A Department of Human Resources student loan collection plan, begun in April 1978 has netted the city $230,000 in payments from people who have defaulted on their loans. Included among the defaulters are 172 city employes who may lose their jobs if they don't begin repayment.
The funds came from people who have defaulted on low-interest bank loans for which repayment was guaranteed by the city and federal governments.
There are 3,356 students, including 271 D.C. government employes, who recently defaulted on $6.2 million in student loans. City banks participating in the program during the past 11 years have made 7,804 student loans, totalling $14.5 million.
The $230,000 represents collections from about 400 of 892 defaulters who signed repayment agreements with DHR amounting to $2.2 million dollars, said William Gee, an official in DHR's State Education Services Division of the Office of State Agency Affairs.
Gee said 12 members of his office staff sent students three letters demanding payment before threatening legal action. The staff mailed 9,922 letters. About 1,350 people who did not responed to the notices are considered "hard core" defaulters, said Gee. Ot 271 city employes, who borrowed $600,000,172 are in this group, he said.
Gee said 99 other city employes-including DHR personnel-signed agreements to repay $250,206.70.
He said the corporation counsel will take legal action against the 172 hard-core defaulters. Once a legal judgement verifying the debt has been obtained to the D.C. Personnel Office with a recommendation that the employes be fired.
Gee said about two-thirds of the defaulters are employed, and thre remainder are either unemployed or cannot be located. The majority of the city employes are public school teachers or instructors in the University of the District of Columbia, Gee said.
Since July 1978, 105 cases have been referred to the corporation counsel, Gee said. Of these cases, 36 defaulters signed agreements with DHR to repay $84,743. The remaining defaulters, owing $250,000, have either signed agreements with the corporation counsel or their cases are being prepared for civil action.
The announcement comes nearly five months after city banks reumed the student loan program. Loans were discontinued in June 1976 after the city's default rate reached 33 percent-nearly triple the national average.
Unable to make repayments on guaranteed laons totalling more than $4 million, the District of Columbia became the only city in the country to have the low-cost student loan program suspended.
An agreement was reached in February 1978 for the program to continue if the debt was repaid. All but about $300,000 has been repaid.