Taxpayers Fund $454,000 Pay for Collector Chasing Student Loans

The U.S. Ninth Circuit Court of Appeals ruled in August 1996 that the third party collectors for the U.S. Department of Education are covered by the Fair Debt Collection Practices Act.
The facts of the case are as follows:
Brannan executed a promissory note for a loan under the former Guaranteed Student Loan (GSL) program. USA Funds, a private guarantee agency under contract with the U.S. Department of Education, guaranteed the loan. The Department insured USA Funds. After the lender's assignee declared Brannan in default and filed a default claim with USA Funds, the Agency paid the loan and began collection efforts.
Brannan sued USA Funds, alleging violation of the Fair Debt Collection Practices Act by (1) threatening to cause her to lose her job, (2) communicating with third parties about the debt, and (3) refusing to communicate about the debt through her attorney. The trial court granted defendant summary judgment, holding that it was exempt from the FDCPA under §1692 (a)(6)(c) which exempts "any officer employee of the United States or any state to the extent that the collecting or attempting to collect any debt is in the performance of his official duties"
The Ninth Circuit reversed. It rejected USA's argument that Congress did not intend for the FDCPA to apply to government student loan guarantee agencies. The ad proscribes abusive collection practices, by "any person who regularly collects or attempts to collect" debts. The Circuit Court noted that FDCPA does not provide an exemption for guaranty agencies that acquire a student loan after default in order to pursue its collection. Moreover, the court said, Department of Education regulations explicitly provide that GSL third party collectors and their collection activities-are subject to the Fair Debt Collection Practices Act.
The Court said that the exemption referred to in the FDCPA applies "only to individual government officials or employees who collect debts as part of their official duties". In this case, the agency is a private, not for profit organization with a government contract. IT IS NOT A GOVERNMENT AGENCY AND THUS IS NOT EXEMPT.

Actually the U.S. Ninth Circuit Court of Appeals ruled differently.

BOB you are a moron! Apparently you did not read the other posts and/or have no clue how Federal Student Loans work.  You can not file bankruptcy on them. They are considered unforgiveable loans, which means you signed for them the only way they are forgiven is if you DIE!  However, there is one other way that never works because you would have to show extreme hardship and as long as you are able to work they stay with you! it basically does not mean to yourself but to your family and that is very hard to prove to even get it into a bankruptcy court. I know this because I used to work for a short time with a company that did collections of student loans and I talked to this guy that took out a student loan and had his career but had a work accident and lost both his legs. They did not care what happened to him they just wanted his money to pay for the student loan.  Because of that I quit that job becuase to me that was bad enough to lose his legs and then for then to say so what you owe us the money.  Hell I even had to call some lady that was 74 years old and try to collect.  When I finally reached someone at her number she had already died and they wanted proof that she was dead.  Taking out student loans is convient if you want an education but to have to pay them back is a pain in the butt.  I have student loans I am paying back now and I refuse to let me college bound teen take out any student loans at all.  I rather work 50-60 hours a week to pay cash for his education!  So BOB before you make a comment that makes you look uneducated check out the facts of what you are talking about.

It's too bad that the studentloanjustice.org guy is such a huge [***] to his own members.  Here are some quotes from the founder Alan Collinge, from when I was a member of the group on causes.com:

Sat, Dec 31, 2011 at 1:38 AM:
         are you [***] stoned?
         What's up, fellas??

         http://links.causes.com/s/clzVsf


         Where's the love? Do you think I'm not fighting for you?? What the [***]? You think you can sit v\back, and watch this problem solve itself. This historical record, after all is said and done, will ask: Where the [***] where the people in this fight?? X Boxes? Play Stations? What the [***] happened to the people in this fight?? Where they simply too stoned to care? WHAT THE [***]?????

Sat, Dec 31, 2011 at 1:40 AM:
         What the [***] is the matter with you people??!!
         Alan Collinge
         What the [***] has happened with you people?? Are you happy with your loans? Do you secretly want to be a [***], a concubine, a prostitute for Wall Street?? Are you a bunch of sold out [***] for Wall Street, in bed with your Alma Mater?? Is that your reality? Why don't you get the [***] out of this group if you aren't willing to fight?? I can't stand weakness, particularly in my little fighting club. If you aren't up for the battle then get the [***] out of the [***] KITCHEN. I want fighters in my club, not [***].

This guy was worse than most debt collectors.  I reported these posts and then left causes.com.

Everything with *** was censored by 800notes, the whole word was used originally.

department of education guarnatees all the student loans after 20 years of default they  pay them off unless this has been recently changed and they havent updated the information you can find by doing a little digging into their web site. PCR is an annoying company with out any regard for anyone they reach on the other end of a telephone call . After trying to negotiate with a representative  I simply hung up, they amounts they required to  " refinace " or jumpstart a repayment plan are rediculous, If ihad what they wanted i would  be in default to begin with, which is what i stated to  their rep before  disconnect.

sincerely

very annoyed

good luck. it takes $$$ to make US gov. to do anything. It's been privatized right under our noses and we cannot afford their services. worse, we fund these sweet contract deals for these crooked companies and on top of that they pay hardly any tax. all the wealth gets sucked out of the middle class this way.

Student loans can be discharged for permanent disability due to mental illness such as bipolar disorder and schizophrenia.

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts

Why don't you just go to work in Europe? Debt collectors in the US will not get a penny. In fact we do not have a social security number like in the US. Plus it would cost them a lot to get an European debt company involved. Good Luck

Wow really? Only federal loans though?

Awesome

Nope. Maybe not criminal proceedings, but there are laws under which it's possible. You must work for the scam artists, because if you knew the facts, you'd know it's possible. Unlikely, but possible.

What, however, they can't do is avoid civil proceedings. There are many laws under which an individual, harassed by anybody . . . for any reason . . . can file suit, and collect money. I've collected more than enough money from collection agencies which used unconscionable tactics (Check your state's consumer protection or deceptive trade practices act. Anything unconscionable -- usually broadly defined and applied -- may be a cause of action.) to pay off the underlying debt. In all but one case (dealt with in the lawsuit), the debts were not legitimate to begin with; they were never collectable.

I know what I'm talking about, with both court records available to the public and copies of checks from the harassers to prove it. Criminal? Doesn't put money in my bank account.

While there are many protections for those collecting on student loans, and while there are virtually no protections for students getting the loans, there are still laws which protect people >>all people<< against certain behaviors.

Even acting under color of law, acts of oppression are illegal. There are limits beyond which it is illegal to proceed, no matter who you are, or what you're doing. So.... who's the moron?

Seems, Rickie, like you either:
1) Work for these slimeballs, or
2) Foolishly caved in to harassment, intimidation, or whatever, or
3) Defaulted on a student loan, and are now trying to find some way to weasel out, but don't want anyone else to do it.

But, you certainly know little about the law, and nothing about fairness. In which, it must be said: If you have a student loan, and you don't make some kind of arrangement, or at least an effort, to pay it off, perhaps you deserve a certain amount of unpleasantness in your life. I paid off my wife's student loan, even though she graduated about the time we met. I paid off a daughter's student loan, even though it was made to her. (That was our arrangement; we couldn't give her money at the time, and it was easier for her to borrow than for us to.) Another daughter's student loan was paid off without cash exchanging hands because she got it under a program which provided a certain percentage of forgiveness for each year she was a teacher.

It is almost criminal that the laws are written the way they are, with respect to student loans. Hardships, proprietary schools (which give students little or nothing, and which often employ fraudulent tactics), bankruptcy -- a lot of factors which should provide legitimate leniency are ignored. That's wrong. At the very least, there should be a mechanism for the suspension of interest assessments, under limited circumstances which should trigger some compassion. People in Louisiana, for example, are right now dealing with how to survive from day to day. Many will be affected for years. Those people should not have to worry about student loans -- or interest on them -- until they're back on their feet.

It's also wrong for bill collectors to make such obscene profits while their targets receive very limited protection against obscene and unconscionable collection methods.

I believe a person should pay his debts. If, freely and willingly, a contract is entered into which creates an obligation, I believe that obligation should be discharged in an honorable manner, without excuse or evasion.

Taking one's income tax refund? First, if a person doesn't manage their finances any better than to have such a refund come in under a hundred dollars, maybe they don't need the money. Second, if the person wants the refund applied to OTHER TAX DEBT, then the refund should be excluded from any collection efforts.

Taking one's Social Security money? Reprehensible, unless it can be shown the person's income is above a certain level.

If someone is living above a subsistence level ("Subsistence" means no cable TV, no new TV, no new car, etc.), then some part, if not all, of the excess can reasonably be taken. If you've got the excess money (or credit) to buy a new car, you've got the money to wait a year or two and put the new car money against your debt. If you've got the credit to buy a new car, but you want to be a deadbeat, then you should get a conventional loan, pay off the student loan, and then default on the conventional loan. Of course, to do that you'd have to be smart enough to get something out of the education you got the loan for, in the first place. And, if you're that smart, they you're smart enough to make enough money to pay off the loan.

If there is garnishment, surely it will eventually pay off the debt, unless you're making so little that the garnishment only covers, or doesn't even cover interest.

But, I would ask: Do you have a car? How much did it cost? If you took out a loan, and your car is less than 8 years old, with fewer than 150,000 miles on it, could you have found one for $1,000 - $5,000 to drive for a few years, until you paid off the loan?

How's your TV? Newer than the digital changeover? Shame on you.

Got cable? Why?

Ever paid for tickets to a professional sporting event?

In other words, if you're living -- spending money above the necessities -- and not working to pay off your loan, then maybe the loan should follow you until you die. Surely, nobody twisted your arm and made you take the money, in the first place.

From here, it looks like you didn't want to work your way through school, and now that you have the advantage of that education, you don't want to pay for it.

That doesn't make the system fair, or change the unreasonable parts of the student loan programs. It just puts your "plight" into perspective.