You are viewing this article in the archives. For the latest breaking news and updates in Ann Arbor and the surrounding area, see
Posted on Sun, Oct 7, 2012 : 3:46 p.m.

Rate of lawsuits against delinquent student loans in eastern Michigan among nation's highest

By Sven Gustafson

People who are delinquent on paying student loans from the eastern part of Michigan have one of the highest chances of being taken to federal court to recoup payments, the Detroit Free Press reported Sunday.

Eastern Michigan over the past two decades has accounted for an average of 13 percent of all federal student loan recovery lawsuits nationwide at more than 14,000 suits filed, the Freep reported. The chances of being hauled into court were higher only in the Los Angeles area.

Michigan’s relatively high rate of lawsuits are partly thanks to four private practice law firms that work under lucrative federal contracts giving them a quarter or more of what they recover.

Among local schools, Washtenaw Community College had the highest default rate for student loans at 21 percent, according to the Free Press’ database. Eastern Michigan University had an 8 percent default rate, Concordia University was at 5 percent and the rate for University of Michigan students was just 1 percent.

The average student in Michigan now graduates with nearly $26,000 in student-loan debt, the newspaper says. Those who are sued can face garnished wages, seized assets and ruined credit for years. Student loans, unlike other forms of debt, can’t be wiped out through bankruptcy.

Some economists fear that the $76 billion in delinquent student loan debt, up more than $10 billion in the first quarter of 2012, could be the nation’s next financial crisis as tuition costs continue to climb.

For more information, read the Free Press story.



Thu, Jan 17, 2013 : 9:27 a.m.

I agree that because of lack of jobs a lot of students can't afford making any payments. But we should not forget about those who irresponsible spend money not only on their education. One thing I don't like abut students who take out student loans: they start thinking about repayments only when it is a due date. Why not worrying about it while you are in the university and can have a part-time job. All they think about is having fun! I am trying to say that it is silly to blame the government or students only. It is like blaming instant payday loans for irresponsible consumers who refuse to pay back on time.


Tue, Oct 9, 2012 : 3:54 a.m.

I wish I could sell a commodity where the I knew the purchaser would always be able to get the money they need to buy what I am selling. I really don't have to worry about whther they need or not, and it doesn't matter what the quality of it actually is. Even better yet my employees are well paid, , they have pretty good job security, sometimes with cadillac benefits, and to top it off we don't pay no stinking taxes in some instances. Oh an we also get the best seats at all the events on campus. What a business model


Mon, Oct 8, 2012 : 3 p.m.

"Michigan's relatively high rate of lawsuits are partly thanks to four private practice law firms that work under lucrative federal contracts giving them a quarter or more of what they recover." Just wondering if anybody knows which law firms have these contracts.


Mon, Oct 8, 2012 : 6:14 p.m.

If you follow the link to the Free Press story you'll see all four law firms listed.


Mon, Oct 8, 2012 : 1:50 p.m.

The numbers get reported without explanation. The average debt for an undergrad from a public university is less than $8,000. From a private college it's about $17,000. From a for-profit institution it's over $31,000, where over 90% of students borrow. The $26,000 figure includes all degree levels, including med school, law school, MBA programs, etc. The average student graduates with no more debt than a used car.

Jeffersonian Liberal

Mon, Oct 8, 2012 : 1:40 p.m.

The Marxist in the White House and his progressive stooges have federalized the student loan program to ensure the votes of the young and ignorant. In the mean time this will continue to drive up the cost of tuition. Young people that are not ready for college, or have no business going will be given loans without having to qualify for them. Can you say government engineered housing collapse?

Angry Moderate

Mon, Oct 8, 2012 : 6:19 p.m.

Clownfish - if the cost of credit (the interest rate) is lower, there is more easy money available for going to college, which increases demand and decreases price sensitivity. Just like low interest rates on mortgages ramped up the price of houses during the bubble.


Mon, Oct 8, 2012 : 4:23 p.m.

Please explain how reducing student loan rates is going to drive up the cost of tuition.


Mon, Oct 8, 2012 : 1:06 p.m.

Does anybody have any proof that the people graduating and not being able to pay back debt have "basket weaving" degrees? I know several engineers and accountants that were out of work for over a year. I know a lawyer that has been declared "over qualified" for several positions and is still seeking placement after 15 months out of work. This is just anecdotal, so I don't take it as an all around view, but curious if the claims of bad degrees can be backed up, seeing as I know people with good degrees that are still looking or were unemployed for long periods.

Angry Moderate

Mon, Oct 8, 2012 : 6:18 p.m.

Most law degrees are not good degrees. Anyone can get into a school like Cooley, which offers minimal employment prospects.

Jon Wax

Mon, Oct 8, 2012 : 12:42 p.m.

Good! Pay what you owe!! you wanted a masters in fine art in the year 2012? pffff ohhhhkay. now pay for it! just cuz you realized too late that your degree is semi-useless, the rest of us are not going to be on the hook for your failure to pay your bill. pay what you owe! Peace

Unusual Suspect

Tue, Oct 9, 2012 : 6:48 p.m.

"If your so sure..." "If I learned anything from my liberal arts program..."


Tue, Oct 9, 2012 : 2:09 a.m.

My wife just got a fine arts degree and she just got a good paying job with great benefits. If your so sure all liberal arts degrees are usless post some stats and back it up and give me at least three links from different sources. If I learned anything from my liberal arts program you've got to back up your arguments. pfffff ohhhhkay

Jon Wax

Mon, Oct 8, 2012 : 7:36 p.m.

because... this story is about student loans. when there is a story about any of the issues you listed not paying up their share, i will say the same thing to them. pay what you owe. why would you think i would single anyone out? everyone needs to kick in their fair share. in the future: ad hominem never really works. keep that in mind. take notes if needed. especially when you're anonymous. Peace

Angry Moderate

Mon, Oct 8, 2012 : 6:17 p.m.

Yet medical bills, credit card bills, mortgages, and car loans can be discharged in bankruptcy. Why do you single out college students for your vitriol?


Mon, Oct 8, 2012 : 11:56 a.m.

No surprises. A lot of people who lost low skill, relatively high pay jobs during the last recession were forced/lured back into the classroom unexpectedly. These folks ended up not graduating due to being lazy or academically unqualified. If they did graduate, they graduated with basketweaving degrees ... and got another rude awakening from the job market (colleges and universities do a great job in creating nothing degree programs for lazy people.) Either way the student debt is not being paid back as agreed. One thing that could be done to avoid problems in the future is that only academically eligible people enrolled in degree programs that have some proven demand (nursing, engineering, business administration, etc.) would be eligible for loans. Unfortunately, art appreciation and women's studies majors would be left to their own devices... and rightfully so. These are interesting subjects but should be left to the more affluent as a sort of hobby style pursuit.


Mon, Oct 8, 2012 : 11:49 a.m.

If you can get into the UofM you're probably cut out for college. Anyone can get into WCC and getting into EMU isn't much more difficult. We need to stop this nonsense that everyone needs to go to college. We're making debt slaves of millions of people... which, alas, is probably the point. Yes, an education at a second tier university is worth it for some. Just not nearly as many as are persuaded to make the attempt. Admissions standards are so lax that you're not going to get an honest assessment from the non-elite unis, and even then.


Mon, Oct 8, 2012 : 2:20 a.m.

Interesting that it's the liberals who've been blaming the education bubble on the "predatory practices" of the for-profit schools. Maybe the public institutions are the problem?


Mon, Oct 8, 2012 : 4:29 p.m.

Not sure what the world liberal has to do with your post but 60% of public school undergrads borrow and graduate with an average debt of $8,000. Over 90% of students at for-profit schools borrow and they graduate with an average debt of over $31,000. I think they have fairly abysmal graduation rates as well but I don't have those figures. Personally, I think that the privatization of student loans is as much to blame.


Mon, Oct 8, 2012 : 2:16 a.m.

It's too bad that relies on "freelance journalists" to repost stories from the Free Press. I wonder what happened to the full-time education reporter that the Ann Arbor News used to have.


Mon, Oct 8, 2012 : 2:12 a.m.

"Washtenaw Community College had the highest default rate for student loans at 21 percent" No surprise there. Not putting blame off of students, but if your only "affordable" option is a community college offering a bunch of programs for jobs that were in demand more than a decade ago and next to nothing for skills currently in demand, whats a student of little options to do?

Superior Twp voter

Mon, Oct 8, 2012 : 1:56 a.m.

I think there exists an "elephant in the room" here in SE Michigan. And it's NOT the law firms who pursue these outstanding loans. However, in today's P C world, one cannot attempt to expound on any causal factor(s) that don't fit within the P C police parameters.

Angry Moderate

Mon, Oct 8, 2012 : 6:15 p.m.

Jon Wax - if they were sponging off mom and dad, they wouldn't have to take out non-dischargeable loans to pay for school. It is no longer possible to pay tuition by working part-time for minimum wage, as it was previous generations.

Superior Twp voter

Mon, Oct 8, 2012 : 3:09 p.m.

Was not quite what I had in mind, Jon Wax, but may be very valid!

Jon Wax

Mon, Oct 8, 2012 : 12:44 p.m.

i'll do it! it's about a bunch of overentitled brats who got gassed up on "You can do anything!" then they went out and rather then having to deal with real life, they sponged off mom and dad for years while going to college. now the real world is catching up to them and you can see how they wiggle and squirm in an effort to find any way possible not to pay those loans back. how's that? close? Peace


Mon, Oct 8, 2012 : 1:49 a.m.

Note that the default rate is based on students that don't pay within 270 days within the first year of repayment only. Those that default after the first year are not counted in the Department of Education statistics. Additionally, the collection fee paid to collectors and or attorneys to collect is added onto the loan total including capitalized interest. The quoted average $26,000 loan could easily balloon to over $40,000 as a result. What students should keep in mind: If the loans are in default, consolidation is almost always the worst deal. The collector or attorney will push for this as it is easy money for them (the maximum collection fee is rolled into the new consolidated loan). The better option to consider is loan rehabilitation, which can return loan(s) to good standing and potentially eliminate collection fees ( The Federal Student Loan Ombudsman office at the Department of Education can determine eligibility. Student loans will never go away, so don't let them default in the first place. Forbearance and deferment are options to delay payment. It's also important to know who is on the other end of the phone. Before a loan is officially considered in default, there are statutory requirements that must be executed to attempt to rescue the loans. It is not uncommon for the same collection firm to be awarded the contract for both pre-default and post-default collection. It's an unfortunate conflict of interest, where a defaulted loan is much more lucrative than a rescued loan. The Federal Student Loan Ombudsman office is the best source if information as a student nears default. Making a payment within the 270 day window can freeze the default process, too.

Jack Campbell

Sun, Oct 7, 2012 : 11:32 p.m.

I have 120k is student loan debt and manage to pay it no prob with a modest income. 26k? cry me a river.

Unusual Suspect

Tue, Oct 9, 2012 : 6:51 p.m.

How the heck did you end up with 120K in loans? What school(s) did you go to, and what degree(s) did you end up with?

Unusual Suspect

Tue, Oct 9, 2012 : 6:45 p.m.

Boo, as a child, there's nothing wrong with it. As an adult, there is plenty wrong with it.


Mon, Oct 8, 2012 : 2:11 p.m.

It was a joke. Get over it!

Boo Radley

Mon, Oct 8, 2012 : 1:20 p.m.

And what is wrong with living with your parents while paying off loans, or for any other reason?


Mon, Oct 8, 2012 : 12:53 p.m.

djacks, you just accused someone of trolling and having no proof of their comment...where is your proof that jack lived with his parents while paying off his loan...come on!


Mon, Oct 8, 2012 : 5:16 a.m.

In defense of Jack - He probably qualified for Income Based Repayment and doesn't have to live at home. Its mainly the kids who take private loans who are in the hole.


Mon, Oct 8, 2012 : 2:16 a.m.

How was it living with your parents while paying off that debt?


Mon, Oct 8, 2012 : 1:39 a.m.

Jack, did you study law or medicine? If so, I'm glad you were able to pay off your loans.


Mon, Oct 8, 2012 : 1:31 a.m.

(... scratching head?!?) Was it worth it?! Thinking there is more to this story.


Sun, Oct 7, 2012 : 8:59 p.m.

Thanks President Obama for your laser focus on jobs! If these people had jobs other than "Hamburger Flippers" they could afford to pay off their student loans


Mon, Oct 8, 2012 : 1:02 p.m.

What would you have done in 2009, XMO? i thought Rick Snyder was going to turn MI around, you told us that. What happened?

Superior Twp voter

Mon, Oct 8, 2012 : 1:52 a.m.



Sun, Oct 7, 2012 : 11:43 p.m.

Default means students who are not in deferment or Income based payment. If you are unemployed or flipping burgers, your repayment amount will be little to nothing. There is much more default in private loans with super high interests rates and no deferment or income based repayment plan.


Sun, Oct 7, 2012 : 10:42 p.m.

You mean TARP that passed under Bush in 2008 and was left for Obama to administer?

Tom Todd

Sun, Oct 7, 2012 : 10:10 p.m.

bailed out banks got free money that helped the economy how?


Sun, Oct 7, 2012 : 10:03 p.m.

And tax cuts for mega-millionaires will help this situation how?

Jay Thomas

Sun, Oct 7, 2012 : 8:36 p.m.

The majority of EMU students don't graduate. I'm only surprised the default rate isn't even higher.

Evan Smith

Mon, Oct 8, 2012 : 3:05 a.m.

The four year graduation rate at EMU is an astonishingly low of 12.3%. The 6 year graduation rate isn't much better at only 37.7% EMU must do a better job in helping make sure these students graduate on time, because these numbers are just horrifying.


Mon, Oct 8, 2012 : 2:14 a.m.

Got proof or do you just like to be a troll?