DoE Will Stop Using Private Debt Collectors For Defaulted Student Loans

7 June 18

 Debt collectors

The Department of Education has announced plans to stop using private debt collectors to go after student loan borrowers who have defaulted on their loans. Instead, the DoE will use current loan servicers.

According to the letter from several Democratic senators , the government is responsible for ensuring people had access to affordable education, and that the department’s use of private debt collectors is a threat to that responsibility. The senators also expressed concerns about how effective the methods were and the taxpayers’ cost.

In a Feb. 5 letter, several senators had also asked the Inspector General of the DoE to look into whether the use of private debt collectors was the misappropriation of taxpayer money.

Calif. Sen. Kamela Harris said all students should be able to afford an education that lets them attain their full potential. She said the DoE’s decision to stop using private collection debt agencies is a step in the right direction. She said their effectiveness is questionable and are taxpayers’ burden. Harris said direct resources should be used to ensure student borrowers do not default rather than chasing down those who do default.

Wash. Sen. Patty Murray said higher education is about opening news opportunities but that most students must take out ridiculous amounts of money to pay for their degree. And, when they struggle to pay their bills and debt back, they have private debt collection companies going after them. She said she was happy to hear that DeVos is listening to Congress and helping the millions of student loans borrowers in need of the DoE’s help.

Mass. Sen. Elizabeth Warren said using private student loan debt collectors is a problem for, not just student loan borrowers, but for taxpayers footing the millions of dollars to pay them for their job. Warren said many debt collection agencies have a shady history – some even breaking the law – to get students to pay back their debt.

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