Education Department Cancels Debt Collection Contracts with Two Firms

Contract terminations are due to “substantial changes” in requirements to perform activities associated with defaulted loan debts.

5/4/2018 6:00 AM

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Education Department Cancels Debt Collection Contracts with Two Firms

Due to a substantial change in its needs, the Department of Education said in a May 3 court filing that it would cancel debt collection contracts with Windham Professionals and Performant Financial Corp.

According to the Court of Federal Claims notice, “The solicitation will be cancelled due to a substantial change in the requirements to perform collection and administrative resolution activities on defaulted Federal student loan debts. In the future, ED plans to significantly enhance its engagement at the 90-day delinquency mark in an effort to help borrowers more effectively manage their Federal student loan debts.”

In the filing, the ED said it expects enhanced outreach efforts to “reduce the volume of borrowers that default, improve customer service to delinquent borrowers and lower overall delinquency levels.”

The current private collection agencies (PCA) under contract with the ED “have sufficient capacity to absorb the number of accounts expected to need debt collection services while the process for transitioning to the new approach is developed and implemented. Therefore, additional PCA contract work is not currently needed,” the filing said.

The contracts will terminate May 7, 2018.

The Washington Post reported in January that Windham and Performant “beat out nearly 40 other bidders for contracts valued at up to $400 million.” The contracts were awarded in December 2017.

Media reports indicate the process of selecting contract winners was slowed due to a legal dispute that erupted over the exclusion of several debt collection companies.  While the issue was being sorted out, a judge's order blocked the ED from assigning newly defaulted accounts to debt collectors, according to Inside Higher Ed.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


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Education Department Cancels Debt Collection Contracts with Two Firms

Due to a substantial change in its needs, the Department of Education said in a May 3 court filing that it would cancel debt collection contracts with Windham Professionals and Performant Financial Corp.

According to the Court of Federal Claims notice, “The solicitation will be cancelled due to a substantial change in the requirements to perform collection and administrative resolution activities on defaulted Federal student loan debts. In the future, ED plans to significantly enhance its engagement at the 90-day delinquency mark in an effort to help borrowers more effectively manage their Federal student loan debts.”

In the filing, the ED said it expects enhanced outreach efforts to “reduce the volume of borrowers that default, improve customer service to delinquent borrowers and lower overall delinquency levels.”

The current private collection agencies (PCA) under contract with the ED “have sufficient capacity to absorb the number of accounts expected to need debt collection services while the process for transitioning to the new approach is developed and implemented. Therefore, additional PCA contract work is not currently needed,” the filing said.

The contracts will terminate May 7, 2018.

The Washington Post reported in January that Windham and Performant “beat out nearly 40 other bidders for contracts valued at up to $400 million.” The contracts were awarded in December 2017.

Media reports indicate the process of selecting contract winners was slowed due to a legal dispute that erupted over the exclusion of several debt collection companies.  While the issue was being sorted out, a judge's order blocked the ED from assigning newly defaulted accounts to debt collectors, according to Inside Higher Ed.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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