Budget Bill Rider Would Allow Student Debt Collectors to Robocall Your Cellphone

Tucked into the congressional budget deal is a provision that would let companies robocall Americans’ cellphones to collect any money owed to or guaranteed by the government, including federal student loans, mortgages and taxes.

The proposal would amend a law that consumer advocates say protects Americans from being harassed or inundated with text messages and calls that could run up their cellphone bills.

“This will unleash numerous unwanted calls to cellphones,” said Margot Saunders, an attorney with the National Consumer Law Center. “If you’re low-income, on a limited cellphone plan and get 10 calls a week, it would be more than invasive, it would be expensive.”

The Education Department argues that its student loan servicers, the middlemen that collect and apply payments, would have a better chance of helping borrowers avoid late payments with access to their cellphones.

“Many student loan borrowers, especially those that may just be graduating, move frequently in addition to no longer having landline phone numbers. It can be difficult for servicers to find a borrower except by using a cell phone number,” department officials wrote, in a report issued to the White House earlier this month. Agency officials declined further comment.

For the better part of a year, debt collection agencies and student loan servicers have lobbied the Federal Communications Commission to exempt federal student loans from the Telephone Consumer Protection Act, a law that bars the use of auto-dialers to call and text people on their cell phones without permission.

Nelnet, one of the department’s largest servicers, sent the FCC a letter in April insisting that people who consented to its robocalls had a higher chance of remaining current on student loan payments.

Companies such as Nelnet, Navient and American Education Services are paid millions of dollars by the federal government to handle payments, answer questions and help people avoid defaulting on their loans. Their pay is aligned with their performance, so the more people they keep current the more money they make.

President Obama has supported loosening the robocall rules in several budget proposals in an effort to reduce student loan delinquencies and defaults. Still, the FCC has remained firmly in opposition to any changes to the law that could erode consumer protections. If anything, the agency has doubled down on its position.

[The FCC is cracking down on annoying telemarketers and robo-calls]

In June, the FCC made it easier for telecom companies to use block autodialed calls and text message. It also established stricter definitions of autodialing to prevent telemarketers from side-stepping the rules. The commission, which declined to comment on the budget provision, said it received more than 215,000 complaints about unwanted calls from consumers last year.

Saunders from the law center says the volume of complaints will only get worse if the budget provision succeeds. Changing the law could subject a wide range of people to harassing calls, including borrowers’ relatives, references or someone who has their reassigned cellphone number.

Given the bipartisan support for the budget deal, there is a good chance the provision will pass both chambers. House Minority Leader Nancy Pelosi (D-Calif.) was not available for comment, but has signaled to news media that Democrats could provide the votes needed to get a majority in the House.

By Danielle Douglas-Gabriel