Collection agencies exist across a wide range of industries. One of the major areas for collections, however, is the student loan industry. Currently, in the United States, $1.2 trillion is tied up in student loans. And, unfortunately, among 20% of borrowers are in default on these loans.
Because student loans are such a serious, high-dollar concern, the Consumer Financial Protection Bureau recently turned its attention toward those who attempt to collect these debts and service the loans. The organization, after conducting its investigation, was quick to identify and highlight several illegal student loan collection practices, which has put those who are responsible for collecting student debts on high alert.
What has made such collectors even more concerned is that, following this announcement from the Consumer Financial Protection Bureau, the Department of Education and the Department of Treasury also launched their own investigation into student loan servicing in an effort to ensure that all servicers are in compliance with the Dodd-Frank Act and that they do not utilize unfair, abusive, or deceptive practices.
Behaviors that all of these agencies deem inappropriate include:
· Servicers who act as debt collectors
· Telephone calls made at inappropriate times
· Maximized late fees
· Not providing full and complete information
The Consumer Financial Protection Bureau has taken its concern over such behaviors seriously and has launched investigations into many major student loan services, including Discover Bank, CitiGroup Inc., Great Lakes Higher Education Corporation, Navient Corporation, and FedLoan Servicing.
Obviously, this information can be a bit alarming for those who attempt to collect on student loans. However, as long as collectors are aware of and in compliance with all laws, including and especially full disclosure of required information and telephone calls at appropriate times, they do not have much to fear.
Compliance is key in all collection industries, and this particular industry is just front and center at the moment. The recent attention to student loan servicers and collectors should cause collection agents in this industry to be extremely attentive and compliant, but in reality, those are behaviors that should always be practiced in the collections industry.