The U.S. Department of Education contracts out the collection of defaulted federal student loans to nearly two dozen private, third-party debt collection agencies. Borrowers, advocates, and the media have been severely criticizing the Department (quite loudly) after various independent reports accused many of these debt collection agencies of engaging in abusive and deceptive practices that violate federal law. These reports have accused the Department of poor and insufficient oversight of its contractors. Despite this, the Department has repeatedly ignored the criticism and renewed its contracts with many such agencies.
This may be changing. Perhaps in response to the growing chorus of criticism, the Department recently announced that it is terminating its contracts with five of its debt collection agencies, including:Read More