More than two years have passed since the Department of Education pulled the private collection agency handbook off of its web site and as far as we can tell, the handbook has yet to reappear in public. (You can find the old handbook from 2009 on our site).
The Department does have some collection-related information available on the “Information for Financial Aid Professionals” section of its web site. For the most part, however, this site does not include the most important information about how the government instructs and compensates its collectors. There is also some information on the government web site soliciting contractors to bid for these lucrative collection contracts. This information can be useful, but it is hard to find and far from complete in any case.
This lack of transparency makes it nearly impossible to have a knowledgeable debate about the true costs and benefits of the current collection system. Is it possible that the Department doesn’t want us to know how much money goes to private debt collectors or how collectors are often incentivized to pressure borrowers into options that are not in their best interests? In some cases, collectors fail to counsel borrowers on options they are legally entitled to, highlighting instead the programs that bring in the most profits for the collectors.
To help us understand the current system, NCLC sent a Freedom of Information Act (FOIA) request to the Department last August. Despite the time limits on respondng to FOIA requests, we have not yet received any substantive responses.
Among other information, we requested all policies, public statements, handbooks, guidance and similar documents concerning:
- Fees paid to private collection agencies for Direct Loan rehabilitations and consolidations,
- Criteria for sending defaulted loan accounts to the Department of Treasury for offset,
- Factors used to determine whether collection fees will be added to loan balances and formulas used to calculate fee amounts,
- Information about litigation criteria and about hiring of private law firms to litigate defaulted student loan accounts, and
- Studies and research about re-default rates after rehabilitation and consolidation.
We understand that these are complex issues, but we can’t get anywhere if the government refuses to let the public know what is going on.