The U.S. attorney's office in the District of Columbia -- as part of a nationwide crackdown on defaulted student loans worth millions to the federal government -- has begun picking up debtors who ignore court orders to make payments and bringing them into court.
In what U.S. Attorney Joseph E. diGenova said is a first in the federal government's longtime battle to collect unpaid student loans, a Southeast woman who allegedly owed more than $2,400 in principal and interest was picked up by U.S. marshals on Jan. 17 at her home and brought before a federal judge. She was released after agreeing to supply financial information to diGenova's office that would allow the government to begin collecting the debt.
Assistant U.S. Attorney Royce C. Lamberth said the court has ordered that another debtor be arrested and brought to court Monday for a contempt hearing, a tactic that could be used on as many as 100 other debtors in coming months if they continue to ignore court orders to make payments or provide the court with financial information.
"These are not isolated incidents," diGenova said yesterday. "These people are representative of a larger group of individuals scofflawing against the citizens of the United States, who permitted them to get these loans in the first place."
More than $4.5 billion in federal funds from two low-interest loan programs have gone to students, who subsequently failed to pay the money back, according to Richard Hastings, director of debt collection for the Department of Education.
The department plans to refer 15,000 defaulted cases, worth about $50 million, to the Justice Department for collection by the end of February, Hastings said. The department has begun funneling these cases out to U.S. attorney's offices around the nation, according to Robert Ford, a deputy assistant attorney general.
Letters went out to the offices saying, "These education cases are coming. Really go after them," Ford said. "We want to show we can do the job. It's a matter of pride with us."
The new push to collect the delinquent loans follows hearings in Congress last year on a bill sponsored by Sen. Alfonse M. D'Amato (R-N.Y.) that would have authorized the Justice Department to hire private lawyers to go to court to collect the debts.
During those hearings, witnesses from private collection agencies, hired by the government to try to collect the delinquent loans, asserted that there was not enough power behind the threat that the government would sue if the debtor didn't pay, according to a D'Amato aide. The witnesses said "the word was out there was a backlog of student loan cases, and there was a good chance" the cases would get lost behind other priorities, the aide said.
The lawsuit is a complicated and time-consuming collection tool, used only when all other means have been exhausted, according to Assistant U.S. Attorney Lamberth.
The federal attorneys have the authority to "attach" portions of the debtors' wages, or take personal property such as a car, after getting court orders.
But first, the court must find the debtors and determine what property they own.
For instance, in the case of Mae Burke, the Southeast woman brought to court Jan. 17, the loan had been in default since 1975, according to court documents.
In February 1982, the court entered a judgment ordering her to pay the money, according to the records.
Lamberth said Burke did not comply and also failed to respond to a series of financial questions issued by his office. Finally, Burke was ordered to appear in court Dec. 14, but failed to appear and was picked up by U.S. marshals, according to documents.
Lamberth said Burke "was surprised she could be pulled into court just for not answering our questions."
Lamberth said Burke asserted that she had not received the notices to appear and that she was unemployed. Burke could not be reached for comment yesterday.
Lamberth said his office would "be moving faster" in the coming cases, many of which have been moving through the judicial pipeline for several years.
The office also filed 50 new lawsuits against borrowers with outstanding loans of up to $12,000 and issued a list of their names yesterday to the media.
Those borrowers could be brought into court, too, said Assistant U.S. Attorney Constance L. Belfiore, "unless they get the word from this and it acts as a deterrent."