he seemingly unstoppable rise of college tuition and the
Action From the DOE
surge in national student loan debt are getting a lot of
attention in the media right now. Consumer advocates,
legislators, regulators and the White House are all taking a
closer look at both how students get loans and how those loans
are ultimately collected.
“I think depending on what kind of student loans you are
collecting, it can be tough right now,” said David Williams,
president of Williams & Fudge in Rock Hill, S.C., which
works with 1,400 colleges and universities across the
country and handles both private and federal student
In light of all the recent attention-grabbing headlines
and increased market regulation, what can collection
agencies currently in the student loan market—or
looking to break into it—expect to experience?
Collector reviews just a few of the many issues in
the market right now—including the recent U.S.
Department of Education action, the spotlight
on for-profit colleges and the Student Aid Bill of
Rights—to help collection professionals understand
what’s going on and where the student loan market
may be headed.
In February, the U.S. Department of Education
announced it would wind down the contracts of
five of its 22 private debt collection firms—Coast
In response, four of the companies filed lawsuits, which
a judge consolidated.
According to the original complaint filed by Coast
Professional, the DOE’s decision on the contract was a
violation of the law because the department did not use
competitive procedures in its decision to reassign the contracts.
In mid-April, a federal court judge dismissed the consolidated
complaints filed by Coast Professional, Enterprise Recovery
Systems, National Recoveries and Pioneer Credit Recovery based
on lack of jurisdiction rather than the merits of the case.