The Department of Education relies heavily on private debt collectors to recoup money from borrowers who have defaulted on student loans. As the total amount of outstanding student debt rises, private collection firms view student loans as a burgeoning market and are aggressively seeking contracts with the department. In 2011, the Education Department paid about $355 million to private debt collector companies. The Department has contracts with at least twenty-three private debt collectors.
Some of these debt collector companies have been accused of abusive or unsavory tactics. In 2011, the Education Department received 1,406 complaints about its collection contractors, a 41% increase from the previous year. Outsourcing the collection of student loans raises important questions about borrowers’ privacy. Private debt collectors are entrusted with sensitive personal and financial data of student borrowers. Under the Privacy Act of 1974, the Department may release certain information about student borrowers to collection firms, but those firms must in turn abide by the Privacy Act safeguards.
The Department publishes a detailed privacy manual, the “PCA Procedures Manual,” and distributes it to contractors in order to instruct debt collectors about federal statutory requirements. The most recent public version of the manual was published in 2013.
Collection firms with Department of Education contracts are required to submit various compliance and disclosure reports on a regular basis. Each student loan collection firm must sign a “Certification of Privacy Act Training” form certifying that the employee has received proper annual privacy training. Collection firms are required to submit monthly “Quality Control Reports” to the Department which must include a section on privacy and any problems or corrective actions. Collection firms must also submit “Security Awareness and Privacy Act Training Reports” which must state the date of the firm’s last privacy training.
All three of these compliance reports are matters of significant public interest because they represent the primary oversight mechanism for determining whether numerous federal contractors are adequately protecting the privacy of student-loan borrowers.
EPIC’s Freedom of Information Act Request and Subsequent Lawsuit
In September 2012, EPIC submitted a FOIA request to the Education Department requesting:
- The most currently updated version of the “PCA Procedures Manual” that the Department of Education publishes as guidance for its debt-collection contractors. The 2009 version of this manual was prepared by the Federal Student Aid Operation Services Processing Division.
- All “Certification of Privacy Act Training” forms, “Quality Control Reports,” and “Security Awareness and Privacy Act Training Reports” submitted by private debt-collection firms to the Department of Education during the last three years.
When the Education Department failed to produce any documents, EPIC filed its administrative appeal in November 2012.
On March 15, 2013, EPIC filed a lawsuit against the Education Department based on the agency’s failure to comply with statutory deadlines and unlawful withholding of agency records.
The Education Department released documents in response to EPIC’s lawsuit. On November 4, 2013, EPIC settled the case with the Education Department and was awarded $9,000.00 in attorney’s fees.
EPIC v. Department of Education, Case No. 13-00345 (GK) (D.D.C. filed Mar. 15, 2013)
- Court Docket
- EPIC’s Complaint against Education Department (Mar. 15, 2013) (pdf)
- Defendant’s Consent Motion for Extension to Respond EPIC v. Department of Education, (Apr. 23, 2013) (pdf)
- Defendant’s Motion for Enlargement of Time to Answer or Respond to Plaintiff’s Complaint (May 20, 2013) (pdf)
- Defendant’s Answer to Complaint for Injunctive Relief (June 24, 2013)(pdf)
- Order Setting an Initial Scheduling Conference (June 24, 2013) (pdf)
- Joint Meet and Confer Statement (July 3, 2013)(pdf)
- Order Referring Case to Magistrate Judge Facciola for early case management purposes (July 8, 2013) (pdf)
- Referral to Magistrate Judge (July 8, 2013) (pdf)
- Order re referral to Judge Facciola for full case management (July 15, 2013) (pdf)
- Joint Status Report (Aug. 20, 2013) (pdf)
- Briefing Schedule Order (Aug. 20, 2013) (pdf)
- Education Department’s Motion for Summary Judgment (Sept. 27, 2013)(pdf)
- Consent Motion to Stay Proceedings Pending Completion of Settlement Negotiations (Oct. 28, 2013)(pdf)
- Stipulation of Settlement and Dismissal (Nov. 1, 2013)(pdf)
- Order Dismissing with Prejudice (Nov. 4, 2013)(pdf)
- EPIC’s FOIA Request (Sept. 20, 2012) (pdf)
- PCA Procedures Manual: 2009 ED Collections Contracts (modified March 20, 2013)
- 2012 Security Training Certifications (pdf)
- 2011 Security Training Certifications (pdf)
- 2010 Security Training Certifications (pdf)
- 2012 Privacy Act Training Certifications (pdf)
- 2011 Privacy Act Training Certifications (pdf)
- Privacy Act Training Certifications (pdf)
- Quality Control Reports
- Windham Professionals (pdf)
- West Asset Management (pdf)
- Van Ru Credit Corporation (pdf)
- The CBE Group (pdf)
- Progressive (pdf)
- Premier Credit (pdf)
- Pioneer (pdf)
- Performant (pdf)
- NCO (pdf)
- National Recoveries (pdf)
- IQor (pdf)
- Immediate Credit Recovery Inc. (pdf)
- GC Services (pdf)
- Financial Asset Management Systems (FAMS) (pdf)
- EOS (pdf)
- Enterprise Recovery Systems, Inc. (pdf)
- Delta Management(pdf)
- ConServe (pdf)
- Collection Technology Inc. (pdf)
- Coast (pdf)
- Account Control Technologies (pdf)
- Emily Atkin, Maximus Wins $848M DOE Contract To Run Student Debt Center, Law 360, Oct. 2, 2013.
- Shahien Nasiripour and Chris Kirkham, Student Loan Defaults Surge To Highest Level In Nearly 2 Decades, Huffington Post, Sep. 30, 2013.
- Patrick Lunsford, Dept. of Education Slashes Commissions for Private Debt Collection Contractors, Inside ARM, Mar. 19, 2013.
- Andrew Martin, Debt Collectors Cashing In on Student Loans, The New York Times, Sep. 8, 2012.
- John Hechinger, Obama Relies on Debt Collectors Profiting From Student Loan Woe, Bloomberg, Mar. 26, 2012.
- Mark Russell, Student Loans: The ARM Industry’s New Oil Well?, Inside ARM, Oct. 20, 2011.