WASHINGTON — The Education Department is canceling its contracts with five of the 22 private collection agencies it uses to recoup past-due student loans after years of public criticism over the aggressive practices of some of the debt collectors the department uses.
The decision arrives after a lengthy review of hundreds of phone calls between all of the collection agencies and borrowers who had fallen behind on their loan payments. Officials at the department discovered that five of its collectors had duped borrowers into believing that they could repair their credit or have collection fees waived if they paid up.
“Federal student aid borrowers are entitled to accurate information as they make critical choices to manage their debt,” Education Undersecretary Ted Mitchell said in a statement. “Every company that works for the department must keep consumers’ best interests at the heart of their business practices by giving borrowers clear and accurate guidance.”
Calls to four of the five collection agencies — Coast Professional, Enterprise Recovery Systems, National Recoveries and West Asset Management — were not returned.
