Susan Browmmiller, in her classic book on rape, observed that rape victims are often assaulted twice. First, they are physically raped by their attacker; and then they are psychologically raped by the justice system when they testify against the rapist in a brutal and humiliating criminal trial.
Something similar can be said about student-loan debtors. Millions of unsophisticated young people have been enticed to take out student loans to enroll in academic programs that don't lead to good jobs. That's rape number 1.
Then when these duped individuals are unable to pay back their student loans, they fall into the hands of the unscrupulous debt collectors. That's rape number 2.
Brandon v. Eaton Group Attorneys: Law firm accused of violating Fair Debt Collection Practices Act
Last January, a federal judge in Louisiana ruled in a case brought by Cassandra Brandon against Eaton Group Attorneys (Eaton), a law firm representing National Collegiate Student Loan Trust (NCSLT), a student-loan debt collector. Eaton had sued Brandon on NCSLT's behalf, alleging that Brandon had defaulted on her student loans and owed NCSLT about $46,000.
After the lawsuit was filed, an agent for Eaton sent Brandon a letter, which was described as a "REQUEST FOR PAYMENT ARRANGEMENTS." And this is what the letter said:
Dear CASSANDRA PLUMMER [Plummer is Brandon's maiden name]:
If you would like to explore a voluntary repayment plan, then please provide the requested information. The debt will need to be acknowledged through the attached consent judgment. Please return these forms as soon as possible. This is a communication from a debt collector. This is an attempt to collect a debt. Any information will be used for that purpose.Accompanying the letter was a partially completed consent judgment, which stated:
IT IS ORDERED, ADJUDGED, AND DECREED that judgment be rendered in favor of Plaintiff, NATIONAL COLLEGIATE LOAN TRUST 2007-1, and against the defendant, CASSANDRA PLUMMER . . ., in the full sum of $41,115.13, together with accrued interest of $4,998.37, and additional interest of 4% from date of judgment, and for all costs of these proceedings, subject to a credit of $0.00.Brandon then sued Eaton Group Attorneys in federal court, charging the law firm with violating the Fair Debt Collection Practices Act (FDCPA). Basically, Brandon accused the law firm of sending her a deceptive debt-collection letter in violation of the FDCPA.
Eaton moved for summary judgment on Brandon's claim, arguing that its letter was "non-deceitful as a matter of law." But Judge Sarah Vance denied the law firm's motion and allowed Brandon to proceed with her suit.
Judge Vance began her analysis by summarizing the purpose of the FDCPA, which is to eliminate "abusive, deceptive, and unfair debt collection practices . . ." The law prohibits debt collectors from using any "false, deceptive, or misleading representation or means in connection with the collection of any debt," and it bars debt collectors from using "unfair or unconscionable means" to collect on a debt.
In the court's view;
[The] letter [Brandon] received was misleading because an unsuspecting debtor, seeking only to 'explore a voluntary repayment plan,' could be fooled into executing the consent judgment without knowledge of the consequences. Specifically, an unsophisticated debtor may not know that the consent judgment will serve to waive potentially valid defenses and may facilitate a wage garnishment order" [Emphasis supplied]By telling Brandon she must formally acknowledge her debt before she could even "explore" voluntary repayment plan, the Eaton Group Attorneys was basically inviting her to "inadvertently dig herself into a deeper hole." (Internal citation omitted).
Congress needs to clean up the student-loan debt collection industry
Laws are already on the books that ban unfair debt collection activities. Brandon sued Eaton Group Attorneys under the FDCPA; and Navient Solutions and Student Assistance Corporation had a judgment assessed against them last spring for violating the Telephone Consumer Protection Act.
But more needs to be done.
Specifically, Congress needs to hold hearings on the activities of the student loan guaranty agencies--and Educational Credit Management Corporation in particular. A Texas bankruptcy judge slapped ECMC with punitive damages last year for repeatedly violating the automatic stay provision of the Bankruptcy Code, but the penalty was entirely too light for such a wealthy corporation.
And Congress needs to eliminate the excessive penalties--25 percent or more--that debt collectors assess on student-loan debtors in default. After all, it is the penalties and accrued interest that are driving millions of struggling student-loan debtors into 20- and 25-year income driven repayment plans.
Republicans and Democrats could bring relief to millions of overwhelmed student-loan debtors if they just joined together to pass meaningful reform legislation. If our nation's politicians can't cooperate in a bipartisan effort to clean up the student loan program, then shame on all of them.
Brandon v. Eaton Group Attorneys, CA No. 16-13747 (E.D. La. Jan. 24, 2017).
Bruner-Halteman v. Educational Credit Management Corporation, Case No. 12-324-HDH-13, ADV. No. 14-03041 (Bankr. N.D. Tex. 2016).
McCaskill v. Navient Solutions, Inc., No. 8:15-cv-1559-T-33TBM (M.D. Fla. April 6, 2016).
Robert Shireman and Tariq Habash. Have Student Loan Guaranty Agencies Lost Their Way? The Century Foundation, September 29, 2016. Accessible at https://tcf.org/content/report/student-loan-guaranty-agencies-lost-way/