Education Department Facing Lawsuits, Criticism from Its Own Student Loan Debt Collectors

The U.S. Education Department may well be losing the support they gained for dropping student loan debt collectors accused of federal violations for not actually dropping said student loan debt collectors.

According to the Huffington Post, even those collectors are not happy with the Education Department (ED), as two of them have filed lawsuits. The two suits say the ED accused all its contracted debt collecting companies in an email of violating federal guidelines protecting borrowers' rights.

A few days later, on Feb. 27, the ED said they would be discontinuing their contracts with five debt collectors, a move that drew rare praise for the department. But any positive vibes the ED earned vanished when a spokeswoman clarified last week the department's decision only applied to a few expiring contracts. The ED will still honor two lucrative, multi-year contracts.

In a recent meeting in which ED Undersecretary Ted Mitchell addressed student loan borrower advocates, attendees told the HP he indicated his department was aware of the accusations of student loan borrower violations.

Joining the chorus of voices advocating for the ED to get tougher on their debt collectors has been the President. In addition to his free community college and rating system initiatives, Barack Obama has been pushing for a "student aid bill of rights."

"We are very disappointed in the Department of Education's inability to hold its contractors accountable, but beyond that it's even more upsetting that they're not standing by what they said they would do," Chris Hicks, an organizer who leads the Debt-Free Future campaign for Jobs With Justice, told the HP. "The president has instructed the department to treat borrowers with more fairness and this shows that the department is not taking that message seriously."

He said these recent developments are another wedge between student loan borrowers and the ED. The debt collectors are the middlemen between the two and the ED has exhibited once again a lack of transparency with their dealings.

"It feels like they're not following through on things they said they would do," Hicks said. "It seems like the department was talking out of both sides of its mouth and misled borrowers."