Oral Arguments Scheduled in Dept. of ED Debt Collection Contract Protest

Last week Judge Wheeler scheduled oral argument in the case of FMS v. The United States (ED) and Alltran Education, Inc. On August 30, 2018 at 10:00 AM EDT the Court will hear argument on both the Plaintiffs' and Defendants' motions for judgment on the administrative record.

Oral argument will be open to the public, but there will be no dial-ins permitted. 

Background

FMS v. The United States is the fourth round of protests related to ED's contract for unrestricted (large category) private debt collectors. After several years of legal wrangling, ED simply cancelled the Solicitation, saying that they changed their strategy and no longer need the services of the large collectors. Read here for more background on that.

The most recent activity had been the filing of a motion for a Temporary Restraining Order to prevent ED from recalling defaulted student loan accounts that were still being worked by five private collectors that had previously held the contract, and had received Award Term Extensions (ATEs). That motion was denied a few weeks ago, and was followed immediately by a recall of accounts.

A little about the recall

A source close to the matter tells insideARM that the recall seems to have been conducted hastily, leaving some concerned that borrowers may be harmed -- or at least frustrated. Some of the questions being asked: 

• What happens to documents students have submitted as part of payment/deferral programs but have not yet been processed?
• What happens to Administrative Wage Garnishments (AWG) that were put in process but may need to be reversed?
• What happens to post-dated checks held for accounts in rehabilitation by the companies that received the recall? Who will be responsible for processing those - and will this happen in a timely fashion so the accounts don't violate the terms of the rehab?

The source said it's possible that ED has thought these (and many other questions) through, but the process did not appear well organized, and should borrowers attempt to contact the collectors they had been working with, those collectors do not have answers to provide.

The upcoming oral arguments

The upcoming arguments are not about the recall, but about the cancellation of the Solicitation. insideARM will report on additional developments as they occur.

For those who want additional background on this multi-year saga, this page contains a full list of insideARM coverage.