Debt Collectors Lose Court Battle With Education Department

Private debt collection agencies lost a legal battle with the Department of Education this week over their role in an overhauled student loan servicing system, dubbed NextGen by the Trump administration.

The debt collectors last year protested a solicitation for NextGen that would have discontinued contracting with companies solely for collection of defaulted loans. But a federal judge ruled this week that the solicitation, while flawed, was not illegal.

The ruling allows the department to move forward with plans to phase out the role of debt collectors and incorporate collection of defaulted debts into the broader student loan servicing system.