DEBT COLLECTORS LOSE LEGAL CHALLENGE: U.S. Court of Federal Claims Judge Thomas C. Wheeler on Wednesday ruled against a group of companies trying to block the Education Department’s plan to eliminate their role as contracted debt collectors.
— The ruling is a victory for the Trump administration’s efforts to overhaul how it collects federal student loans, a project dubbed, “Next Generation Processing and Servicing Environment.”
— Under the NextGen platform, the department will no longer hire companies that are solely dedicated to collecting defaulted loans. Instead, the department will incorporate debt collection into its loan servicing platform.
— The Trump administration’s plan to cut private debt collectors out of the federal student loan system drew praise from Democratic Sens. Elizabeth Warren (Mass.), Kamala Harris (Calif.) and Patty Murray (Wash.). They argue debt collectors aren’t effective in helping struggling borrowers and cost taxpayers too much money. More from Michael Stratford.