Dive Brief:
- A lawsuit against the U.S. Department of Education by five debt collection companies dismissed in March has been thrown out.
- The Chronicle of Higher Education reports a federal judge threw out the case without even hearing its merits, suggesting her rationale was on technical grounds.
- The lawsuit argued the department acted arbitrarily and ignored renewal conditions on the companies’ contracts, asking the court to prevent their termination, according to the article.
Dive Insight:
The Department of Education dropped the five debt collection companies for allegedly unscrupulous practices in their collection of student loans, accusing them of violating borrowers’ rights under fair debt collection laws and misleading students about how to get out of default. The five collectors were some of the top-rated agencies by the department before their dismissal, making the announcement of their termination a surprise. The department may be preparing a new debt collection strategy, using federal agencies instead of private collectors.