Four debt collectors contracted by the U.S. Department of Education brought suit against the DOE when they decided not to send them any more business. The target of all of these (and many more) agencies? Students in trouble with their student loans.

Fortunately, a federal judge threw out the lawsuits in a sealed order, on April 15th.

Knowing that student debt is the second largest debt pool in the country, it should be no surprise that the Education Department contract is an enormously valuable one. More than 7 million Americans owe more than $100 billion collectively in defaulted federal student loans. Anyone who falls more than a year behind in payments can expect a call from a federally-contracted debt collector.

More than a call, really. Repeated calls, sometimes crossing the border into harassment. And according to the DOE, a great deal of misleading information. The four suing agencies (Pioneer Credit Recovery, National Recoveries, Enterprise Recovery Systems, and Coast Professional) were all told that they would be sent no future business because they had broken federal consumer protection laws by misleading borrowers about the fees and benefits of paying up.

They argued in court that they had broken no laws and that the DOE had warned all of its more than twenty debt contractors about these laws but punished only them. Which sounds a great deal like ‘I didn’t do it but even if I did, everyone was doing it.’

Students are among the most vulnerable of all those in debt. Almost all young and un- or under-employed, caught in the whirlwind of job-seeking and trying to make their way into a working world that has little room for them, the last thing they need are predatory debt collectors with the cachet of a federal government contract to harass them. We can only hope that the DOE continues to clean house, and that the federal justice system continues to back them up.

About 

Martin Ackerman is a freelance writer and current editor originally from Staten Island, NY. His university schooling focused on English education and Japanese. He has a (not so secret) passion for art history and political science. When he isn't writing or editing you can find him at sci-tech conventions, building the latest LEGO city or pampering his cat, Tea. You can follow him on Twitter @MarMackerman.