Paying for unpaid debt
Editorial | U. contract with General Revenue Corporation requires attention
Student debt at the University is already a big enough problem without the questionable tactics of debt collection agencies that divert school funding and badger debt holders about outstanding payments. The University ought to take a closer look at its contract with General Revenue Corporation to ensure that the latter isn’t happening.
The University has held a contract with GRC, a subsidiary of Sallie Mae that is paid to collect unpaid student tuition on behalf of the University, since 2005. Certain recent findings, however, have brought into question the integrity with which the company conducts its affairs. The Rutgers Student Union first brought the issue to light in October while drafting an in-state tuition bill, but a teach-in hosted by the group earlier this week has made it clear that it’s one that demands attention.
With student-loan debt surpassing credit card, automobile and housing debt in the country, debt collection is of course necessary. But it’s important that the act be carried out ethically, and, in the GRC case, legally. According to RSU members, the GRC has been using bullying tactics — including threatening to affect a student’s credit rating — to antagonize debt-holders into paying defaulted loans. Additionally, Article 2.7 of the University’s GRC contract enables the company to use “skip tracing,” which involves collecting as much information about a person, to locate their whereabouts.
Undoubtedly, tactics like these are somewhat unsettling, and the RSU is not the only ones who have taken note of this fact. A Daily Targum article noted recently that the GRC has received 344 complaints from the Better Business Bureau, as well as several lawsuits for allegedly violating the Fair Debt Collection Practices Act and the Telephone Consumer Protection Act. Regardless of whether or not such an approach to debt collection is being carried out by the GRC on the University’s own campus, allegations like these reflect poorly on the collector as a company and should be taken into account by administrators when looking to renew the GRC’s contract.
Yet the University’s relationship with the GRC becomes even more suspect when one considers that the company is allowed 25 percent of the outstanding tuition collected. The idea that the GRC is making such a massive profit of off the debt owed by students to the University is frankly frightening, and probably unnecessary. Ideally, these funds should ultimately find their way back into the University to pay for its own affairs, not end up in the pockets of a private corporation. Allocating money away from other University programs that require attention — of which there are many — seems to do little to serve the interests of our community.
These concerns deserve looking into, and the University would do well to consider doing so. If true, the aforementioned allegations, along with the exorbitant amount of money the GRC is paid for their service, cast the contract as not only questionable, but also potentially destructive. Student loan debt affects an enormous majority of students here on campus, and those struggling to pay their debt off should be given the resources to help them do so — not be further penalized by collection agencies like the GRC.
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