Profits vs. students’ interest
As long as the National Student Loan Service Centre is in a private company's hands, don't hope for improved service
Nelnet understood the tension between its interests and the interests of borrowers. In 2005, Nelnet filed documents with the American Securities and Exchange Commission that stated they were concerned that their profits would drop if borrowers paid off their loans too quickly.
The result of this clash of interests is shoddy service. This testimony was posted anonymously on jobvent.com by an employee of a Nova Scotia branch of the Resolve corporation: “They have such a ridiculously HIGH turnover they must hire people who have lower competency levels… And, the people they get to train you were merely trained recently.”
A Vancouver woman named Dianne Russell has intimate experience with this kind of conflict of interest. She went to school in the early nineties, and has had a loan since. About eight months ago her father received an inheritance, and decided to help her pay off her debt in full. She hired John A. Leblanc of the Canadian Financial Wellness Group, an organization that deals largely with student loan holders in crisis. After eight months of emailing and faxing NSLSC, Leblanc has been unable to figure out how much Russell owes.
“It’s really frustrating,” Russell says, “because I want to pay it down, and I can’t.” Her theory is that the NSLSC is putting off settling in order to prolong interest payments. “We’ve been stonewalled, at every attempt to nail something down… they’re basically refusing to tell me how much I owe,” she says.
Before this, her debt had been sent to collections, so the government had put a lien on her income tax return, which was supposed to have been going to her student loan. But the forensic accountant Russell and Leblanc hired could find no evidence that that money had been applied to her loan. “Where has my tax money gone?” she asks.
It’s a question that all Canadians should be asking of the NSLSC. The government is spent $66 million in 2006-07 on the service centre (in addition to $18.5 million paid to collection agencies). By 2009-10 NSLSC costs are projected to climb to almost $90 million. While this same conflict of interest could definitely apply to a publicly run NSLSC — governments try to make money too — at least this money would stay in the public sector, where it could be put towards more services and programs, rather than line the pockets of the stockholders of an American company.
