Congress has recently passed a budget bill that includes a provision to
allow debt collectors to used robocall technology to contact borrowers
of federal loans. Robocalls either use a technology with the capacity
to autodial or utilize a pre-recorded or artificial voice. The provision
in Section 301 of the Budget Act will allow loan servicers and other collectors
of federal loan debt to use robocalls “to collect a debt owed to
or guaranteed by the United States.” This provision in the new budget
bill repealed the advanced consent requirement for collectors of debt
that is owed to or guaranteed by the federal government. While student
loans are the primary focus of this provision, it is possible that other
types of government-based debt such as back taxes and Federal Housing
This change comes in the wake of tightened rules implemented by the Federal
Communications Commission and the Consumer Financial Protection Bureau
on the use of robocall technology by debt collectors. In June, the FCC
adopted a proposal to protect consumers against unwanted robocalls and
spam texts. The proposal includes several clarifications including empowering
consumers to revoke their consent to receive robocalls and robotexts and
allowing consumers to use robocall-blocking technologies. The robocalls
are among the biggest sources of consumer complaints. In 2014, the FCC
received over 251,000 complaints from consumers about automated calls.
In July, the CFPB settled with Discover Financial Services after the company
placed more than 150,000 calls demanding payments to private student loan
borrowers’ cell phones at inappropriate and inconvenient times.
Nearly 41 million Americans have federal student loans, and about 6.9 million
borrowers were in default as of June 30, 2015. Section 301 of the budget
bill removes the current requirement for a caller to have the consent
of the called party before making autodialed or prerecorded calls for
the purpose of collecting debts owed to or guaranteed by the federal government.
It also removes the ability of the called party to stop these unwanted
calls from reaching their cell phones or the cell phones of third parties.
The Department of Education has argued that using robocall technology
can help prevent student loan borrowers from defaulting by reminding borrowers
to make payments. However, consumer groups have pointed out that student
loan servicers, such as Navient and Nelnet, could use robocall technology
to harass students even before the loans go into default. It can be argued
that there are better ways to assist students struggling with loans than
to harass them into making payments. The focus should be on assisting
these borrowers in making payments and keeping them from defaulting rather
than adding to their stress with oppressive robocalls. Additionally, the
borrowers should be given the option as to whether they would like to
be reminded automatically as to when their payments are due.