College Credit

A squeeze on loan deadbeats

During the past 25 years, millions of students have received Federal Government loans to help defray their college expenses. But 1.5 million of them have since flunked a morality test: they have failed to repay their debts, leaving Uncle Sam holding the bag for $1.8 billion. Last year Education Department officials used a computer search to identify 46,000 federal employees among the defaulters. Result: 5,000 promptly anted up $2.3 million. Now the remaining 41,000 are being told they must pay up in 30 days or their wages will be garnisheed at the rate of 15% per paycheck (25% if they sue the Government and lose). To pressure nonfederal debtors, the Government is negotiating a plan with credit bureaus that would place a black mark on the credit ratings of citizens who are lagging in repaying their Government loans. That measure might go into effect by the end of this year. This file is automatically generated by a robot program, so viewer discretion is required.