Subscribe to Receive the Daily Report

Sunday, March 1st, 2015

Education Department Terminates Contracts With Debt Collectors Accused Of Wrongdoing

Author:     Shahien Nasiripour
Source:     The Huffington Post
Publication Date:     02/27/2015 9:59 pm EST
 Link: Education Department Terminates Contracts With Debt Collectors Accused Of Wrongdoing
Stephan:   Here is some excellent news. At long last the Department of Education has decided if not to drain the swamp of student debt, at least to decant a portion. Other countries let young motivated people go to college for free or nearly so. Several now pay students as if learning were one's job, for which one should be paid. They recognize that education people are necessary for a healthy democracy. The U.S., on the other hand, has chosen to indenture its students with debt.
U.S. Secretary of Education Arne Duncan Credit:usnews.com

U.S. Secretary of Education Arne Duncan
Credit:usnews.com

The U.S. Department of Education, under fire for its lackluster oversight of student loan contractors, said Friday it will terminate its relationship with five debt collectors after accusing them of misleading distressed borrowers at “unacceptably high rates.”

The surprise announcement follows years of complaints about allegedly illegal debt-collection practices by Education Department contractors, the department’s seeming lack of interest in ensuring that borrowers are treated fairly, and the relative opacity of the entire operation.

The most prominent of the debt collectors, Pioneer Credit Recovery, is owned by Navient Corp., the student loan giant formerly known as Sallie Mae. Pioneer, under investigation by the Consumer Financial Protection Bureau, generated $127 million from the contract over the past two years, according to its annual report to investors on Friday. It has worked for the Education Department since 1997.

With the number of borrowers in default now more than 7 million as federal student debt surpasses $1.1 trillion, the contracts have become among the most lucrative Education […]

Read the Full Article