Student Loan Collections and Debt Collection Agencies

Companies Conducting Federal Student Loan Collections

The U.S. Department of Education outsources student loan collection to private debt collection agencies. Twenty-two debt collection agencies were involved in student loan collections, though in 2015 the Department of Education announced that it was winding down contracts with Coast Professional, Enterprise Recovery Systems, National Recoveries, Pioneer Credit Recovery, and West Asset Management because they were providing inaccurate information to borrowers. The Education Department then rehired Coast Professional and National Recoveries a year later after saying that the agencies had taken corrective action. While the other three companies aren’t getting new business from the department, they’re still managing billions of dollars in defaulted student loan debt. In the meantime, the fired debt collection agencies sued, and in April 2017 a judge ordered debt collectors to stop working on defaulted student loans.

Yet according to the Department of Education website, these 22 agencies have contracts to conduct student loan collections:

Account Control Technology

CBE Group

Coast Professional


Collection Technology


Delta Management Associates

Enterprise Recovery Systems

Financial Asset Management Systems

FMS Investment Corp.

GC Services

Immediate Credit Recovery


National Recoveries

NCO Financial


Pioneer Credit Recovery

Premiere Credit of North America

Progressive Financial Services

West Asset Management

Windham Professionals

Van Ru

Periodically, the Department of Education invites private debt collection agencies to bid on contracts to for student loan collections. A certain number of slots are typically reserved for debt collection agencies categorized as small businesses (less than $8.5 million in annual revenue). The remainder are categorized as unrestricted (large) firms.

When the contract period for debt collection agencies ended in 2014, the Department increased to 11 the number of small businesses, and in 2015 gave five large agencies two-year extensions. This allowed the remaining dozen large agencies to continue to collect on existing accounts but not receive any new accounts.

As of December 2016, the private debt collection agencies had been assigned more than $2.6 billion in student loan collections. Every quarter, they collect around $90 million in voluntary payments and $160 million in wage garnishments. Given that the agencies receive 25 cents for every dollar they collect, there’s powerful incentive to get and keep Department of Education accounts.

For that reason, it’s no surprise that many Department of Education debt collection agencies will go to almost any length to excel in student loan collections. While there are significant differences between student loan debt and other types of unsecured consumer debt, one thing remains constant: agencies that conduct student loan collections must abide by the federal Fair Debt Collection Practices Act. This means, for example, that they can’t harass you, embarrass you, threaten you, or mislead you.

If you’re being harassed by Debt collectors about a defaulted student loan, Lemberg Law can help. To speak with a representative directly and immediately call 844-685-9200 for a free, no obligation case evaluation. Let us help you get the justice you deserve.

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