Government cracking down on unpaid student loans

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Government cracking down on unpaid student loans
Lynne Marek / Staff reporter
February 13, 2009

CHICAGO — The United States is filing a slew of civil lawsuits this month in federal court in Chicago against people who received government student loans, as long ago as the 1980s, and have failed to repay the funds.

The U.S. Department of Justice contracts with private law firms to bring the cases and has recently renewed a contract that could lead to the filing of as many as 20 new cases per week for the first few months of this year. The government notified the clerk of the U.S. District Court for the Northern District of Illinois at the beginning of the year that those cases may be flowing in for the next few months, said Randall Samborn, a spokesman for the U.S. Attorney's Office for the Northern District of Illinois.

"The government pursues recovery of money it's owed," Samborn said. "Unfortunately, student loan defaults are a voluminous source of litigation."

The collections firm in Chicago that's handling the cases is Teller, Levit & Silvertrust, which has eight attorneys. The lawsuits have been filed by attorney Margaret Keen, who the firm's Web site says specializes in student loan and post-judgment collection. She referred questions to Harold Stotland, another lawyer at the firm who said he was unaware of an increase, though he acknowledged that his firm entered a new contract with the government for the program in the past six months to a year.

In one lawsuit filed on Feb. 12, the complaint states that the defendant owes $5,141 in principal and $4,741 in interest on a guaranteed student loan that is accruing $1.13 per day. U.S. v. Alonso, No. 09-887. While the lawsuits are signed by U.S. Attorney Patrick Fitzgerald, who is in Chicago, the program is run out of the main Justice Department in Washington, Samborn said.