JPMorgan Chase may have cut back on its private student lending, but the megabank is still making plenty of money on student debt.
In addition to some $9 billion [PDF] in taxpayer-subsidized Federal Family Education Loans and untold millions in private student loans, JPMorgan, the country’s biggest bank by assets, has a private equity arm, One Equity Partners. In turn, One Equity Partners owns NCO Group, a debt collector that makes millions of dollars a year from the federal government to collect on students who’ve defaulted on their loans. And that taxpayer money is paying for some pretty abusive practices.
In 2009, Jason Fagone at Philadelphia Magazine reported on one woman’s experience with NCO as it tried to collect the $9,000 that her husband, at the time on active duty in Iraq, owed for school. At the time, Tara Burkholder told Fagone, she was working for free as a student teacher and had $92 in her checking account and a daughter to care for.
“The NCO lady told Tara it was time for her to give up on her dream of being a teacher, and get a paying job immediately: ‘Honey, sometimes we have to do things that we need to do.’ The lady also told Tara that NCO had contacted her husband’s commanding officer in Iraq, and that if she didn’t pay back the loan, her husband would be dishonorably discharged from the Army.”
Burkholder’s story is hardly the only one. In the past three years, according to a report [PDF] from the National Consumer Law Center, there have been 1,116 complaints to the Better Business Bureau about abusive practices from NCO. Last February, the company settled with attorneys general from 19 states, paying $575,000 to quiet complaints about its collection practices and setting aside $50,000 per state to reimburse consumers who have wrongly paid NCO for debts they didn’t actually owe. That’s right, people were being pushed to pay and in some cases paid back money they didn’t owe in the first place.