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Department of Education Releases Debt Collection Data Following NCLC Lawsuit

As reported on studentloanborrowerassistance.org , nearly two years after NCLC filed their initial request, the NCLC is finally able to close the file on their Freedom of Information Act (FOIA) lawsuit against the U.S. Department of Education.

Back in March of 2013, NCLC sent a FOIA request to the Department requesting documents related to the financial incentives and oversight of the 22 private collection agencies that collect federal student loans.

In response, NCLC received no useful information. Of the 25 pages NCLC received, 17 were completely black, and 8 pages had all but the debt collectors’ names redacted. Finally, after months of getting no response to our appeal, NCLC filed a lawsuit in federal district court against the Department of Education.

Under the terms of our settlement, the Department agreed to provide us with an uncensored version of all of those documents.You can see all the documents here.

The documents show that the Department paid approximately $22 million in bonuses to 11 debt collectors in Fiscal Year 2012. One such company was NCO Group, Inc. whose parent company settled charges with the FTC for $3.2 million just one year later.

The documents also showed that the service quality category was omitted from the calculation of the collection agency’s performance scores. This is a huge problem. As NCLC discussed in their 2014 report, service quality is the only performance category that incorporates the borrower’s experience.

A recent audit by the Department’s Inspector General confirmed that the Department does not actually use this category in calculating the performance scores.

The obstacles NCLC faced in getting this information are unfortunately business as usual for the BIG ED.

BIG ED routinely uses a stonewalling strategy by failing to respond to FOIA requests or providing useless information.

While increased transparency will not solve all student debt problems, improvement in these areas can help restore the balance between borrower rights and extraordinary government collection powers. Our government has nearly unlimited power to collect student loans. At a minimum, the government must be accountable to the public about how it uses this power and how much it costs all of us in the long run.

This is an embarassment to America and the world. President Obama, House Speaker John Tanner and Senate Majority Leader Mitch McDonald must address this national embarassment with US Secretary of Education Arne Duncan. Duncan should be relieved of his position post haste and stripped of his federal pension.

But wait – who owns the pols? Who flies cross country on a fleet of private jets? Could it be the fat cats at Sallie Mae – er – I mean Navient?