The Treasury Department proposes to pay debt collectors much less than in the past to help borrowers get out of default.
Trump administration is hiring debt collectors to go after defaulted student-loan borrowers for first time in 6 years
In short
The federal government is officially bringing back private agencies to engage with individuals carrying overdue education balances. While these contracted collectors will pursue outstanding accounts, their stated objective includes helping individuals find pathways out of default. Notably, the Treasury Department intends to lower program costs by paying these outside collection firms significantly less than historical rates. This initiative marks the first deployment of external collection contractors for this specific purpose in six years.
Key points
- Federal authorities are ending a six-year break by re-engaging private collection firms f…: Federal authorities are ending a six-year break by re-engaging private collection firms for defaulted loans.
- The government aims to cut administrative collection expenses by reducing compensation ra…: The government aims to cut administrative collection expenses by reducing compensation rates for the contracted debt agencies.
- The contracted collectors are officially instructed to assist borrowers in finding viable…: The contracted collectors are officially instructed to assist borrowers in finding viable pathways out of default.