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Department of Education Collections

The U.S. Department of Education currently has responsibility for all federally-backed student loans that go into default through its Federal Student Aid unit. In addition to using extensive internal resources to rehabilitate some borrowers, FSA contracts with 22 private collection agencies to help recover the debt. FSA updates the performance of each collection agency in a comprehensive report every month.

government-contracts

Collection Agencies Choose Sides in Busy Week for ED Contract Protest Case

This week saw a flurry of activity in the Court of Federal Claims case against the Department of Education over its decision to end student loan debt collection contracts with five collection agencies. The end result is a consolidated case that pits four collection agencies — with two others supporting as amici — against the United States and five other collection agencies on the contract.

Student Loan Debt

Collector Layoffs Proceed at ED Contractors as Obama Announces Student Loan Changes

At least two private debt collection agencies have filed notices with their states notifying officials that they will be forced to lay off employees in the wake of the U.S. Department of Education’s announced winding down of collection contracts with five of its vendors. Separately, President Obama today is unveiling a Student Aid Bill of Rights that may further impact the student loan collection market.