GW takes more former students to court for unpaid loans

The University will go to court early next month to reclaim almost $20,000 in loan defaults from former students.

GW and its top financial aid official Daniel Small are suing four former students from the 1990s and 1980s for about $4,500 each, totaling $18,281.25 in D.C. Superior Court. The University’s lawyers filed the small claims request at the end of last month.

The defendants are Penelope Stewart, Karen Williams, Jemessia Edwards and Darin Stringer.

Three of the defendants defaulted on their Perkins loans, made up of federal dollars given to GW, of which the University matches about one-third. Another defaulted on his National Direct Student Loan Fund. Perkins loans must be paid back within 10 years of graduating.

In January, Provost Steven Lerman defended the controversial practice after Al Jazeera reported on earlier lawsuits, saying that it’s a last-resort move required by law.

“Anyone who makes a reasonable effort to communicate with us and any even reasonably token effort to try to work with us, of course we’re not going to bring in to court,” Lerman said then. “But many of these are people who have refused to communicate with us over multiple years, and we have sort of reached the point where we think the law has required us to pursue these.”

GW’s Perkins Loans pool is about $4.5 million, which is smaller than other scholarship options. The financial aid office needs to recover the money in that pool from indebted students to loan out more money to incoming students.

“It is not being replenished, and so when we do manage to collect money for it, the first thing that happens with that money is it gets cycled out to be additional loans. And if we don’t get the money, unfortunately, we cannot make future loans,” Lerman said.

GW sued more than two dozen former students for failing to pay off their loans two years ago, joining three other East Coast schools – including Yale University and the University of Pennsylvania – that have brought defaults to court.

While student loan debt and defaults have soared across the nation over the past decade, only 1.5 percent of GW students default on their loans, a relatively low rate. More than 11 percent of borrowers nationwide couldn’t make their payments in 2012.

The average debt load with which GW students graduated in 2012 was $33,399.

Still, Richard Vedder, director of the Center for College Affordability and Productivity, said the practice is immoral because the students likely weren’t given transparent data on GW graduates’ average salaries. He added that that issue was compounded by the students taking out the loans when they were young, with little experience managing their personal finances.

“Okay, the kids owe money. And the school wants to get the money back,” Vedder said. “But, you know, from a moral perspective and an ethical perspective, one can’t help but think that when the student applied to GW they weren’t told that there is a significant probability they would not graduate, and if they did graduate, they would get a job under $40,000 a year.”

He added, “I’m not saying they should never. If these are egregious cases, then it’s good to make an example of these students.”

The University is also asking for attorney fees and other costs. The court will hear the case on April 2.

-Chloe Sorvino contributed to this report

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