As detailed in a recent Huffington Post report, the Education Department said its move was precipitated by "'high incidences of materially inaccurate representations'to borrowers that it discovered in reviews spanning several months.
The five debt collectors, according to the department, misled borrowers about their options to get out of default, the resulting benefits to their credit reports and collection fees. Misleading borrowers about their defaulted debts may violate federal fair debt collection laws."
"Every company that works for the department must keep consumers’ best interests at the heart of their business practices by giving borrowers clear and accurate guidance," said Education Undersecretary Ted Mitchell. "It is our responsibility -- and our commitment -- to uphold the highest standards of service for America’s student borrowers and consumers."
The debt collection companies affected by the Education Department's actions are: Pioneer Credit Recovery, owned by Navient Corp., the student loan company previously known as Sallie Mae; Coast Professional; Enterprise Recovery Systems; National Recoveries; and West Asset Management.
The Huff Post also reported, "The Education Department said it would transfer accounts from affected companies, including Pioneer, to its other debt collectors, and would officially terminate its relationship with the companies once all accounts have been moved over. The move is the department's most forceful response in years to alleged misdeeds by its student loan contractors."