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President Trump's proposed budget calls for cutting back affordable options for people paying back student loans. Even with the current slate of repayment plans, millions of Americans who took out money to go to college are struggling to keep up. As a result, federal officials have been taking former students to court. Since 2012, these borrowers have paid the government $87 million after facing lawsuits. Bobby Allyn of member station WHYY brings us this story about how private law firms help the government get those loans repaid.
BOBBY ALLYN, BYLINE: When Maribel Carrasquillo-Rivera was trying to make sense of a lawsuit filed against her over a federal student loan, the amount jumped out at her. She borrowed $2,600 to attend a computer training school. But that was in 1984, and interest has been building.
MARIBEL CARRASQUILLO-RIVERA: This surprised me a lot. It was almost $9,000.
ALLYN: She had tried to pay it back over the years, but she claims the loan servicer was not keeping track of all her payments, so she gave up.
CARRASQUILLO-RIVERA: Even though it was my fault that I took the money, but I didn't even end up working what I studied for.
ALLYN: Instead, she ended up making far less working as a part-time assistant with the Philadelphia School District. As Carrasquillo-Rivera examined the lawsuit even closer, another thing struck her. She had taken out a government loan, but it was a private debt collection law firm suing her. When she called them for more information, she got this automated message.
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UNIDENTIFIED WOMAN: Welcome to KML Law Group. Please be advised that this firm may be considered a debt collector, and any information received during your call may be used for that purpose.
ALLYN: The majority of the money the government has collected from one-time students by going to court has been thanks to private debt collection lawyers. That's according to data obtained from the Justice Department. Instead of representing themselves, federal officials have farmed out this line of work to law firms that have worked for banks over things like credit card bills and foreclosures.
ROHIT CHOPRA: The tidal wave of defaults is creating a big opportunity for those to profit off of that pain.
ALLYN: Rohit Chopra is a consumer advocate and former senior official in the Department of Education.
CHOPRA: And the debt collection industry certainly looks at the student loan market as a big growth opportunity.
ALLYN: Now, who exactly are the ones being sued, and how does the government decide who to go after? Precise answers are hard to come by, but after reviewing dozens of the suits, patterns did appear. Almost all of the borrowers took out loans decades ago. In the bucket of unpaid federal student loan debt, these are the debtors way at the bottom. Often the borrowers are getting paid under the table, or they're low-income, making it tricky for officials to take tax refunds or garnish wages. The government turns to debt collection lawyers when other efforts to collect have failed and when they know the student has some kind of asset, like a home.
JENNIFER SCHULTZ: You're not talking about doctors and lawyers. You're talking about people who went to community colleges and trade schools.
ALLYN: Lawyer Jennifer Schultz has represented former students in these types of cases. Advocates like Schultz say these suits seem to be targeting people who have the least ability to pay anything back since many never finished college despite the debt that got them there. But others, like lawyer Harlan Cohen, have a different view. He's represented institutions owed money in court. He says the government can't just look the other way when someone takes out a taxpayer-backed loan and then tries to disappear.
HARLAN COHEN: There's always going to be a certain percentage of that. Since these loans are taxpayer-backed, there is an obligation to the society at large to enforce the creditors' rights - in this case, they're backed by the government - to get the loans repaid.
ALLYN: But Natalia Abrams thinks there could be another way to ensure repayment. She runs the nonprofit called Student Debt Crisis. She says the money paying for private law firms could instead be devoted to helping students find affordable repayment plans.
NATALIA ABRAMS: And then the government would still be able to recoup their money.
ALLYN: President Trump's proposed budget aims to reduce the four income-based repayment plans to one. That change requires congressional approval. For NPR News, I'm Bobby Allyn in Philadelphia.
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