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University Daily Kansan, May 2, 1983
Uncle Sam leans on loan defaulters
Bv United Press International
In Philadelphia last year, U.S. marshals impounded a dozen cars, including a snazzy new Dodge and a recently purchased Jeep, owned by people who had defaulted on federal student loans.
A few months later in Los Angeles, the U.S. attorney's office filed suit against 90 student loan defaulters, many of whom were doctors or attorneys.
NATIONWIDE, THE government is in the process of warning 47,000 federal workers that, unless they start repaying defaulted loans soon, Uncle Sam will pocket a hunk of their pay.
The federal government, after years of ineffective prodding for repayment of student loans, is now conducting open warfare against defaulters.
Impounding cars, filing suits and withholding wages is part of the multifaceted attack against the estates $2.5 billion in defaulted student loans.
"Deadbeats" is the word Sen. Charles Percy, R-III, used to describe them last year while successfully defending his government more collection muscle.
The Debt Collection Act of 1983 allows the government to withhold 15 percent of a federal employee's pay as a means of collecting a defaulted student loan. In the past, withholding federal wages was prohibited.
ANOTHER IMPORTANT provision allows the government to send the defaulter's name, Social Security number and the size of his debt to national
credit bureaus, thus applying pressure on him to paul or set bad credit ratings.
This winter, notices sent to defaults warned that unless they made arrangements to repay the government, a letter would be sent to credit bureaus.
Percy's legislation combined a 1981 regulation that put the pressure on colleges. That measure cut off loan money to institutions with default rates above 25 percent and reduced loans to those with rates of 10 percent to 25 percent.
"We're trying to apply pressure from all directions," said Frank Krebs, a member of the Education Department's three-year-old Student Loan Collection Task Force. "We're out to collect for Uncle Sam."
AS OF JUNE 39,1881,the most recent date for which figures are available, the overall default rate on $5.7 billion of matured National Direct Student Loans was 15.37 percent,down 2 percent from 1976.
Reagan's fiscal 1984 budget, submitted to Congress in January, proposes adding only $4 million to the national Direct Student Loan Program.
The president also proposes tightening eligibility for recipients of the Guaranteed Student Loan Program and has estimated $2.35 billion to $2.2 billion.
Percy's proposed crackdown sailed through Congress following the highly publicized congressional hearings where several default cases were cited;
- A doctor was 18 months behind in repaying his $7,963 school loan. At the same time, he held a $4,000 line of credit. He paid $2,500 and a $2,500 home improvement loan.
was of December 1981, Harvard's medical school had a default rate of 24 percent. A credit check of 100 delinquent graduates found that 83 had perfect records in repaying other loans, such as the ones on homes and cars.
- A $36,000-a-year employee of the Education Department refused a court order to pay a 1973 student loan of $4,000, claiming financial woes. Shortly thereafter, he bought an $18,000 Porsche.
- A court judgment and four letters by a congressman to the Justice Department failed to get another Education Department award in 1977 from $4,000. During the same period, the employee got two promotions and salary raises to $34,000.
"For years, there had been only a minimal attempt to collect," said Krebs, a management analyst for the Education Department task force. "We have come a long way, but more needs done. Percy's bill will certainly help."
Enactment of that measure allowed Education Secretary Terrel Bell to announce on Dec. 6 that he was applying added pressure on the 47,000 federal employees who owed $68 million in defaulted student loans.
UNDER HIS ORDERS, letters were sent to the employees' respective federal agencies. The agencies, in turn, are warning defaulters to arrange for payment or face an "offset" of wages that could begin in July.
At the same time, a number of U.S. attorney's offices began seeking court judgments against bigger defaulters from banks, colleges and the government.
U. S. attorney's office, in a single day filed suit against 90 defendants. The action drew news stories that included names, occupations and hometowns.
Hugh Blanchard, assistant U.S. attorney, said. "We wanted to attract some attention. We wanted to collect from these people and prompt others to pay now and avoid a similar fate. We think it was pretty effective."
In Philadelphia, the U.S. attorneys went after cars last September, impounding 27 owned by people who failed to pay federally ensured student loans or who had not repaid overpayments made under the GI Bill.
"THIS IS THE best attention-getting device we have ever used," said Assistant U.S. Attorney Virginia Powell. "We want them to pay."
All but one of the defaulters, who included several teachers and a number of city employees, immediately made arrangements to repay their loans so they could get their cars back, giving up his auto to public auction.
Shortly afterwards, the U.S. attorney's office in Harrisburg, Pa., impounded 20 cars of student-loan defaulters. The Justice Department praised the campaigns and urged other U.S. attorneys to take similar action.
To help augment its battle, the government last year turned over to private debt collectors about $570 million in defaulted loans from 402,000 accounts.
In Los Angeles last September, the
THUS FAR, they have brought in $9 million and worked out repayment schedules for another $40 million / less than 10 percent of the total figure given to them.
Persistent applicants will find summer jobs
By United Press International
WASHINGTON — The summer employment outlook can discourage even the most industrious of job bunters.
The National Park Service has 35,000 applications on file for 6,000 summer jobs. The construction industry plans to rehire laid-off workers and retailers have virtually eliminated extra summer help.
BUT EXPERTS insist there will be ample opportunity this summer for the persistent, energetic applicant.
"We're talking about students who are "weaking to be flexible, to learn a new skill," says Inez Frank, director of the University of Mary. "We're anticipating that we will be the same or better than last year."
"Today's teenager's just can't get by without some sort of income," says Brian Wyant, 17, of Lanham, Md. "If you're living at home, your parents don't expect you to mooch off them forever."
Summer jobs have become an economic necessity for nearly 60 percent of the nation's youth, 16-21, who get the sun and surf for employment.
The restaurant industry, one of the largest employers of teens, expects a strong summer season.
THE ECONOMIC indicators
point to the fact that we are moving out of the recession," says Dorothy Dee, a spokesman for the National Restaurant Association. "You can assume if the economy is getting people will be eating out more."
The construction industry is less optimistic.
"Unemployment is the last thing to change when you're coming out of a recession," a spokesman for the Associated General Contractors. "We're going to look first at skilled people who have families to take care of."
Other industries, such as retailing, have permanently changed their summer hiring practices.
"I would not encourage anyone to look at the retail industry for summer employment," says Alice McCord, personnel officer for the National Retail Merchants Association.
For disadvantaged youth, the government will provide an estimated 813,000 jobs this summer in filing from being to life-guarding.
Yet more than a third of the nation's youth will remain idle this summer, neither working nor studying, statistics show.
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