Department of Education Student Debt Collection Contracting Injunction Extended

Courts Department of Education Debt Collection Litigation Department of Treasury

On May 31, U.S. Court of Federal Claims Chief Judge Susan G. Braden extended her preliminary injunction in a legal dispute involving the awarding of Department of Education (Department) debt collection contracts. She stated the order would stay in place “to preserve the status quo until the viability of the debt collection contracts at issue is resolved.”

Judge Baden’s order provides several reasons for her decision, all pulled from news reports, including: (i) a CFPB report stating that private collection agencies chosen by the Department offer uncertain value despite great cost; (ii) a New York Times article suggesting that oversight for the Department’s student debt would be transferred to the Treasury Department; and (iii) press reports announcing James Runcie’s resignation. Runcie served as the chief operating officer of the Office of Federal Student Aid.

The order has prevented the government from collecting on defaulted student loans—a halt which began on March 29 when Judge Braden issued a temporary restraining order in the matter.