If you’ve got student loan debt—especially unpaid student loan debt—there’s a story out of Houston that probably landed on your radar this week. As explained by New York magazine’s Daily Intelligencer blog (under the headline “U.S. Marshals Are Arresting People in Texas Who Have Outstanding Student Loans“), the stakes in student loan debt collection just shot way, way up:
Here’s what the U.S. government says about the student loan you may have been tardy about paying back: “If your loan is placed with a collection agency, you will be responsible for costs incurred to get payment. The holder of your loan can take other actions to collect as well.” Those “other actions” involve withholding your tax refund or, in some cases, garnishing your wages. And, this week in Texas, they began to involve federal agents in combat gear bursting into debtors’ houses and arresting them.
The story went understandably viral. Debtors’ prisons are illegal, so the idea that people are being arrested and jailed simply for unpaid student loan debt—perhaps the most pernicious debt of all, since it can never be discharged by bankruptcy—struck a chord with people concerned with debt and fairness.
The case in question involved a Houston man named Paul Aker, who told Fox26 that he was taken at gunpoint to a federal court, where he was forced to sign a payment plan for a 29-year-old student loan. The report from Fox26 cited an unnamed “reliable source” within the U.S. Marshal’s office in Houston that said that Aker “isn’t the first and won’t be the last” to be arrested for failing to pay their loans. They also cite U.S. Rep. Gene Green (D-Houston), who explained to the network that “the federal government is now using private debt collectors to go after those who owe student loans.” That’s, er, not exactly new—private debt collectors have been pursuing delinquent student loan holders for some time—but Green explains that those private debt collectors are “getting judgments in federal court and asking judges to use the US Marshals Service to arrest those who have failed to pay their federal student loans.”
That’s all certainly disturbing to hear about in a country whose laws prohibit debtors’ prison. But The New York Times says that it’s not entirely true.
Specifically, the Times talks to sources in the Marshals Service that say that it wasn’t a simple matter of Aker falling behind on his payments and being arrested. As the paper reports:
[A]s is the case with many stories that are shared widely online, the truth is a bit more complicated: Mainly, the authorities said the Houston resident, Paul Aker, was arrested after he disregarded years of orders to appear in court and address the repayment of a student loan from almost three decades ago.
When United States Marshals finally made contact with him last Thursday, officials said he threatened two deputies.
So for the millions of Americans who may worry that the authorities will show up with handcuffs to collect old student debt, Mr. Aker’s arrest is hardly typical — as long as you respond to the government’s requests to pay up.
That’s a reassuring clarification for sure—don’t ignore court-ordered requests to appear in court, don’t threaten to shoot deputies who show up at your door, and you won’t be arrested!—but it may be as misleading as the report that seven U.S. Marshals are minutes away from kicking your door down if you have a student loan in default.
It’s true that U.S. Marshals can’t just show up and arrest anybody whose loan is past due. But it’s also true that private debt collectors have leveraged the courts in ways that have put people at risk of arrest without having threatened any federal officers or willfully disregarding court orders. Specifically, there’s a history of debt collectors seeking “failure to appear” bench warrants against debtors who never received notices. NPR reported on the practice back in 2011:
Although debtors’ prisons are illegal across the country, it’s becoming increasingly common for people to serve jail time as a result of their debt.
Collection agencies are resorting to some unusually harsh tactics to force people to pay their unpaid debt, some of whom aren’t aware that lawsuits have been filed against them by creditors.
The NPR story cites a specific woman in Illinois who never received any notices, which isn’t unheard of. According to a Wall Street Journal report from the same year, “sloppy, incomplete, or even false documentation […] can result in borrowers having no idea before being locked up that they were sued to collect an outstanding debt.” (Debt collectors describe the practice as extremely rare, though a 2011 story from the Minneapolis Star-Tribune noted that the practice had spiked by 60 percent in Minnesota over a four-year span.) In the state of Washington, meanwhile, lawmakers passed a bill that same year requiring debt collectors who seek bench warrants against parties who fail to appear in court to provide proof that debtors had been fully notified of all lawsuits and court judgments against them.
All of this is to say that there are a lot of misleading headlines out there regarding this case. “U.S. Marshals Are Arresting People In Texas Who Have Outstanding Student Loans” is one of them, but “Viral Student Loan Nightmare Is Not What It Seems” is another—or, at least, the conclusion that this can’t happen to anybody who doesn’t have a stack of unheeded orders to appear in court sitting on their kitchen table and a gun they’re eager to tell federal agents about is a bit hasty. This may not be the new normal for people with student loan debt, but it’s all a lot more complicated than it sounds.