Is the Department of Education using unlawful debt collectors?
After news surfaced that the United States Department of Education would forgive the student loan debt of some associated with the Corinthian 100, more students and borrower advocates are questioning the collection practices of the department.
According to the Huffington Post, the department isn’t sure if the debt collectors used to gather funds from former students are doing so within the confines of the law.
“In March, Education Undersecretary Ted Mitchell told borrower advocates that he wasn’t confident the department’s debt collectors were in compliance with federal debt collection laws.”
That’s fairly startling considering the department outsources nearly all of its collection services. If the companies responsible for aggregating monies owed to the federal government through students loans, one would think that it should be attained through legal means, yes?
Good news did emerge from this bit of information, though. The Huffington Post reports that “the Treasury Department has launched a pilot program in which federal employees, rather than private contractors, try to collect on a small portion of defaulted student loans.”
Through the program the department wants to learn if federal employees are able to collect more money from defaulted student loans than the outsources organizations.
If the program works, that’s even better news. But some of the collection agencies that have been acquired to handle student loans act illicitly at times. Giving more options and possibly more time for former students to repay their loans may be in the best interest of the federal government.
With debt ballooning due to the student loan crisis, a test program regarding collection services may be just a dip of the toe in the water. More drastic measures may be needed to properly address the issue.