Debt Collection and Your Student Loans

If you are currently in default on your student loans, it is important to follow the news about the U.S. Department of Education’s (DOE) plans for debt collection. According to a recent article in Inside Higher Ed, earlier this month the DOE indicated that it “had awarded contracts to collect on defaulted student loans to two firms, Performant Recovery Inc. and Windham Professionals.” For a number of months now, consumer advocates and debtors have voiced concerns about the DOE’s debt collection practices, which some argue do not give consumers the opportunity to get back on track with their student loan payments.
We want to say more about the DOE’s debt collection plans and to remind consumers about their rights under the Fair Debt Collection Practices Act (FDCPA).
Debt Collectors Set to Makes Hundreds of Millions from New Contract
There are numerous concerns about the DOE’s debt collection contracts with Performant Recovery Inc. and Windham Professionals. First, many consumer advocates argue that debtors who have newly gone into default should have the opportunity to “rehabilitate their loan debt.” However, when accounts with recent defaults are turned over to debt collection companies, former students who are struggling to repay their loans—and may miss a few months’ worth of payments—do not always have the opportunity to catch up on what they owe. This can lead to a cycle of debt and ongoing financial difficulties.
Last year a judge blocked the DOE “from assigning newly defaulted accounts to debt collectors” precisely for this reason when the Department attempted to award contracts to different debt collection companies.
Another significant problem with the DOE contracts is that the companies who will be doing the debt collecting could stand to earn as much as $400 million, and Education Secretary Betsy DeVos has ties to Performant Recovery. As the article explains, prior to becoming Education Secretary, DeVos had invested in Performant Recovery. While “she was required to divest from holdings in the firm within 90 days of her Senate confirmation,” consumer advocates are concerned about her ties to a company that could gain hundreds of millions through its contract with the DOE.
Knowing Your Rights Under the FDCPA
Even if the debt collection companies hired by the DOE begin contacting you about student loan defaults, it is important to remember that you have rights as a consumer. Specifically, the FDCPA says that debt collectors cannot do some of the following:
  • Call your place of employment;
  • Contact you outside the hours of 8:00 a.m. and 9:00 p.m.;
  • Call or otherwise contact anyone besides you or your attorney to discuss outstanding debts;
  • Threaten you with violence, arrest, or property seizure;
  • Call you repeatedly with the intention of annoying you;
  • Lie to you; and
  • Use obscene or profane language with you.
Consumers have additional rights under the FDCPA, and if you believe you are being harassed by a debt collection company, you should reach out to a consumer protection lawyer.
Contact a Consumer Protection Attorney in Oak Park
Do you have questions about your rights as a consumer when it comes to debt collection practices and the FDCPA? An experienced Oak Park consumer protection attorney can speak with you today. Contact the Emerson Law Firm for more information.
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