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Collection Agencies That Recover Federal Student Loan Debt

Updated on February 10, 2011

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.
  • CollectCorp
  • 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
  • NCO
  • 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. 


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    • profile image

      Al Franken 

      7 years ago

      These people ARE fishing for SS#'s and information and then they will use it to rob you blind. But they have the right to, you see congress took the Guaranteed student loans out of the Gov and handed it to the banks so they could prey upon the young and vulnerable. Of course they were rewarded for this by these robber barons.... We the American sit back and let them. So sit there on your big A$$ and do nothing! /weak kneaded people make me sick. Spoon feed pigs that do nothing to fight for their rights or for their children. I say crush these thieves and their banks too. And lets go after all of them. Hang them from the lamp posts!!!!!!

    • profile image


      8 years ago

      "Never, ever, ever deal with the collection agency when paying off defaulted student loans. Ever. "

      So what do I do instead with Allied and Progressive going after me? Tell them to bugger off and that I'll talk with the Dept. of Education directly? I can't exactly ask them since they're the ones trying to collect from me.

    • monicamelendez profile image


      8 years ago from Salt Lake City

      Do you really need to file bankruptcy Taylor? I know that in many cases, student loan debt can be restructured within going that far. Of course, you won't be able to work that out with Conserve. You'll have to go back to the lender.

    • profile image


      9 years ago

      Finally, I got a nice high paying job for the first time since graduation in 2000 with a Master Degree. Now I am being called by a collection agency Conserve. I immediately, hired an attorney, but started to think it was not worth the money.His directions are take the Rehab plan and make the nine payments then apply for Chapter 13. I don't know if this guy if guiding me correctly or what. Please share some insight if you have any.

    • profile image


      9 years ago

      My husbands loan was put into default, and I have had to make all the calls to Diversified Collection Agency. They have never called or harassed me. I agreed to make a 10% down payment and a monthly payment for 9 months before the balance will be dropped. However, they were supposed to withdraw the down payment from my account yesterday and have not done so yet. Now I'm worried that I made a huge mistake and I don't know what to do. I just want it paid and off our credit report! Please help!

    • profile image

      Collection Company 

      9 years ago

      Commercial debt recovery should be in legalities and in a system.The collection agency, understands it best.The collection services procure bad debts & abide by the Fair Debt Collection Practices Act. Legal support to cases and quick response to the individual cases make the collection company a huge hit.

    • profile image

      Joe Loan 

      9 years ago

      I have student loan originally handled by Nelnet and College Assist. I believe Nelnet is responsible for the fraud of predatory lending and I need an accounting of the loan. I think there is a lot of overcharges. I think I am currently being sued by Dept. of Education. To get full accounting of interest and disclosure. who would I sue.

    • profile image


      9 years ago

      Financial Asset Management has been fired as a colletion agency for student loans due to their harrassing and unprofessional business practices.

    • profile image


      10 years ago

      Hi Edward,

      Thank you for the informative article. My educational load has been handed over to Enterprise Recovery Systems. They claim to have a Loan Rehabilitation Program (12 months), which would transfer my loan back to the original lender at the original percentage rate. However, the bottom line is I don't trust them. I would like to take advantage of such a program if it exists. Do you have any thoughts?

      You end your article with "Never, ever, ever deal with the collection agency when paying off defaulted student loans. Ever." So, do you suggest that I contact a lawyer for help? Should he or she have any special knowledge?


    • profile image

      Transportation Collection Agency 

      10 years ago

      Great post for all of the students out there paying off their student loans.


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