Dept. of Ed. Cancelling Debt Collection Contracts


A federal court last week blocked the Education Department’s plans to cancel contracts with debt collection firms handling defaulted student loans.

The decision to drop the debt collectors was part of a broader overhaul of loan servicing pursued by the Office of Federal Student Aid. But Judge Thomas Wheeler of the U.S. Court of Federal Claims found that the department’s justification for canceling the contracts was “slipshod” and that its alternative — a plan to offer more enhanced servicing to borrowers before they default — included scant details.