SOURCE: Center for Responsible Lending

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March 02, 2015 13:42 ET

A Bold Step to Protect Student Borrowers by the US Department of Education

WASHINGTON, DC--(Marketwired - March 02, 2015) - On Friday, the US Department of Education announced it will end contracts with five student loan debt collectors that collect federal student loan debts on behalf of the government. The Department found that the five companies had a pattern of providing incorrect information to borrowers about their rights to manage their loans and bring them out of default. The Department has also pledged to prepare better guidance for debt collections to comply with consumer protection laws in the future.

In response, CRL senior policy analyst Maura Dundon offered the following remarks:

Student loan debt is now a trillion-dollar business -- and as the financing of higher education increasingly shifts to federal student loans, the Department of Education must insist on the highest consumer protection standards. This move illustrates a commitment to responsible lending practices and is a strong step to protect consumers and taxpayers.

No matter what type of debt owed, consumers have the right to be treated fairly and in accordance with the law.

We thank Undersecretary Ted Mitchell for his actions to protect student borrowers and uphold consumer protections.

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