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NCLC Sues The Dept. of Ed Over Debt Collection

May 20, 2014 | Adam S. Minsky, Esq. Default Pay-As-You-Earn Policy & Reform Private Student Loans

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This week, the National Consumer Law Center (NCLC), a consumer rights policy and legal advocacy organization based right here in Boston, announced that it is suing the U.S. Dept. of Education under the Freedom of Information Act (FOIA) for its secretive debt collection practices.

By way of background, the Dept. of Education contracts over 20 private collections agencies to collect on its defaulted federal student loans. Taxpayers foot the bill for these collections contracts, which cost over $1 billion in 2011 alone. The Dept. of Education projects that these costs may eclipse $2 billion by 2016. There is widespread agreement that many of these debt collection agencies routinely misrepresent student loan law and violate consumer protection statutes. Nevertheless, this federally subsidized debt collection business is booming, and contracts are routinely renewed by the Department despite widespread abuses.

NCLC stated that they have tried for over a year to obtain information under FOIA on secret contracts between the Dept. of Education and individual debt collection agencies in order to obtain details on Department oversight of the industry, and financial incentives that are provided to the companies. The Dept. of Education failed to fully comply with NCLC’s request, so NCLC filed suit in federal district court.

It will certainly be interesting to see how this turns out. The contract details between the Dept. of Education and debt collectors would shine a huge light on how these operations actually work, and could provide a foundation for reform.

Read NCLC’s press release here.

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Default Pay-As-You-Earn Policy & Reform Private Student Loans

About Adam S. Minsky, Esq.

Adam S. Minsky founded the first law office in Massachusetts devoted entirely to assisting student loan borrowers, and he is one of the only attorneys in the country practicing in this area of law. He provides counsel, legal assistance, and direct advocacy for borrowers on a variety of student loan-related matters. He regularly speaks to students, graduates, and advocates about the latest developments in higher education financing.

Books by Adam S. Minsky

The Student Loan Handbook for Law Students and Attorneys

The Student Loan Handbook for Law Students and Attorneys

Student Loan Debt 101

Student Loan Debt 101: The Definitive Guide to Understanding and Managing Your Student Loans

Student Loans for Parents and Cosigners

The Student Loan Guide for Parents and Cosigners

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asminsky@minsky-law.com
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Boston, MA 02110

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