Trump administration welcomes back student debt collectors fired by Obama
Source: MSN/Washington Post
A pair of private collection agencies fired by the Obama administration have accepted the Education Department’s offer of new contracts to recoup past-due student loans, but the agreements are in limbo as the government wades through a messy court battle.
Enterprise Recovery Systems and Pioneer Credit Recovery were among five companies whose contracts the government cancelled in 2015 after an audit showed them giving inaccurate information to people trying to get their student loans out of default. The companies said the evaluation was arbitrary and flawed for drawing conclusions based on excerpts from a handful of calls, and four of them took legal action against the department.
To put an end to the litigation, the Trump administration in February said it would reconsider assigning accounts to the four companies and disregard the two-year old audit against them. Some of the firms balked at the deal for failing to compensate them for the loss of hundreds of thousands of accounts, and said it would be meaningless because the department was in the midst of a new contract bid, according to court documents.
This week, Enterprise Recovery and Pioneer Credit accepted the terms of the deal, but the other two companies involved — Coast Professional and National Recoveries — rejected the offer. They choose instead to continue collecting student debt under other, existing contracts with the department, according to court filings.
Read more: http://www.msn.com/en-us/news/us/trump-administration-welcomes-back-student-debt-collectors-fired-by-obama/ar-BBAHSdy
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“The (Obama era) guidelines that were taken away laid out really basic, commonsense guidance for how servicers should act so that borrowers can navigate repayment,” says Suzanne Martindale, a staff attorney and education debt expert at Consumer Reports. “Removing these is incredibly shortsighted and will likely cause greater problems down the road for students and families.”
The guidelines called for major changes in student loan servicer practices, including new standards for responding to borrower problems in a timely way, providing economic incentives to give high-quality customer service, and imposing penalties for poor performance.
In March, DeVos rescinded a 60-day grace period to allow students in loan default to get back on track and avoid a fee of 16 percent of their loan balance.
Also last month, the Education Department said it would delay implementing the gainful employment rule, an Obama-era regulation that penalizes college vocational programs if graduates accrue more debt that they can pay with post-grad earnings.
Last month, the CFPB reported a 429 percent increase in student loan complaints about servicers from December through February, compared with the prior year. Consumers say servicers process payments incorrectly, make it harder for them to enroll in more affordable payment plans, and fail to act when borrowers complain.
Much More: https://www.yahoo.com/news/protections-borrowers-fall-face-trouble-184224571.html
Dunno if the 429% increase in problems in December through February, compared to the prior year, has anything to do with the current administration compared to the previous administration..... should I set up a poll?
More from the article:
Federal student loans in default are up 15% from 2015.
Problems with Navient, tsk tsk (spun off from Sallie Mae - the largest servicer of federal student loans)
How to Handle Problems With Your Student Loans
