The Department’s Decision to Terminate Private Collection Agency Contracts

Our objective was to review the U.S. Department of Education’s (Department) decision - making process for terminating its private collection agency (PCA) contracts. The decision to terminate the PCA contracts is part of an ongoing, multiyear Departmental strategy to overhaul student loan servicing and default collections. In mid-2018, FSA made the decision for Business Process Operations (BPO) vendors to handle future default collections due to potential efficiencies and costs savings and the belief that doing so would improve customer service and the customer experience. As of September 2022, defaulted accounts are with FSA’s Default Resolution Group, which is handling any defaulted customer inquiries, and FSA intends for the BPO vendors to begin handling default collections in June 2023.