Did you hear the one about the Bloomberg reporter ripping the entire student loan debt collection industry? It is almost too outrageous to believe unless you read yesterday’s article written by Bloomberg News reporter John Hechinger and unless you’ve focused your business life on the affairs shaping the collection industry since before the start of the great recession.
The nasty joke goes something like this: Shortsighted, mudslinging news person from reputable business resource attempts to bash bill collectors focused on recovering past due student loans ends up with a rambling, one-sided, feeble, and inaccurate portrayal of an entire industry.
Hechinger starts with the headline “Obama Relies on Debt Collectors Profiting from Student Loan Woe,” and proceeds to throw everything he possibly can into his tirade against collectors.
I have a hard time classifying this piece as “journalism” because I cannot see how it fits into the same category as the numerous articles that properly, objectively, and thoroughly cover a topic instead of jumping on the bandwagon of bashing sessions that began five years ago in the mortgage industry, moved through banking sector, and on to debt buying industry before finding its way into student loans.
Am I wrong? If so, please show me my errant ways. But before responding, consider the following excerpts from the first 2 pages of Mr. Hechinger’s piece.
Quote #1: “With $67 billion of student loans in default, the Education Department is turning to an army of private debt-collection companies to put the squeeze on borrowers.”
The reporter chooses his words carefully to sensationalize the topic to his advantage. The fact is that student loan collectors are carefully scrutinized by the US Department of Education, an agency of the Federal government that would not tolerate collectors “putting the squeeze on borrowers.” In fact, if you review their score card like I have, you would know that number of complaints is watched very closely. Let’s move on.
Quote #2: How about the phrase “growing complaints that they are violating federal laws”?
It is absolutely true that the number of consumer complaints against collection agencies has grown to very significant levels ranking them at or near the top of complaint lists in recent years. No one in the collection industry should dispute this and everyone should do everything they possibly can to reduce the number of complaints levied against collectors.
That said, I encourage everyone to re-read the article written by Mike Bevel of insideARM just last week on this topic, because it is very well done. A large number of the complaints are simply not valid and I am certain student loan collectors working for the Department of Education score at the bottom of this list because anything more will absolutely not be tolerated.
And my favorite is Quote #3: “Former debt collectors said they worked in a ‘boiler-room’ environment, where they could earn bonuses of thousands of dollars a month, restaurant gift cards and even trips to foreign resorts if they collected enough from borrowers.”
Here’s a question for our reporter friend, Mr. Hechinger: How many student loan collection agencies did you walk through to come up with this statement? I venture to say zero. If he did, he would see that every collection agency that has the ED contract has a clean, professional and secure working environment for each and very professional collector they employ. There are absolutely zero exceptions to this fact. Zero! I know because the Department has very stringent requirements that they closely monitor and I have personally walked through almost all of them myself. There are currently 22 of them and I doubt our friend has been to one.
Maybe he watched this clip from the movie Boiler Room instead of doing his homework for this piece. Great movie but this is not an accurate portrayal of student loan collectors. I guarantee it.
I could go on and on but you get the idea how poorly written and inaccurate this article is.
Anyone who knows me knows that I am passionate about the collection industry and I am always up for a good challenge. I will put my money where my mouth is and call upon anyone in the media profession who wants to create a balanced portrayal of student loan collections or, for that matter, any sector of the accounts receivable management industry, to give me a call. I will be happy to work with you to get it right. Until that time, it is a shame that agency owners and executives need to spend their time reacting to consumers, clients, staff and investors who read this article instead of professionally servicing the clients who engage their services.
Mike Ginsberg is the president and CEO of Kaulkin Ginsberg Company. You should follow him on Twitter: @mike_ginsberg.