A consumer advocacy group on Monday sued the U.S. Department of Education over the agency’s refusal to release documents showing how the federal government awards bonuses to debt collection companies it hires to recover defaulted student loans.
The National Consumer Law Center charges in its lawsuit that the department violated the Freedom of Information Act by withholding records relating to the performance and incentive pay for the government’s contracted debt collectors. The group had sought information about the department’s methodology for evaluating and compensating the companies. It also requested documents that show how individual debt collection companies have performed.
The Education Department asserted, according to court documents, that it may keep the documents secret under an exemption to the information law that protects “trade secrets” and certain commercial or financial information.
Persis Yu, a lawyer at the law center, said in a statement that “collection agencies routinely violate consumer protection laws and prioritize profits over borrower rights.” She added: “Taxpayers and student loan borrowers have a right to information about the impact of the Education Department’s policy of paying outside debt collectors on the rights of borrowers.”
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