Student Loan Continued Damage and 30% Collection Fees for Tuition

I big thanks to Credit & Collection News who pointed these articles out to me. You’ve got to give credit where it’s due.

Thousands Paying for an Education that Failed to Deliver

Now, some of the financial companies that hold the debt say they, too, were victims of these for-profit schools and should be able to recoup their expenses.

The amount of private loans students took out to attend these now-defunct, for-profit schools is unclear, but it is likely in the hundreds of millions of dollars. For example, in 2010, when many of these for-profit schools were booming, Corinthian Colleges expected to give out $150 million in private loans and ITT dispersed $64 million in loans during just the third quarter of that year, according to a report from the National Consumer Law Center.

The legal options to discharge private debt are limited. In some cases, financial firms have sold the debt off to collection companies, complicating efforts by regulators, students, and advocates to track down who holds the loans and applying for discharges. Lawsuits and bankruptcy cases have entangled some of these financing companies, forcing former students to wait in line behind a long list of aggrieved parties for relief. [Read More]

Universities in Va. Hit Students with Whopping Collection Fees for Unpaid Tuition

When Katie Otersen transferred from Northern Virginia Community College to George Mason University last fall, she braced for a jump in price. Tuition and fees would total $11,300, more than double what she had paid before. She covered expenses the first semester without taking out loans. But she struggled in the second.

Little by little, Otersen paid down her bill with earnings from a job at a salon, but she still owed nearly $3,000 when classes ended. When she sought to make another payment in May, she was shocked to learn that her account had been sent to a collection agency that tacked on a fee of 30 percent. She can’t continue at Mason unless she pays it.

“I can’t argue or negotiate this. I’m just stuck paying almost $1,000 more,” Otersen, 23, said. “The fact that they charged me as a student who has been paying throughout the semester this 30 percent fee is disgusting.”

Otersen is one of thousands of Virginia students caught in a state-sanctioned debt trap. These students lack the money to pay their bills on time, and are penalized in a way that makes it harder to meet the obligation. [Read More]

Steve Rhode
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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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