President Al
Gore to greet the trainees Mon
day.
"You believe in this country,
This country believes in you,"
Gore said. "Together we are
going to build the future of
America."
Core drew frequent compar
isons to other public service pro
grams, like the Peace Corps.
"The i oncept of working togeth
er tor the best interests of our
nation is as old as the nation
itself." he said
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