Defaulted student loans fuel growth of collections industry.

Once again, students across America are being harassed and exploited by 3rd party collections agencies who specialize in Defaulted Student loans. With America deep in a recession that is producing record high levels of unemployment, newly graduated students are finding themselves going into default despite their best efforts - and the vultures of debt are waiting for them.

Continental Service Group Inc., which operates as ConServe, has expanded in the past five years from fewer than 100 workers to 340. And the third-party debt collection company, which specializes in student loan defaults, plans by November to open a call center in the Buffalo suburb of Depew with a capacity for 100 workers.

Debt is big business for western New York. According to the state Labor Department, 16 debt collection companies operate in the Rochester region, employing a total of 1,500 people at an average annual wage of almost $39,000. Debt is an even bigger business in the Buffalo area, with 90 companies employing almost 6,000.

Student loan debt plays a particularly sizable role. Wyoming County-based Pioneer Credit Recovery Inc., a subsidiary of student loan giant Sallie Mae, employs almost 1,000 people across western New York.


Private companies collected $376 million in defaulted federal student loan debts in fiscal 2008 for the U.S. Education Department. The average student loan account balance handled by these companies is $4,233, according to the Association of Credit and Collection Professionals.

ConServe began in 1985 serving a variety of colleges and universities. Today its client base ranges from the U.S. Education Department to institutions such as the University of Rochester, Rochester Institute of Technology, Harvard University and Southern Methodist University. Roughly 10 percent of the nation's higher education institutions use ConServe as one of the debt collection agencies with which they work.

Ever since the radical changes to both the Higher education laws, and the bankruptcy laws which started in the early 1970's and were completed by the mid 1990's, student loans slowly became bankruptcy exempt - including those which were created prior to 1999 which had at some level, bankruptcy protections with a 3, 5 or 7 year wait. Also the 1989 garnishment law which allows the government to garnish a paycheck without a court order also worked to exploit students who were in financial crisis.

Prior to the radical, yet incomplete changes to the Higher education laws which existed in 1990, students had full consumer protections on their loans. The laws changed, and many argue so did their contracts. The US Congress held hearings and created a classification of students whom they recognized as victims of predatory proprietary trade schools. Several senators recognised that these students were left with useless educations and debts they could not pay. And these students have been harassed and hounded by 3rd party collections agencies for years. Now a new generation of students are about to experience the same situation; all because they wanted to better themselves.

I for one, categorically refuse to deal with 3rd party collections agencies. They have no legal standing in my contract, are not parties to my contract, and I see them as evil parasites that do nothing but create misery and stress for students who are already stressed out while trying to repay their loans. I also see these agencies as further exploitation of students.

And its time we end the exploitation of these students once and for all.