- Personal Finance»
- Debt & Bankruptcy
Collection Agencies That Recover Federal Student Loan Debt
Collection agencies recover federal student loan debt rather than the U.S. Department of Education itself. These aren’t specialty collection agencies either. They’re your standard, run of the mill, call you at 3:00 in the morning variety of debt collectors. Why would the federal government employ private collection agencies to pursue consumer debts? Simple. The private debt collectors demonstrate proven results.
Consumer Protection Laws Apply to Defaulted Student Loans
Your defaulted student loan leaves you at the mercy of the federal government until the debt is collected. Once the federal government transfers that debt to a private collection agency, however, that collection agency is bound by the consumer protection laws in the FDCPA.
Guess what that means? If it calls you at 3:00 in the morning you can sue – even if the company is collecting your defaulted student loan debt.
List of Collection Agencies That Collect Federal Student Loans
The following collection agencies collect defaulted federal education loans for the U.S. Department of Education:
- Account Control Technology Inc
- Allied Interstate Inc.
- Coast Professionals, Inc.
- Collection Technology, Inc.
- Collecto, Onc Dba Collection
- Delta Management Associates, Inc.
- Diversified Collection Services, Inc.
- Enterprise Recovery Systems, Inc.
- Financial Asset Management
- FMS Investment Corp.
- GC Services
- Immediate Credit Recovery Inc.
- National Recoveries
- Pioneer Credit Recovery, Inc.
- Progressive Financial Services
- The CBE Group, Inc.
- Van Ru Credit Corporation
- West Asset Management
- Windham Professionals, Inc.
Rehabilitating the Loan
Consider Rehabilitation. Rehabilitating your student loan requires you to work out a payment plan with the U.S. Department of Education. Most payments plans last no longer than nine months before the government pulls the debtor’s student loan out of default, but some student loans require ten months of timely payments.
Once your loan is rehabilitated, it will be pulled out of collections and once again report as current on your credit report. The collection account, however, if there is one, will remain for seven years.
If you are currently under a wage garnishment or bank levy due to your defaulted loan, rehabbing the loan will end the garnishment and levies. Payment made through garnishment and levies, however, does not count toward your repayment plan. If any of the payments on your repayment plan are late, your loan won’t be rehabilitated.
Sending a Cease and Desist Letter to the Collection Agency
Just because you owe a defaulted student loan, that doesn’t mean that the collection agency has the right to contact you whenever and however they please. If you write the collection agency a letter instructing them not to contact you, the Fair Debt Collection Practices Act states that they must oblige.
Normally, this would put you at risk of a lawsuit. The federal government, however, doesn’t have to sue for debts in order to enforce collection and doesn’t sell its defaulted student loan accounts outright. Thus, the collection agency only receives a percentage of whatever it collects from you. The collection agency has no incentive to sue you since it doesn’t own the debt and the government can enforce collection at any time.
Never, ever, ever deal with the collection agency when paying off defaulted student loans. Ever.