In its February announcement to end
the five agencies’ contracts, the DOE said
it would reassign their accounts to five
other companies. Those companies had
been named as “intervenor defendants”
along with the DOE in the consolidated
lawsuit. At press time, the contract
extension and account reassignment were
set to begin on April 21.
In a statement, Brian Davis, CEO
of Coast Professional, noted that his
company has been a top performing
private collection agency for the DOE,
“receiving the highest scores, and has at
all times complied with applicable law
and regulation, including the Fair Debt
Collection Practices Act. As evidence of
our good work, we have never had any
Since the DOE first started
contracting with private collection
agencies in 1981, it has worked mostly
cooperatively with agencies to identify
and resolve any problems. The DOE’s
abrupt contract cancellations—without
giving the affected agencies an
opportunity to review any of the alleged
problem conversations in advance of the
suspension notification—stunned many
credit and collection industry members.
“Everyone I have talked with felt
this recent action was a surprise,” said
Don Taylor, president of Automated
Collection Services in Nashville, Tenn.
“My experience with the Department of
Education has been working together to
improve processes and provide quality
services to student borrowers.”
The contract cancellations have
had serious consequences for the
companies, which employ hundreds of
people. Within a week of the DOE’s
announcement, at least two of the
companies filed notices with their state
that they would be forced to lay off
some of their employees.
Private collection agencies working
with the federal government have strong
incentives to give up to 10 percent
of their placements to qualified small
businesses. Three of the five companies
whose contracts were cancelled were
unrestricted contractors, and it’s
estimated that at least five subcontractors
have been affected by the cancellations.
Last year, Mark Neeb, IFCCE,
president of NeebEDU in Rochester,
Minn., sold his successful collection
company to open a new company
specializing exclusively in student loans.
He is a subcontractor for one of the five
agencies, and he is nervous about what
the future holds for his new company—
and its employees—with the DOE
contract gone.
