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U.S. Department of Education Office of Inspector General The Department’s Decision to Terminate Private Collection Agency ContractsOur objective was to review the Department’s decision-making process for terminating its private collection agency (PCA) contract.
What We FoundThe decision to terminate the PCA contracts was part of an ongoing, multiyear Departmental strategy spanning two Administrations and three FSA Chief Operating Officers to overhaul student loan servicing and default collections. In mid-2018, FSA made the decision for Business Process Operations vendors to handle future default collections. This was primarily due to efficiencies and costs savings identified through market research, as well as the belief that doing so would improve customer service and the customer experience. Business Process Operations contracts were awarded in June 2020, and by June 2021, FSA began actively discussing the termination of the PCA contracts. FSA officials believed that the student loan payment pause combined with the progress being made on the operational status of the Business Process Operations vendors provided the ideal timeframe for making the transition with little disruption to defaulted student loan borrowers.
What We RecommendThe report did not include any recommendations.
