Top 5 FFEL Considerations
The federal government is increasingly using private collection agencies (PCAs) to rehabilitate and collect delinquent debt. In addition to the Internal Revenue Service’s use of PCAs in the collection of unpaid taxes, the Department of Education (ED) has continued to expand its use of PCAs in the collection and rehabilitation of its portfolio of defaulted student loans. Given that Ed’s portfolio of defaulted student loans stands at over $40 billion, the need for private agency cooperation in servicing these loans will continue to grow.
For agencies large and small alike, several key points should be considered in your evaluation of whether or not participation in the ED contract will work for you:
- Substantial upfront capital requirements
- Highly consolidated market
- Data Security and the Office of the Inspector General
- Recent legislative change in CCRA may impact the FFEL market
- Alternatives to FFEL Collections
In addition to describing these points in detail, this white paper also summarizes the current legislation related to the Higher Education Act in the 110th Congress.
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