Hang up on the HANGUP Act

Last week, Congress cleared the Bipartisan Budget Agreement of 2015, which President Obama signed into law on Monday. The bill includes a small but important provision allowing the federal government and its contractors to use predictive dialer technology to collect a debt owed to or guaranteed by the United States. The change is one of the important ways to strengthen the student loan servicing system and improve borrower communication, as noted in a recent report by the U.S. Department of Education, and has long been supported by the Obama administration, which included the provision in each of the last four budgets proposed by the president.

Unfortunately, the provision has been unfairly portrayed as a tool to harass consumers and now a bill (the “HANGUP Act”) has been introduced in the Senate which would repeal the provision. The HANGUP Act in actuality would harm the very consumers it purportedly wants to protect since, in the student loan arena, the Bipartisan Budget Agreement will provide a way to help those struggling with student loan debt.

{mosads}There is nearly universal agreement by all stakeholders, including Congress, the administration, the financial aid community, student loan servicers and collectors, borrower advocates, and student groups, that distressed student loan borrowers need timely and accurate information in order to successfully navigate the often-confusing array of student loan repayment options. Without a doubt, person-to-person communication is the most effective way to assist borrowers in this task. Student loan servicers know from hundreds of years of combined experience that reaching borrowers on their cellular telephones – the devices used by the vast majority of those with student loans – is the most effective way to ensure that borrowers know and understand their options so they can avoid – or get out of – default. 

Those who immediately conclude that the use of predictive dialer technology leads to abusive “robocalls” do not understand how the federal student loan system works. Predictive dialers simply provide efficiencies which allow service providers to speak to significantly more borrowers per caller. This, in turn, leads to more student loan borrowers accessing income-driven repayment plans to avoid delinquency or, for those in default, to enter into a loan rehabilitation program that gets them out of default and removes the record of default from their credit report. The change will allow servicers and collectors to use 21st Century technology to reach tens of thousands more borrowers each month, ensuring that these students will not “time out” and default on their student loans, or languish needlessly in default.

The Bipartisan Budget Agreement charges the Federal Communications Commission (FCC) with developing rules to limit the number and duration of calls to cellular phones. Rather than seeking to repeal the provision, the National Council of Higher Education Resources (NCHER) believes all interested parties should work with the FCC to find common ground on these consumer protections so that the new rules are fair to borrowers and taxpayers alike. Our members know that abusing the right to auto-dial consumers is counter-productive. Rather, predictive dialer technology is an indispensable tool that significantly increases the contact rates – and thus the number of successful borrower resolutions – over manually dialing calls to often discarded landline telephones. But make no mistake: regulations that are too restrictive will ultimately harm borrowers.

We all have a stake in a successful federal student loan program that helps student and parent borrowers repay their debts and protects the interests of taxpayers who ultimately are the holders of the loans. The president’s recent Student Aid Bill of Rights and multiple Administration reports have discussed the importance of improving the student loan borrower experience, including promoting better communication between borrowers and servicers. Congress and the administration should be commended for including this important provision in the Bipartisan Budget Agreement, which will assist struggling borrowers who need timely and individualized help in managing their student loan debt.

Bergeron currently serves as president of the National Council of Higher Education Resources (NCHER), which represents a nationwide network of lenders, secondary markets, guaranty agencies, loan servicers, private collection agencies, schools, and others that assist students, borrowers, parents, and families access, manage, and pay for the costs of postsecondary education.