iStock (iStock/iStock)A contractor for the Education Department is suing the federal agency, alleging that billions of dollars in defaulted student loans go uncollected because the government is not lining up new private debt collectors. The allegation stems from a long-standing dispute between the department and the collection agencies it uses to recoup student loan payments that are past due. The Education Department assigns defaults to 13 companies, while FMS and four other collection agencies handle older accounts. In fiscal year 2018, the Education Department recovered $10.4 billion on a $166 billion portfolio of student loan defaults managed by private collection agencies. Critics of the existing default apparatus say it is exceedingly expensive and operates to the benefit of the collection agencies.

Source: Washington Post February 28, 2019 22:58 UTC