The National Consumer Law Center and the American Civil Liberties Union asked a federal court to force the U.S. Department of Education to hand over documents that show how the government collects student loan debt.
The groups filed a lawsuit against the Education Department on Wednesday, accusing it of violating the Freedom of Information Act by failing to release information about the department's oversight of the private companies hired to collect student loans as well as overall debt collection policies.
If the lawsuit moves ahead, a federal judge for the first time could evaluate the department’s argument that parts of the debt collection manual are law enforcement records that it can keep secret under the Freedom of Information Act.
The department’s preliminary response to their public records request indicates that the Education Department doesn't monitor its debt collection program for racial disparities. The Office of Federal Student Aid "does not track race or data related to race," a department official wrote in a letter.
The NCLC and ACLU want answers to several questions, including whether the Education Department’s collection practices disproportionately affect borrowers of color, who are more likely to have student loan debt in the first place. Many student advocates and regulators have argued the Education Department hasn’t adequately policed its loan contractors, which guide borrowers on payment options and collect monthly payments. The public records request, filed last May, also seeks the department’s policies for using - and instructing its debt collectors how to use - the tools it has to collect student loans from borrowers who default, such as wage garnishment, tax refund offsets and other methods.The Education Department earlier in March provided more than 1,700 pages of documents that responded only to parts of the groups’ 20-part Freedom of Information Act request. Those documents were heavily redacted, the ACLU and NCLC said, and the Education Department didn't provide any documents in response to some requests. Education Department officials have said they are reviewing the Freedom of Information Act request sent by the NCLC and ACLUE to decide if more information can be provided.
"The Department of Education is acting like it has something to hide," Rachel Goodman, a staff lawyer with the ACLU’s Racial Justice Program, said in a statement. "The public has a right to know how a taxpayer-funded agency handles debt collection to ensure it is done in a fair and nondiscriminatory way.”
The public availability of a large manual that the Education Department provides to companies it hires to collect student loans on its behalf is also at issue in the lawsuit. The document instructs the Education Department's debt collectors how to work with borrowers. Education Department officials told the NCLC and ACLU that they're still deciding whether to release that specific document but it previously has cited a law enforcement exemption in the Freedom of Information Act as a reason why it won't fully release the manual.
The NCLC and ACLU argue in their lawsuit that the Education Department’s use of the law enforcement records exemption to withhold from the public other, similar information about its debt collection program is "straightforwardly unlawful." The Education Department has come under criticism before from consumer groups, Senate Democrats and its own inspector general for not properly overseeing the companies it hires to collected defaulted federal student loans. Total student debt has doubled in the last eight years to $1.3 trillion, according to the Federal Reserve. Nearly 1 in 5 of the roughly 42 million Americans with student loans are in default, according to the CFPB. Several million more are delinquent while millions of others watch their balances grow as they delay payments under approved repayment plans, Education Department data show. Rohit Chopra, the former assistant director of the Consumer Financial Protection Bureau, began working for the Education Department in January as a senior official focusing on student protections, financial capacities of schools and openness of the department’s data. Chopra previously pushed for a strong government response to the student debt crisis, such as allowing borrowers to refinance loans with high interest rates or discharge debt in bankruptcy that they’re unable to repay. In 2013, he said financial regulators and economic policymakers would be irresponsible if they ignored the potential problems stemming from overly indebted Americans struggling to repay student loans.