Texas Student Loan Collection Follies: AG Ken Paxton collects grand total of $54.12 by garnishing student loan debtor’s bank account; bank gets $600.00 for its trouble, for a total haul of $654.12

HOW THE STATE OF TEXAS SQUEEZES A FEW ROCK-BOTTOM DOLLARS 
FROM STUDENT LOAN DEBTORS 

Texas Attorney General Ken Paxton presides over a well-oiled litigation machine optimized to extract money from people who have fallen behind on payments on the state-sponsored student loans funded and administered by the Texas Higher Education Coordinating Board (THECB). 

To be sure, keeping the flow of payments coming is important to the long-time viability of the student loan system if it is to be self-sustaining (as opposed to being supported by general revenue). 

But consider this:

On February 1, 2019, the Attorney General went after one of the wayward student loan borrowers with a writ of garnishment against two banks suspected of holding funds owned by the judgment debtor:

One bank was nonsuited, presumably because the ex-student had no account there. The other one, JPMorgan Chase, reported that the customer/judgment debtor had the princely sum of $654.12 sitting in his account.

***

The Garnishee Bank wants $600 in attorney's fees 

Given the measly amount, it is reasonable to guess that the debtor is in the habit of living paycheck to paycheck, and that the sum was what’s left from the most recent pay period.

On April 2, 2019 a judgment of garnishment was duly entered for the benefit of garnishor and garnishee. The garnishee bank was awarded $600 in attorney’s fees and State recovered a net of $54.12 to be applied to the loan balance. Based on the State's application for the writ of garnishment, the amount of the underlying judgment is $45,094.00. 

Does this make sense? Even if only looking at it from a cost-benefit perspective? 

Judgment of Garnishment in THECB student loan case 

A private bank gets $600 for its rather minor trouble of having to file an answer in the garnishment action and forking over its customer’s money to a third party; the State collects $54.12 to help assure the viability of its student loan program. Meanwhile, the debtor, who had his account balance frozen, then seized, may not be able to buy food and pay bills until the next paycheck amount is direct-deposited into his checking account.

  

The student loan debtor is out $600 that did not go to reducing the outstanding debt on the judgment owed to the State, but went into the coffers of the bank that clean out his account per court order.

If you look up the case documents, the is-this-right question gets even pricklier.

Turns out the underlying judgment was signed Apr. 21, 2006. So it is more than 12 years old; it was granted for $16,232.97 plus $97.50 costs of suit with a 9% interest rate. A prior execution attempt in 2006 turned up no assets to seize.

Nulla Bona Execution Attempt in 2006 

So the Attorney General is now (in 2019) trying to collect a sum that is about three times the original judgment amount. It has been augmented greatly thanks to the much higher interest rate in 2006. In recent years the judgment interest rate has been 5%.
    

Paxton sues hundreds of former Texas college students who defaulted on THECB student loans each year at the Travis County courthouse, conveniently located a few blocks for his headquarters in Austin, Texas. Not so convenient for the ex-collegiate defendants around the state, and some beyond, but that does not really matter because they all end up with default judgments or summary judgments in any event. Even if they were to hire a private attorney to enter an appearance, it is for naught, except that it may postpone the highly predictable outcome: but only for a few months, at best. 

Writ of Execution in 2006 turned up no no-exempt assets