Before the Federal Communications Commission Washington, DC 20554

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1 Before the Federal Communications Commission Washington, DC In the Matter of ) ) Rules and Regulations Implementing the ) CG Docket No Telephone Consumer Protection Act of 1991 ) Comments of the Coalition of Higher Education Assistance Organizations in Response to the Notice of Proposed Rulemaking to Implement Changes to the Telephone Consumer Protection Act by the Bipartisan Budget Agreement of 2015 The Coalition of Higher Education Assistance Organizations (COHEAO) appreciates the opportunity to submit comments on the Notice of Proposed Rulemaking ( Notice ) from the Federal Communications Commission ( Commission ) to implement the changes made to the Telephone Consumer Protection Act (TCPA) by the Bipartisan Budget Agreement of COHEAO was founded in 1981 and serves as a partnership of colleges, universities, and servicing organizations dedicated to promoting Federal campus based loan programs, institutional and private loans, student financial wellness and other student financial services. Nearly all COHEAO members participate in the Federal Perkins Loan Program, which is one of the three major Federal student loan programs authorized under Title IV of the Higher Education Act 1. Many COHEAO members also administer loan programs on behalf of the Department of Health and Human Services Health Resources Services Administration (HRSA) 2. Additionally, several COHEAO commercial members work with the Federal government in the William D. Ford Direct Loan Program (Direct Loans) and/or lenders and guarantors in the Federal Family Education Loan Program (FFELP). These comments are largely focused on the Federal Perkins Loan Program and the HRSA loan programs administered on campus. Therefore they do not answer every question set forth in the Notice. A. Covered Calls Questions 8-10: The Notice seeks comments on the phrase solely to collect a debt and proposes to limit calls to only those made after a borrower is delinquent on a debt. However, it also indicates that the benefits of debt servicing calls, including preventing delinquency, outweigh any potential negatives from allowing these calls to be covered and seeks further input on the definition of servicing. 1 William D. Ford Direct Loan Program; Federal Family Education Loan Program; and the Federal Perkins Loan Program. The Higher Education Act of 1965, as amended as of December See US House of Representatives Office of Legislative Counsel: 2 HRSA Loans for Disadvantaged Students; HRSA Health Professions Student Loans; HRSA Primary Care Loans; and HRSA Nursing Loans. The Public Health Service Act, as amended as of March, See US House of Representatives Office of Legislative Counsel: 1

2 COHEAO strongly agrees with the Commission s proposal to include calls related to servicing as covered calls. However, to make the Bipartisan Budget Act of 2015 (BBA) work for the maximum benefit of consumers and taxpayers, pre-delinquency servicing calls must be included as covered calls. Further, creditors in Federal loan programs who choose to self-service their loan portfolios should also be allowed to contact borrowers with these types of calls in the most efficient manner as possible. In terms of student loans, there are Federally contracted servicers which work on the Direct Loan program. There are also schools participating in the Perkins Loan Program and which may self-service their portfolios or enter into contracts with companies for servicing. Similarly, lenders which had participated in the Federal Family Education Loan Program (FFELP) may self-service or enter into contracting arrangements. All of these organizations Perkins Loan schools and servicers; FFELP lenders and servicers; and Direct Loan servicers are involved in the servicing of Federal student loans and should be included in any special provisions in the final rules relating to debt servicing. The notice also indicates the Commission is considering an alternative proposal which would only include calls to defaulted borrowers as covered calls. COHEAO strongly disagrees with this approach, particularly in regards to student loans. Communicating with borrowers is the very core of servicing and collecting of Federal student loans. In contrast with other debts, the Federal student loan programs have myriad repayment plans, which means that if servicers and collection agencies are able to contact borrowers, they are very likely to be able to help them avoid default. In fact, the largest student loan servicer states it is able to help 90 percent of borrowers it is able to contact avoid default. 3 Questions 11 & 12: The Notice seeks comments on the phrase owed to or guaranteed by the United States, particularly when another party may have a pecuniary interest in the loan. In terms of student loans, all Federal loan programs should be considered as debts owed to or guaranteed by the United States. Specifically, the Perkins Loan, HRSA, and Direct Loan Programs are programs with debts owed to the Federal government and FFELP is a program with debts guaranteed by the Federal government. Perkins Loans and the HRSA loan programs are unique in that they are revolving loan funds administered by colleges and universities which require institutions of higher education to match a portion of Federal investments in the fund. The match requirements in these loan programs range from 11 percent to 25 percent of Federal funds. However, Perkins Loans and HRSA loans are clearly Federal loans made and administered under the terms of a Federal program, and the debts in these loan programs are largely owed to the Federal government. The funds are only permitted to be used to make Federal Perkins Loans. The match requirements in these programs should not preclude them from being covered by the Bipartisan Budget Agreement of Perkins Loans are the nation s oldest student loan program and are authorized under Title IV of the Higher Education Act. 4 The HRSA loan programs are authorized under Title VII of the Public Health Service Act 5. Accordingly, the Department of Education and Department of Health and Human Services 3 Millions of Student Loan Success Stories: It s All About the Conversation. Navient website: 4 The Higher Education Act of 1965, as amended as of December, See US House of Representatives Office of Legislative Counsel: 5 The Public Health Services Act, as amended as of March, See US House of Representatives Office of Legislative Counsel: 2

3 issue rules and requirements for institutions of higher education for administering the loan programs in order to protect taxpayers. 6 Simply put, these are Federal loans administered by colleges and universities. Therefore, Perkins Loans and HRSA loans are debts owed to the Federal government and must be covered by the Bipartisan Budget Act. Questions 13 & 14: The Notice seeks comments on who can be called? and the related question of whether we should limit covered calls to the cellular telephone number the debtor provided to the creditor, e.g., on a loan application. It later discusses skip tracing and proposes to exclude calls made to numbers acquired via skip tracing services from the Bipartisan Budget Act exception. Limiting covered calls to the numbers provided on loan applications will greatly inhibit the utility of the exception for consumers and taxpayers. Providing date sensitive information regarding any Federal student aid can only be successful in situations such as this when the lender, contracted servicer or guaranty agency initiates skip-tracing efforts to secure new demographic information. Skip tracing services are beneficial for the collection of debts, particularly in dealing with highly transient populations, such as student loan borrowers. The ability to utilize an automated dialer to call a cellular telephone number does not waive the protections for parties that are being contacted for location information. There are many Federal laws and regulations that govern proper communication with consumers and any third party. The purpose of these laws and regulations is to protect the consumer against unwanted calls. The Fair Debt Collection Practice Act (FDCPA), Unfair Deceptive, or Abusive Acts or Practices (UDAAP), and many state consumer laws outline the permissible purposes of contacting non-debtors. Specifically, Section 804 of the FDCPA provides guidelines for allowable reasons to communicate with a person or persons who do not owe the debt: Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall -- (1) identify himself, state that he is confirming or correcting location information concerning the consumer, and, only if expressly requested, identify his employer; (2) not state that such consumer owes any debt; (3) not communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information; (4) not communicate by post card; (5) not use any language or symbol on any envelope or in the contents of any communication effected by the mails or telegram that indicates that the debt collector is in the debt collection business or that the communication relates to the collection of a debt; and (6) after the debt collector knows the consumer is represented by an attorney with regard to the subject debt and has knowledge of, or can readily ascertain, such attorney's name and address, not 6 Office of Federal Student Aid Handbook, Chapter 5: Perkins Loan Billing, Collection and Default: 3

4 communicate with any person other than that attorney, unless the attorney fails to respond within a reasonable period of time to communication from the debt collector. 7 Further, limiting calls to numbers provided by the debtor to the creditor is somewhat incongruent with the intent of the law and current Federal practices in the student loan program. Since 2009, borrowers with Direct Loans and Perkins Loans have provided express written consent for contact via automated telephone dialing systems (ATDS) and/or pre-recorded voice messages via the Master Promissory Note (MPN). 8 Limiting covered calls to the numbers provided by debtors prior to 2009 will severely reduce the effectiveness of the Bipartisan Budget Act exception for student loans. The Notice also proposes to exclude calls made to numbers provided by the debtor, but then later reassigned by wireless carriers. Absent a national database with reliable information on reassigned numbers, COHEAO strongly encourages the Commission to review the one-call window standard for all calls made to reassigned numbers. The relatively small number of debts owed to the Federal government may also prove to be an excellent population to pilot variations of the one-call window on reassigned numbers. Whether the number is acquired through skip tracing or has been reassigned, it is ultimately a call to persons the caller does not intend to reach. COHEAO strongly believes the one-call window for reassigned numbers greatly inhibits collection activities. Question 15: The Notice seeks comments as to who may call debtors under the new Bipartisan Budget Act exception. COHEAO agrees with the Commission s interpretation that the new exception should apply to creditors in Federal loan programs and their agents. The limiting principle of what constitutes an agent should be the existence of a contractual relationship between the creditor and agency for the servicing and/or collection of Federal debts owed to the creditor. The Federal agencies charged with administering the variety of loan programs already have numerous requirements in place of creditors, servicers, guarantors and their agents to protect consumers. For instance, in the Federal Perkins Loan Program, the Department of Education has numerous requirements for schools in their capacity as creditors and agencies in their capacities as servicers and collectors. 9 The Commission does not need to layer on any additional requirements for schools, servicers, and collection agencies to participate in campus-based Federal loan programs. B. Limits on Number and Duration of Covered Calls Questions 17 & 18 The Notice seeks comments on the appropriate restrictions for the number of attempts to contact as well as the duration of calls considered as covered calls. The FDCPA is a model of such protection when communicating in connection with debt collection. Section 805(c) of the FDCPA addresses ceasing communications: 7 Federal Trade Commission, Fair Debt Collection Practices Act: 8 Perkins Loan Master Promissory Note: 9 Office of Federal Student Aid Handbook, Chapter 5: Perkins Loan Billing, Collection and Default: 4

5 805(c) Ceasing communication If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except -- (1) to advise the consumer that the debt collector's further efforts are being terminated; (2) to notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor; or (3) where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy. If such notice from the consumer is made by mail, notification shall be complete upon receipt. 10 Consumers receiving unwanted calls after asking that they cease have legal recourse, provided in the statutory language of the FDCPA. Additionally, The Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC), in addition to state attorneys general, are authorized to enforce the FDCPA. However, proposing a specific restriction on the frequency and duration of calls simply because they were initiated via an ATDS for the collection of debts owed to or guaranteed by the federal government will create mass confusion within the higher education community and expand potential unwarranted lawsuits when a recipient believes the calls were made by an ATDS when in fact they were dialed manually. The cost of defending such unwarranted lawsuits will discourage the college/university and their servicer from using efficient telephonic equipment to contact student aid recipients. The CFPB is in the process of considering proposing rules relating to debt collection. It released an Advance Notice of Proposed Rulemaking to solicit comments. The Bureau possesses the authority to issue substantive rules for debt collection under the Dodd-Frank act. It may also issue regulations concerning unfair, deceptive, and abusive acts or practices. Having what amounts to a separate definition of such acts or practices created by the FCC as proposed in this section will be confusing for all parties and could lead conflicting regulations and enforcement practices. Question 19: The Notice seeks comments on whether the Commission should look to other standards or precedents for guidance, noting the FDCPA s requirements restricting calls to between the hours of 8:00 a.m. and 9:00 p.m. at the local time of called party s location. Unlike landlines that are identified with a specific locality, an owner of a cellular phone is very mobile. As a result, the individual scheduled to receive a call could have an address that is in the eastern time zone, a mobile phone area code from the central time zone, but has traveled to the West Coast. The FCC could establish permissible contact hours from 8:00 a.m. to 9:00 p.m. using the most conservative approach of either the zip code of the residence or the area code of the mobile phone number. In the example given, a call would be attempted after 8:00 a.m. Central Time (9:00 a.m. Eastern Time) and would cease at 9:00 p.m. Eastern Time (8:00 p.m. Central Time). There are always some unknown variables, such as travel. However, these risks can be mitigated, and organizations 10 Federal Trade Commission, Fair Debt Collection Practices Act: 5

6 investing the time and resources to establish a debtor s residence or employ this most conservative approach for contacting borrowers should be held harmless. The Notice also points to activities of the CFPB as a potential source of guidance. As noted above, the CFPB is in the process of considering modifying the regulations associated with the FDCPA and has issued an Advanced Notice of Proposed Rulemaking. COHEAO strongly encourages the CFPB and FCC to align requirements relating to communications with borrowers to avoid confusion in the marketplace. Question 20: The Notice proposes consumers should have a right to stop calls at any point the consumer wishes. COHEAO supports this right for consumers whether communicating that request orally, by letter, or electronic communication. This should be the principal consumer protection right that makes other proposed regulations to regulate frequency or duration of calls unnecessary. Similar consumer rights are currently included in the FDCPA. Question 21: The Notice proposes to require callers to inform debtors of their ability to make a request to stop calls. COHEAO supports assurances that recipients of automated dialed calls for Federal debts are made aware of their rights to stop such calls. However, any requirement to inform recipients of rights that include the ability to stop calls should be a collaboration between the FCC and the CFPB so that any final regulatory requirement for disclosures would all types of debts. Formulating language that is specific to federal debts would be confusing to consumers when they may receive communications about other types of debt that do not require the same disclosure language. C. Other Implementation Issues Questions 22 & 23: The Notice seeks comments on the applicability of the Federal debt exemption to calls made to residential landlines. As the Commission s rulings regarding debt collection and telemarketing do not currently have requirements limiting contacts with borrowers, the new exception should not result in any additional burdens for communicating with Federal debtors on their residential landlines. Conclusion At the time of the passage of the TCPA some 25 years ago, the growth both in function and usage of mobile phones could not have been anticipated. It is estimated that over 730 million phones were purchased in Mobile phones are now the primary mechanism to communicate with others and conduct all forms of business. In fact, using mobile phones to make or receive calls falls low in the ranking of overall uses. Mobile phone are used for such functions as navigation, watches or alarm clocks, address book and contact lists, calculators, digital cameras, audio recorders, video recorders, multimedia messaging, communication, web access and apps, gaming, document viewers, digital music, electronic wallets, streaming movies and TV, searching for employment, access to banking, and general purchasing of products and supplies. The mobile phone is the centerpiece for communicating in today s world. According to Pew Research Center, 64 percent of American adults now own a smartphone of some kind and 57 percent of these users have used their phones for financial services. 11 Eighty-five percent of all Americans between the 11 Pew Research Center, US Smartphone Use in 2015 : 6

7 ages of own smart phones and student loan borrowers tend to skew toward the younger demographic, with two-thirds of borrowers under the age of 39 and the majority under This age group s preferred mode of communication is electronic, and as a result, they are expectant of important information being communicated directly to their mobile phones either by text, SMS, phone or . Delivering information related to a debt owed to or guaranteed by the United States to an individual in an efficient manner by the use of auto dialer equipment is to provide valuable information to the communication center of today s consumers. The consumers being served by COHEAO members higher education students and former students -- are dependent on their cellular telephones as their primary means for communication and as depositories to store information in order to conduct business of any kind, including important communications with the institution of higher education they attend or have attended. The Federal government s interest is also served by efficient communication between the institution and the consumer. Consumers are ill-served to have the ability of institutions to contact them inhibited by fear of lawsuits being filed simply for contacting the consumer via the device the consumer has chosen to be his or her primary means of communication. Given the mobility of college students and former students, mail or other forms of communication simply don t work. TCPA rules and the accompanying threat of lawsuits which are costly even when unjustified -- that inhibit or discourage communications with borrowers on the repayment of federal student loans are harmful to taxpayers and consumers. The changes to TCPA made by the Bipartisan Budget Act of 2015 offer the potential to allow for more efficient communications for the servicing and collection of all types of Federal student loans, which is a benefit to consumers and taxpayers alike. However, if the FCC rules prove too burdensome, the fear of litigation will likely continue to preclude the most important aspect of preventing delinquency and default in Federal student lending maintaining contact between creditors and borrowers. COHEAO appreciates the opportunity to offer our comments on this Notice of Proposed Rulemaking, and will be pleased to provide any further information that will assist the Commission. Respectfully submitted, Harrison M. Wadsworth III Executive Director Coalition of Higher Education Assistance Organizations 1101 Vermont Avenue, NW Suite 400 Washington, DC June 6, Federal Reserve Bank of New York Staff Reports, Measuring Student Debt and Its Performance, April 2014: 7