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May 20, 2014

NCLC Sues Dept of Education for Debt Collection Records

The National Consumer Law Center, a consumer advocacy group that we love, is suing the Department of Education under the Freedom of Information Act (FOIA) over the department's refusal to release documents showing how the federal government awards bonuses to debt collection companies it hires to recover defaulted student loans.

In its lawsuit filed yesterday, the NCLC asserts that the department violated FOIA by withholding records relating to the performance and incentive pay for the government’s contracted debt collectors. The NCLC had sought information about the department’s methodology for evaluating and compensating the companies. It also requested documents that show how individual debt collection companies have performed.

A Familiar Refrain

This is not the first time that the Department of Education has faced scrutiny over its debt collection practices.  In January, we shared an article by Natalie Kitroeff in the New York Times on the Educational Credit Management Corporation's overly aggressive tactics to collect on defaulted federal student loans.   Founded in 1994, Educational Credit is the primary private entity contracted by the U.S. Department of Education to fight borrowers' attempts to discharge federal student loans through bankruptcy.

To learn more about the Dept of Education's previous instances of alleged overly aggressive collection practices, click here.

To learn more about the current lawsuit, click here.

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