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July 9, 2009

The July 7th article, “Not-So-Honest Broker” unfairly misrepresents Vangent’s work in support of the U.S. Department of Education’s Ombudsman’s Office and its work with the U.S. Department of Education’s Direct Loan Servicing Center and Default Resolution Group. Furthermore, the article gives the false impression that Vangent is not an honest company. In reality, Vangent and its employees provide valuable financial aid counseling to borrowers and has been a trusted partner with the U.S. Department of Education for over 30 years.

First and foremost, Vangent is not a debt collection company. We have never been involved in the collection of delinquent accounts for the U.S. Department of Education’s Office of Federal Student Aid (FSA). In 2005, FSA awarded 17 contracts for Private Collection Agency (PCA) services. Vangent has never been involved in PCA work for FSA.

The article confuses two contracts under which Vangent is currently performing work:

1. Under a subcontract to ACS (which is a prime contractor to the U.S. Department of Education), Vangent performs Direct Loan Servicing Center and Default Resolution Group (DRG) services for FSA. Our DRG employees assist borrowers with repayment, rehabilitation, consolidation, bankruptcy, questions about Federal tax offsets, and other defaulted loan issues. We also assist borrowers by providing account, loan, and interest information; calculating repayment plans; calculating payoff quotes; and querying school and reference information. We do NOT collect any payments from borrowers.
2. Under a prime contract with the U.S. Department of Education, Vangent assists FSA’s Office of the Ombudsman in working as a neutral, independent party to help resolve disputes between borrowers, loan holders, servicers, guarantors, and schools when regular channels of dispute resolution have been exhausted. Under this contract, Vangent’s Ombudsman Center employees answer phone calls and work customers’ cases to resolve disputes. Our staff members review customers’ situations, advise them on steps to follow, and perform research and make contacts to bring the parties in dispute together for resolution. We do NOT collect any payments from borrowers.

These two contractual arrangements are separate and distinct contracts, and neither of these contracts requires Vangent staff members to engage in collections activities, dunning actions, or dunning decisions.

While several Vangent employees on the Ombudsman contract have had prior experience in working on the DRG contract, this is not a conflict of interest. The DRG service representative background is actually quite desirable for Ombudsman case workers. The DRG service representatives do not perform formal collections functions and are only incented to provide good service. As such, they answer questions and provide information to defaulted borrowers, and are exceptionally well suited to specialize in Ombudsman case work based on their industry expertise. The DRG mission is customer service, not collections. Their training and core skill set are well suited to helping students resolve their loan issues.

Vangent receives no incentive financial or otherwise other than to provide excellent service. Our employees are paid an hourly wage with typical benefits. There are no incentives related to the outcome, e.g. fund recovery from their respective customer interactions. FSA makes the determination that a case is closed, not the Vangent Ombudsman caseworker.

Furthermore, the U.S. Department of Education has reviewed our relationship with borrowers on these two contracts and has determined that no conflict of interest exists.

Carlo Uchello
Vice President, Education Services
Vangent, Inc.
4250 N. Fairfax Drive
Suite 1200
Arlington, VA 22203