Editor’s Note: 

Beginning today, we are reprinting a 15-part series on college-student-loan debt.  (Thank you to onlinecolleges.net for putting this together.)


15 Sad but True Facts about Student Loan Debt Collection

by Staff Writers

October 4, 2012

By now, most people have heard about the staggering amount of debt that the average college grad is carrying, but many may not be familiar with the means by which lenders, even the U.S. government, use to get students to pay back those debts.

As more students than ever are defaulting on loans in the wake of the economic downturn, the government has taken action, recruiting scores of debt collection companies to get borrowers to repay their debts. While there is little debate that borrowers can and should be making payments on their debts, the coercion, misrepresentation, and other aggressive tactics that these collectors take (some of which may even be illegal) have gotten many asking the Department of Education to make some serious reforms in how they collect on debts. Here, we showcase some of the saddest statistics and facts about student loan debt collection as it stands today, from the number of students who are in financial trouble to the highly questionable commissions paid to debt collectors.

  1. There is no way to escape student loan debt.

While changes to some laws may be on the horizon, at present, student debt is virtually inescapable. It cannot be discharged in bankruptcy and as there is no statute of limitations on the debt, it sticks around as long as you do unless it is paid off. It has always been incredibly difficult, if not downright impossible, to discharge federal student loan debt, but reforms to bankruptcy laws in 2005 also made it difficult to discharge private loan debt. While federal loan debt may be troubling, private loans are where debt-ridden students often get in trouble, as private lenders do not offer the sometimes generous repayment options, loan forgiveness, and low rates that federal lenders do. Yet both types of loans have proved troublesome to students in recent years, as the government has taken increasingly aggressive measures to get borrowers to pay up.