How the federal government protects abusive debt collectors

With the latest round of student loan reforms, the Obama administration has worked to develop “loan forgiveness programs and efforts to help borrowers reduce payments”.

However, one glaring aspect of student loan debts has not been addressed at all: abusive debt collectors.

These aren’t just employed by loan sharks or private debt companies either. The Department of Education has hired abusive debt collectors to come after student loan debts, with one-tenth of loans in danger of default—nearly $94 billion.

In fact, lenders hired by the Department of Education have been specifically cited for abuse:

In March 2012, Bloomberg reported that three of the companies working for the Department of Education had settled federal or state charges that they’d engaged in abusive debt collection.

When approached, the Department of Education has been anything but helpful:

The GAO report found that the Education Department still does little to oversee student-loan debt collectors, and has done little more than provide “feedback” when alerted to abuses.

The National Consumer Law Center has been trying for two years, through Freedom of Information Act requests, to obtain information from the Department of Education.

But so far, the Obama administration has stonewalled the requests. On Monday, after more than year attempting to peel back the secrecy around the debt collection contracts, NCLC filed a lawsuit demanding that the Department of Education comply with the Freedom of Information Act and release the data.

The federal government under the Obama administration is protecting abusive debt collectors when students and Americans have a right to know what’s going on. Hopefully, they choose to be more open about their practices soon.

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