Review of Federal Student Aid's Oversight and Monitoring of Private Collection Agency and Guaranty Agency Security Controls

The purpose of our audit was to review borrower complaints against private collection agencies (PCAs) to evaluate how effectively FSA monitored the complaints and ensured that corrective action was taken, ensured that PCAs were abiding by Federal debt collection laws and the related terms of their contracts, and considered borrower complaints in its evaluation and compensation of PCAs. We found that FSA did not effectively do so. Because FSA senior managers considered the number of complaints to be immaterial, they placed insufficient emphasis on the importance of identifying, tracking, and resolving borrower complaints. We also found that FSA did not effectively ensure that the PCAs were abiding by the Federal debt collection laws and the related terms of their agreements with FSA.