(pshorten) Consumer advocates applauded the Department of Education’s announcement last week to end contracts with five private collection agencies that provided inaccurate information to borrowers. On Friday, the Dept. of Education revealed that it would wind down contracts with Coast Professional, Enterprise Recovery Systems, National Recoveries, Pioneer Credit Recovery, and West Asset Management after conducting a review of agency practices. The Department’s Federal Student Aid (FSA) office reviewed all private agencies under contract to ensure they were complying with terms of the agreements, including provisions that the agencies would not engage in unfair or deceptive practices and would comply with all applicable federal and state laws. According to the review, the five private collection agencies in question were found to have given inaccurate information at unacceptably high rates about the benefits of federal loan rehabilitation programs. In particular, these agencies gave borrowers misleading information about the benefits to the borrowers’ credit report and about the waiver of certain collection fees. The rehabilitation programs are an option that can create benefits to defaulted borrowers after they have made nine on-time payments in a period of 10 months. “Federal Student Aid borrowers are entitled to accurate information as they make critical choices to manage their debt,” Under Secretary Ted Mitchell said in a statement.
Comment on U.S. Department Of Education Cuts Ties With Five Debt Collection Agencies To Protect Borrowers
Ashlee Kieler, The Consumerist
Mon, 03/02/2015 - 1:00pm
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