Loan Monitor accused of ruthless student debt tactics


But Educational Credit said Ms Schaffer was spending too much on food while dining out. According to Ms Schaffer, this was a reference to the $ 12 she spent at McDonald’s. She and Mr. Schaffer normally share a “valuable meal,” a small sandwich and fries.

“I was taking care of Ron and working full time, so often I didn’t have time to cook dinner, or I was just too tired,” Ms. Schaffer said in an interview. The lawyers also suggested that she should charge her son for the use of their car, make him pay more rent, and rent the other room in their house.

Asked for comment, Educational Credit said Ms Schaffer “did not meet the legal standard for undue hardship” and had refused an income-based payment plan. His lawyer argued that the plan would treat any canceled loan as taxable income at the end of the repayment period, so that was not a viable option.

Supporters of the agency’s tactics say they are necessary to hold borrowers accountable. “For every dollar that the aggressive debt collection company fails to recover, it’s a dollar that someone else will have to pay,” said G. Marcus Cole, professor of law at the University of Stanford.

Professor Cole added that if it was easy to release student loans in bankruptcy, lenders simply wouldn’t lend money to students without clear assets or prospects. “We need such a standard to allow students who cannot afford an education to be able to borrow,” he said.

The Educational Credit Management Corporation is the product of a scandal that nearly brought down the government’s student loan program two decades ago. In 1990, the Higher Education Assistance Foundation, the nation’s largest student loan guarantee agency for federal loans, announced that it had become insolvent, proof that no one was paying much attention to where student loans went and where they were. refund.

“The high default rates had a particularly big impact on the press,” said Frank Holleman, assistant secretary for education at the time.

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