Provision in New Budget Deal Allows Federal Robocalls to Collect Student Debt

Emily Kowalik ’18
Assistant Copy Editor

A proposed bipartisan budget bill, unveiled this month by the White House and Congressional leaders, includes a provision allowing debt collectors to conduct automated robocalls and auto-text mobile phones to pressure the holders of unpaid student loans. The provision aims to recoup unpaid student loan debt.

The Telephone Consumer Protection Act previously prohibited companies from contacting consumers on their mobile devices without permission.

The new bill exempts government debt collectors from these rules if calls are made, as the bill states, “solely to collect a debt owed to or guaranteed by the United States.”  Creditors already had the right to robocall land lines without borrowers’ consent.

The Federal Communication Commission (FCC) had the power to allow debt collectors to robocall student loan borrowers but chose not to. If the budget pact is enacted, the FCC will have nine months to create new robocall rules.

The result of this change will not only be frustrating for student loan debtors but will also increase their financial burden because borrowers can be charged for the calls.

According to the Sulaiman Law Group, this will impact “low-income individuals relying on prepaid cell plans” because they, like many cell phone users, may use mobile phone plans that allow only a set number of minutes and text messages per month.

There seems to be little evidence that this provision will prevent loan defaults or increase collections. The Hill reported the provision’s author, the Office of Management and Budget (OMB), predicted that it could bring in approximately $120 million over the next decade.

However, a study by the Congressional Budget Office stated collections over the next 10 years would be insignificant. Even if the OMB’s predictions prove more accurate, the $120 million in annual federal revenue would be trivial in the face of the nearly $4 trillion annual budget.

“Nearly 41 million Americans have federal student loans, and about 6.9 million borrowers were in default on $111.4 billion in federal student loans as of June 30,” according to the Department of Education.

According to the National Center for Health Statistics, almost half of American households rely solely on cell phones.

Some senators feel that this provision is not important enough to make them to jettison the entire bill.  Many recommend, however, that the FCC drastically restrict the government’s debt collection calls.

Smith students and faculty opinions vary on how this provision will affect Smith students.

James Miller, associate professor of economics, expects that “the overall effect [will be] very small, especially if someone comes up with an app that blocks robocalls.”

Miller also doubts that this provision will significantly impact collections, as “the federal government already can garnish your income if you don’t pay back your loans.”  However, robocalls may serve to “[remind] people of their legal obligations.”

Julianna Calabrese ’18 echoes many senators’ opinions in saying the provision “sounds like a terrible idea,” “is … just harassment” and is “financially abusive.”

Lucy Liang ’17 points to the potential “financial stress” the provision may bring to “people who are already short on money.” If a person is called repeatedly and “still takes no action, [then] calling clearly isn’t working.”

It appears inevitable that the bill containing this provision will pass. It is now up to the FCC to come up with regulations reducing its hardships on American student loan debtors.

One Comment

  1. Shocking. Trying to recover monies lent. Repayment should be optional as a means of redistributing income from the working class to the indolent class.

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