The Department of Education is responsible for the origination and disbursement of all federal student loans. Usually a source of trust, the organization recently came under fire from external sources claiming they were not open about certain collection practices by its servicers.
Advocacy groups American Civil Liberties Union, National Consumer Law Center, and the ACLU of Massachusetts were responsible for filing an information request. This request was to uncover the practices of collecting debt and how the Department of Education, and its servicing companies, employed their methods, specifically in regards to people of color. As it stands, the Department of Education will contract private companies to collect loans and keep track of debt, though lapses in information have alarmed the organizations mentioned.
The alarm comes from a few vacancies in information. The advocacy groups have thus far received sparse responses over the past few months, of which many contain missing or redacted information. An example would be the Department of Education’s manual it gives to servicers which instructs them how to collect debt, something the groups found to be missing lots of info. Additionally, the advocacy group found the government does not keep track of racial data, a vacancy of data they hope to change.
Additional claims by the groups assert a number of other things. One, for example, is that the Department of Education does not properly monitor the organizations it hires, leading to lapses and possible abuse of the lender. This adds to the possible dangers of how private collectors handle their practices and whether or not race is a factor, leading to urgency the questions be answered. The Department’s own inspector general stressed the importance of having this information, adding its importance since the organization has the power to forgive many crippling loans.
The protection of students dealing with debt they cannot pay is becoming a greater issue. The advocacy groups fight strongly as students who default on their loans can face penalties such as wage garnishment and loss of funds from social security or tax refunds. Should at any point this management of loans be improperly handled by a hired private agency, it is the Department of Education’s responsibility to fix it.
Since it affects broad parts of the population, investigators want to know if people of color are taking stronger hits than others. As of last year, $176 million in loans were recovered through garnishments and another $2 billion from repayment. If there is some foul play here, the advocacy groups demand answers.

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