On March 16, 2017 the U.S. Department of Education (ED or Department) issued a “Dear Colleague” letter withdrawing the statements made in its “Dear Colleague” letter dated July 10, 2015. That letter was titled “Repayment Agreements and Liability for Collection Costs on Federal Family Education Loan Program (FFELP) Loans,” and prohibited guarantee agencies from charging collection costs to borrowers who have defaulted, but quickly enter a repayment agreement.
Last week’s letter says the position stated by ED in the July 2015 letter did not incorporate public input, and therefore is being withdrawn.
The original letter came about after the U.S. Court of Appeals for the Seventh Circuit requested ED’s input in the case of Bible v. United Student Aid Funds, a case in which a consumer challenged the assessment of collection costs which defendant claimed were permitted by the regulations. In response, the Obama Adminstration's ED Department submitted an amicus brief announcing its position that collection costs should not be charged, and later issued the Dear Colleague letter, clarifying its previously ambiguous rules.
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