Collection agencies are a big part of the student loan collection system. Both the government and guaranty agencies have used collection agencies to collect defaulted student loans. On November 8, 2021, the Department ended all contracts with Private Collection Agencies (PCAs). This change means that PCAs will no longer collect defaulted federal student loans that are held by the Department. The Department has temporarily contracted with Maximus Federal Services to service its defaulted student loan portfolio until it sets up a new system for servicing defaulted loans. Though PCAs can no longer collect defaulted loans held by the Department, other entities such as guaranty agencies may still use PCAs to collect defaulted loans not held by the Department.
Student loan collection agencies may engage in abusive or deceptive behavior that violates state or federal fair debt collection laws. You should be aware of common problems and learn about ways to fight back. You should also learn about your rights, including the right to be free from collection agency harassment and abuse and to send a letter to request that an agency stop contacting you. You can use these self-help packets in English and Spanish to help you write this “cease communication” letter. The CFPB also has sample letters you can use to respond to a student loan debt collector.
You should consider filing a complaint with the Department of Education and other federal or state agencies if you are facing harassment or other problems with student loan collectors. Other agencies that can help include the Consumer Financial Protection Bureau (CFPB). The CFPB has an on-line complaint system.