Federal Student Aid U.S. Dept of Education Student Loan Ripoffs Internet Nationwide

The U.S. Dept of Education has contracted with collection agencies and given them carte blanche to collect on student loans. I was told by an employee of the Dept of Ed that these collection agencies are given stacks of pre-signed wage garnishment orders to do with what they will. The order I received, from my employer, with no prior notice from the collection agency as required by law, was signed by an individual who hadn't worked for the Dept for over a year.

The laws were changed so that they do not have to prove you owe anything; you must prove you don't. The laws were also made retroactive, there is no statute of limitations and in most cases student loans cannot be discharged by bankruptcy.

I had a state guaranteed student loan from Nevada in 1989 in the amount of $2,675. Even though I repaid the loan, I later found that it was deemed by the Secretary of Education to be "uncollectable" due to an alteration of the amount on the original promissory note. In 2006 Progressive Financial Services, contracted by the Dept of Ed, began a wage garnishment with no prior notification. According to them, the amount I owed was more than $20,000 and they refused to advise how they were coming up with this amount. The bank from which the loan originated had been out of business for more than 10 years as had the school I attended so I was unable to obtain any records of payment. Any attempts at contacting the Dept of Ed are futile as they merely forward everything to the Federal Student Aid offices which are located all over the country. I requested a hearing, which I am legally entitled to, and received no response until numerous complaints were filed with the FTC and other government offices and 18 months after the initial request I received a letter from someone in Chicago advising that I'd had a hearing and lost. Even though I filed a Freedom of Information Act specifically requesting when and where this hearing was held, by whom I was represented and who presided over the hearing, I was given no further information. Of course, there was no hearing. I have yet to understand why the federal government became involved in collecting what was a loan from the state of Nevada.

The laws for student loans are so obscure and difficult to find that very few attorneys are familiar with them; I have been unable to find any. There is hope however, as the National Consumer Law Center finally published a legal textbook on student loan laws.

I urge anyone who has experienced the nightmare of trying to deal with these sleazy collection agencies to file complaints with any and all relevant government entities, buy the legal textbook (it retails for over $100 but I found it online for $12.95) and if necessary file a lawsuit yourself.

It's really scary when government agencies won't abide by their own regulations.