One
man made $454,000 in a single year as a student-loan debt collector -- more
than twice the pay of the U.S. secretary of education.
The
company he works for charges fees to borrowers and earns commissions from
taxpayers -- totaling as much as 31 percent -- when it collects on defaulted
student loans. Those rich rewards are approved by Congress. His company is one
of 32 little-known “guaranty agencies” that play a key role in the world of
higher-education finance.
His
boss is doing well too. His compensation rose to $618,000 in 2004, $852,000 in
2008 and $1.1 million in 2010, making him the highest-paid head of a guaranty
agency.
By
law, the organizations can receive as much as 37 percent of a borrower’s entire
loan amount, half in collection costs and half in taxpayer-funded commissions. It
typically collects 31 percent, or $7,750 on a $25,000 loan. That’s 31 times
what it can make for preventing the default through counseling.
There
may be dark storm clouds on the horizon for students loaded with student loans,
but the weather looks great for the people that will be relentlessly pursuing
them. Who do you think had the vision to set up such a system? It also raises
another question – what is the purpose of our educational system? Is it to
educate or to supply the growing number of debtors needed to keep the money
stream flowing?
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the article from which the above comments were taken at –
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