Aoun brings in district attorney to assess debt collection

Northeastern University President Joseph Aoun recently asked alumnus and former Suffolk District Attorney Ralph C. Martin II to propose changes to the school’s debt collection practices after The Boston Globe published a report Dec. 20, stating that Northeastern had the highest collection fees out of the schools examined. Also looked at were Boston University and Suffolk University.

The U.S. Department of Education plans to suggest limits early next year on how much universities can charge former students in collection fees if they fail to pay government loans.

“At this point, Mr. Martin is asked to look at the entire issue, and we’ll report back to the president,” said Fred McGrail, director of communications and public relations at Northeastern.

The Globe reported that colleges regularly charge debtors collection fees between 33 and 50 percent of the original balance on loans or unpaid tuition. People with other types of debts, like on credit cards, usually pay much smaller collection fees.

The Department of Education caps collection fees at 25 percent for the loans it administers. The collection fees on other loans, including the Perkins loan, which gives at least $1 billion each year to low-income students, are set by the universities.

The department aims to publish an official proposal in the beginning of May, seek public comment and have the new policy in place by Nov. 1, officials said in a release. It would create rules in collaboration with representatives from universities, student and consumer groups and loan companies.

In the Globe report, college officials defended their collection efforts as the last resort after students failed to respond to college negotiations. Officials said they make no profit on the fees, and the fees are necessary in order to balance their budgets.

Schools typically try to collect the debt for a few months with letters and phone calls before sending the cases to a collection agency, according to a Nov. 19 Globe article. If the first agency is unsuccessful, they sometimes hire a second one. Usually schools file suit only after more than nine months of unsuccessful debt collection.

But McGrail said that the number of cases in which the collection fee reaches high percentages, like 66 percent, are minuscule.

“These are well under one percent of the cases,” he said.

Angela Duffy, a sophomore music industry major, said she has many student loans and worries about them a lot.

“I think about them everyday. It is going to take me so long to pay them off, but I will always pay on time; I have excellent credit,” she said.

According to the Dec. 20 Globe report, President Aoun refused to say whether he believes Northeastern’s collection process was unreasonable, because he did not want to prejudge Martin’s work. He said Martin’s results would be made public, without confidential information about specific students.

“I don’t know what [the report] will say. Mr. Martin will go in there with an open mind, and the president looks forward to seeing [the results],” McGrail said. Martin is scheduled to report back by March 1.

Aoun told The Globe he chose Martin to conduct the review because of his integrity and his love for Northeastern.

Chris Kelley, student government vice president for financial affairs, said he thinks Northeastern will see significant changes in the collection fees once Mr. Martin submits his report.

“I think that we will hopefully see administration be more responsive toward student finances,” he said.

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