Student loan collection agency lays off ~ 250 employees after ED directive

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If regulators and other government officials were wondering what the consequences of a blanket debt collection ban looked like, it’s the canary in the coal mine. On March 20, the Department of Education (ED), following President Trump’s directive, announcement it will grant an abstention of 60 to any person who requests it and waive the interest. Now, the Star Tribune reports that a collection agency that collected these types of student loans filed a notice with the state saying it laid off 248 employees on March 22, just two days after the ED directive.

InsideARM Perspective

insideARM has learned that ED has instructed its collection agencies to stop making outgoing calls to its accounts. For many agencies, a large portion of the staff make outgoing calls. These calls work as more than a simple attempt to collect a debt: they allow debt collectors to proactively provide consumers with information about their accounts. If necessary, the collector can provide the consumer with many hardship options including, but not limited to, changing payment schedules, advising the creditor of the consumer’s inability to pay due to unemployment or a medical problem, and file disputes. Without outgoing calls, consumers must proactively seek out this information (rather than reaching them).

While we can all agree that help should be extended to those who have suffered job loss or other financial hardship as a result of this crisis, there are many other consumers whose roles and businesses have gone with it. success to a work from home model and can continue on with their obligations. The latter population is unfairly favored by general collection bans.

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And, as noted above, without outgoing calls, collection agencies and businesses simply cannot afford to keep call reps on the payroll resulting in layoffs, as seen here. .

Putting two and two together: General collection bans lead people to lose their jobs at the expense of others who are unfairly advantaged.


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