ED to Delay New Collection Contract Award Announcement

The Department of Education will not be announcing the winners of a new student loan collection contract in September as anticipated.

ED sent notices to the 26 collection agencies that had qualified to bid on the contract telling them that a decision was not expected by the end of the month. A spokesperson for ED declined to provide further comment to insideARM, but did send a copy of the notice sent to the bidders.

"The Government is in the process of reviewing the proposals dated June 26, 2008, this serves to inform you that we do not anticipate making an award by this Fiscal Year," the department said in the statement. The fiscal year ends September 30. There is no indication when the new contractors will be announced and there was no reason given for the delay.

ED’s Federal Student Aid (FSA) unit, the department that administers the debt collection program, had previously expected to announce the new contractors by the end of September. The current student loan collection contract, awarded in 2004, is due to expire next year.

FSA also announced earlier this month that it had changed the standard for determining whether a company qualifies as a “small business” under the contract.

Companies that have average yearly revenues of $7 million over the past three years will be considered small businesses. The previous maximum was $6.5 million.

The ED collection contract has a small business set aside contract for firms that fall under the threshold. Of the 17 collection agencies currently on the contract, five are on the small business set aside.