Collector - September 2020 - 38

GOVERNMENTAFFAIRS

A Balancing Act
Student loan collectors remain committed to communicating with consumers, despite the pandemic challenges.
By Leah Dempsey

I

n response to the COVID-19 pandemic
this year, we have seen sweeping
legislation in several areas, including
in the student loan servicing industry.
Like much of what Congress has done
in response to the pandemic, some of
the steps taken have been important
and meaningful to protect consumers.
Others, however, include overly broad,
agenda-driven policy shifts that do little,
if anything, to address specific financial
harm related to COVID-19.
At the height of the pandemic,
several restrictions were placed on the
ability to collect on student loans owed
to the U.S. Department of Education
(DOE). According to the DOE, to
provide relief during the COVID-19
national emergency, federal student
loan borrowers were automatically
placed in an administrative forbearance
that allowed them to temporarily stop
monthly loan payments. This suspension
of payments is set to last until Sept. 30,
2020. Borrowers do have the ability to
make voluntary payments. However,
there have already been multiple
proposals to extend this timeframe far
beyond the fall of 2020.

38

As a result, private collection agencies
(PCAs) working on behalf of the DOE were
required to cease outbound calls, sending
letters, wage garnishment, tax offsets,
etc. A host of other restrictions were also
included in the Coronavirus Aid, Relief, and
Economic Security (CARES) Act.
The draft House versions of the CARES
Act also included additional sweeping
restrictions that extended to Federal
Family Education Loans and Perkins
Loans. However, those provisions were
ultimately not included in the Senate
version that became law. As Congress
takes another bite at the apple in providing
COVID-19 financial relief, several
restrictions that impact PCAs appear to be
on the table for discussion.
The Health and Economic Recovery
Omnibus Emergency Solutions Act
(HEROES) Act, which at press time passed in
the House but had not yet been considered by
the Senate, included additional restrictions.
For example, Section 11051 states that a
creditor cannot apply "pressure" to a borrower
to apply payments to student loan debt.
"Pressure" is broadly defined as "any
communication, recommendation, or other
similar communication, other than providing

basic information about a borrower's options,
urging a borrower to make an election." The
HEROES Act passed by the House would also
suspend interest and required repayment of
student loans until September 2021.
ACA International has expressed concern
to Congress that this one-size-fits-all
approach to solve financial problems that
only a portion of borrowers are facing is
problematic. Instead, ACA is advocating
for a nuanced approach that allows for a
simplified deferment to suspend interest or
payment on a case-by-case basis for those
impacted by COVID-19. This tailored
approach would make more sense as the
country moves toward reopening businesses
and maintaining a functioning economy.
While efforts to relieve financial burdens
for student borrowers may be noble to
some extent, there are some unintended
consequences causing concerns in the
accounts receivable management industry.
For example, thousands of employees
working in the student loan servicing
industry have been laid off, and the
proposals in the HEROES Act would
certainly lead to additional job loss
for many Americans if limitations are
extended for an additional year. Limiting

ACAINTERNATIONAL.ORG


http://www.ACAINTERNATIONAL.ORG

Collector - September 2020

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