Student Loan Industrial Complex

Expecting a federal tax refund? If the United States government erroneously believes you owe a federal debt - particularly, on a federal student loan - do not count on receiving it. In 2009, the U.S. Department of Education controversially chose the private student loan company Sallie Mae, originally established as a government entity in 1973, to exclusively service federal student loans on its behalf. In 2014, Sallie Mae, switching to consumer banking operations, spun off its student loan unit as Navient Corporation. In the three year period following that split, Navient faced numerous complaints, investigations and lawsuits - several of which resulted in monetary settlements to victims - for fraudulent accounting practices and violating consumer protection laws. Among these allegations included charging excessive interest rates to military members. Last year, they were sued for violations of the Fair Credit Reporting Act and Fair Debt Collection Act.

States Defy Federal Government With Laws Aiming to Help Students (Student Loan Hero)

Why Would the Government Stop States From Helping Student Borrowers? (The Atlantic)

To that last point, Navient egregiously continues to use outdated, and outright false, documents from its parent company, Sallie Mae, to collect on allegedly defaulted student loans. If such attempts fail, the alleged outstanding loan is kicked back to the Department of Education, who then uses its governmental mandate to pursue the supposed debt. These measures include absconding with tax refunds, which the Internal Revenue Service is obligated to hand over under federal law for any outstanding federal debts - whether it exist or not. Established by the very creditors and lenders from whom consumers would seek relief, the three credit monitoring services - Equifax, Experian, TransUnion - in what should surprise no one, are no help in the matter. Using questionable documentation provided by these same creditors and lenders, whether legitimate or otherwise, they simply, more often than not, claim the legitimacy of the disputed account after concluding their bogus “investigation.” Thus, the economic servitude of imperiled consumers is maintained, with little other recourse to rectify the situation.

I know this because I am a target of this government-sanctioned scam. By the end of 2005, I repaid my undergraduate and graduate student loan to Sallie Mae. A decade later, I began receiving letters from Navient concerning that previously settled student loan. At the same time, a student loan account naming them as the lender and, afterward, the Department of Education appeared on my credit reports; as often eventually happens to older accounts, my Sallie Mae one had since disappeared. Until this time, I never had heard of Navient and, certainly, had never conducted or solicited any business with them. Admittedly, and unfortunately, I no longer have any Sallie Mae paperwork - including a congratulatory letter for paying off my student loan, speculatively an accidental casualty of a spring cleaning purge several years ago. Even more, the bank I was with at the time is no longer in business due to several mergers and the 2008 financial crisis. And because of this circumstance, the I.R.S. paid my anticipated, albeit minuscule, tax refund to the Department of Education - despite the latter never sending any notice of intention to collect this alleged debt by such means, which is a violation of federal law.

Anyone who has paid attention to education news the last few years is aware of not only the financial but also moral bankruptcy of the federal student loan program. While it is far past time to reexamine and overhaul, and quite frankly dismantle, the credit monitoring services - particularly in light of recent breaches to consumers' personal information - there is absolute urgency concerning the student loan industrial complex, and the various unscrupulous associated entities and agencies involved in it, that only grows worse each day for borrowers.

©2018 Steve Sagarra