TRANSPARENCY TUESDAY: Mining the courthouse to explain the human impact of college student loan debt
As a combined result of the difficult job market and the crushing expense of student loan debt, many thousands of recent graduates are experiencing an unwelcome "reunion" with their colleges -- in court.
The enormity of how much students owe is well-documented. A recent Federal Reserve study quoted in the Los Angeles Times showed that 13 percent of graduates leave owing more than $50,000, and 17 percent of graduates are 90 days or more behind in their repayments. But to go beyond the statistics and tell the human impact of college loan debt on the local community, courthouse records can help.
When a student fails to repay a loan, the lender can initiate a civil action to try to collect the debt. These cases typically will start in the state court -- this may be called circuit court, superior court, district court or county court -- where the loan originated. If the loan was issued directly through the college, as opposed to a bank, then the county where the college is located will be the likely venue for the lawsuit.
A search through the index of civil actions for the name of the college as plaintiff can yield dozens of collection actions. Most courthouses provide public computer access at the clerk's office to search civil actions by party name. An increasing number are offering party-name searches online, but it's generally best to go to the clerk's office in person, because state courts rarely make the entire file of pleadings and motions available online.
To go even further, consider a check of your local bankruptcy court. Every major urban area will have a U.S. Bankruptcy Court where, as with state court, files are indexed by the name of the party and available for public inspection and copying at the clerk's office.
A personal bankruptcy proceeding provides a fresh start by "discharging" what the debtor owes to his or her creditors. But some debts get legal preference and survive a bankruptcy filing, and since 1976, student loan debt has been among them.
When a former student files for bankruptcy, the lender will show up in bankruptcy court and file a claim to declare how much is owed. This allows the lender to stake a claim to any assets that the bankruptcy court is able to identify. Those claims by lenders -- including colleges and universities -- are a part of the public file. So it's worth searching the bankruptcy court's index of creditors to see how often your college is appearing as a claimant -- and to use the information from those files to contact the individual debtors and see if they'll share their stories. (As a bonus story idea, this often also will turn up claims by a university health center seeking payment of bills for medical treatment.)
Note that while court records are a potentially useful reference, they do not come close to capturing the enormity of how many people in the community are desperately behind on their college loans.
The federal Higher Education Act authorizes the guarantors of student loans to bring actions to garnish debtors' wages without the need for a court order. The U.S. Department of Education or a state-level college loan agency -- agencies like the Michigan Guaranty Agency, the Georgia Student Finance Commission, the Iowa College Student Aid Commission and others nationwide -- may simply issue an order to employers to withhold and remit a percentage of an employee's wages. These agency orders won't be found by a search of lawsuits, so it's worth contacting your state's loan guaranty agency and finding out what statics they keep and what databases might be ripe for a freedom-of-information request.
Tagged: public records, student debt, student loan defaults, student loans, transparency, Transparency Tuesday