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How is a student loan recipient like a taxpayer? When either one falls behind on payments, a collection agency comes knocking. And in either case the collection agency may be Sallie Mae.

A House Ways and Means hearing last week about Collection Agencies Gone Wild questioned the tactics and costs of two IRS-contracted collection agencies: CBE Group and Pioneer Credit Recovery, a Sallie Mae subsidiary.

CBE and Pioneer also work for the U.S. Department of Education (ED), tracking down delinquent student loan recipients. ED's 2006 contract with Pioneer is worth $37 million, while ED's contract with CBE Group is a mere $7 million. (Thanks again to OMB Watch for the Web site about government contracts.)

The kicker is that the IRS has acknowledged that the plan to use private collection agencies "will cost more than hiring additional agents to do the same work."

Posted by John on May 29, 2007 10:27 AM | Permalink

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The NCLB Blog was established by the AFT as a forum where public education advocates, policymakers and others can exchange information and express their opinions on NCLB and related issues. The views expressed here are not the official views of the AFT or any of its affiliates. All claims otherwise would violate the spirit and purpose of the blog. © American Federation of Teachers, AFL-CIO. All rights reserved. Photographs and illustrations cannot be used without permission of the AFT.