CFPB Enforcement • File No. 2024-CFPB-0016

They Ran Out the Clock on Borrowers to Steal 16% of Their Loans

EvilCorporations.com • CFPB Consent Order, December 9, 2024 • 26 min read

The Non-Financial Ledger: What the Fine Doesn’t Cover

Picture this: you defaulted on your federal student loan. Maybe you lost a job, had a medical emergency, or just fell behind the way millions of people do in a country where wages haven’t kept up with the cost of living. You know you’re in trouble, but you’re trying to fix it. You called the number on your paperwork within two months of the default. You did the responsible thing.

The person on the phone told you to wait for forms in the mail. You waited a week. The forms didn’t arrive. You called back. Sorry, the agent said, we’ll have to send them again. Wait another week. You waited. Maybe the forms arrived, maybe they didn’t. When you finally mailed the forms back in, you called to confirm receipt and couldn’t get through. The voicemail was full. Or it rang and rang. When someone finally called you back, it was days later, one attempt, no message left if you missed it.

What you didn’t know, what you had no way of knowing, was that every single one of those delays was engineered. The agents taking your calls were not slow. They were not overwhelmed. They were following a deliberate internal process, managed by supervisors who sent emails explicitly saying the “whole objective is to DELAY, DELAY, DELAY.” The forms going by mail instead of email was a policy. Refusing to give out a fax number was a policy. Calling back only once was part of a system designed so that your 65-day window would expire before your paperwork could be completed.

When that 65-day window closed, the law allowed a collection fee of 16% to be added to everything you owed: every dollar of principal, every dollar of accumulated interest. If you owed $20,000, that’s $3,200 dropped onto your balance. You then owed interest on that $3,200 too, for the entire remaining life of the loan. And that wasn’t the worst of it. While Performant was running out your clock, you were also losing time during which your tax refund was being seized to pay the defaulted debt. You were blocked from federal student aid. You couldn’t enroll in income-driven repayment. You couldn’t access loan forgiveness programs. Every day of delay cost you options, not just money.

These borrowers had no alternative. The consent order is explicit on this point: affected consumers could not switch to a different debt collection agency. They could not rehabilitate their loans directly with the loan holder. They were trapped inside Performant’s process, and Performant used that trap against them. The cruelty of the scheme is architectural. It was built into the call routing, the mail-only policy, the unanswered phones, the withheld fax numbers, and the auditor sitting on a completed file at day 58 waiting for a manager’s go-ahead.

The borrowers who got through this process probably never knew why it was so hard. They likely blamed themselves for not being organized enough, for not following up sooner, for not understanding the paperwork. The shame of debt default is already crushing in this country. Performant layered manufactured bureaucratic failure on top of that shame and then collected a fee from it.

Legal Receipts: The Words They Wrote Down

These are verbatim quotes from the CFPB’s consent order. Every word below came from Performant’s own internal communications, documented and entered into the federal administrative record.

“We have a special process on dealing with [defaulted borrower] accounts that have not had collection costs added to their accounts yet. . . . The objective is to delay getting these accounts into billing prior to day 65 . . . . Again the objective is to delay as much as possible without getting Performant in trouble. If we put the borrower into billing prior to day 65 Performant will not get paid on the rehab.”

— Internal email from a Performant manager, as documented in CFPB File No. 2024-CFPB-0016, Paragraph 10

• This email confirms the delay scheme was a formal, managed “special process,” not an accident or the result of understaffing. Leadership designed it deliberately.
• The phrase “without getting Performant in trouble” shows internal awareness that the conduct was legally risky. They knew what they were doing was wrong and planned around detection.
• The explicit financial motive is stated without ambiguity: if borrowers get into rehabilitation before day 65, Performant does not earn its fee. The fee was the only reason for the delay.

“I do not want any of you to offer them our fax number . . . . [W]e want them to mail all documents. Remember the whole objective is to DELAY, DELAY, DELAY.”

— Manager directive to specialized agents, as documented in CFPB File No. 2024-CFPB-0016, Paragraph 13

• Refusing to provide a fax number was a specific, instructed policy. Agents were told not to offer it. This was not an individual agent failing to be helpful; it was a scripted omission directed from above.
• The capitalization of “DELAY, DELAY, DELAY” in the source document reflects the emphasis in the original email. The manager was not gently suggesting patience; this was a standing operational directive.

“Remember we are trying to delay [emoji] we don’t want them in billing yet,” and “. . . [W]e really want to delay as much as possible.”

— Same manager, in separate emails to specialized agents, CFPB File No. 2024-CFPB-0016, Paragraph 11

• These emails confirm the delay directive was repeated and ongoing, directed at specific agents assigned exclusively to handle pre-65 borrowers. This was a dedicated, staffed operation.

“[T]his is a Pre 65 day account please don’t put the borrower into payment until day 65 has past [sic].”

— Manager instruction to an auditor regarding a borrower at day 58, CFPB File No. 2024-CFPB-0016, Paragraph 21

• This is the most explicit evidence of the scheme’s reach: a borrower who had completed every required form, supplied all required documentation, and had their payment amount approved through the audit was still deliberately held for seven more days by managerial instruction. The paperwork was done. The system was functional. The delay at this stage served no purpose other than triggering the 16% fee.
• The borrower in this case had done everything right. The system still failed them on purpose.

Societal Impact Mapping: Who Else Gets Hurt

Public Health

Student loan default and the stress of compounding debt have documented ties to mental health deterioration, deferred medical care, and housing instability, and Performant’s deliberate fee extraction deepened these harms for a captive population already in financial crisis.

• Borrowers in default had their federal income tax refunds seized while in default status. Performant’s delay scheme extended the period during which those offsets continued, depriving affected consumers of tax refund income that many low-income households depend on for one-time large expenses like medical bills or emergency car repairs.
• During the delay period, affected borrowers remained ineligible for deferment and income-based repayment options that could have reduced their monthly debt burden. Financial stress from unmanageable debt loads is associated with depression, anxiety, and physical health neglect due to inability to afford care.
• Many of the borrowers targeted by this scheme had recently defaulted, a status disproportionately concentrated among borrowers from low-income backgrounds, first-generation college students, and borrowers of color, all populations with already-elevated exposure to health inequities. Adding thousands of dollars to their loan balances compounded vulnerability that existed before the first phone call to Performant.

Economic Inequality

The scheme functioned as an extraction mechanism that moved money from borrowers in financial distress to a private debt collection company, and the structure of the 65-day fee rule meant the people least able to navigate the system quickly were the ones most likely to be penalized.

• The 16% collection cost, documented in the consent order as the specific harm imposed on affected borrowers (CFPB File No. 2024-CFPB-0016, Paragraph 23), was calculated on the total outstanding principal and interest at the time of rehabilitation. On a $15,000 loan, that’s $2,400 added in one transaction. On a $30,000 loan, it’s $4,800. Borrowers then accrued interest on these inflated balances for the remaining life of their loans.
• Borrowers in the 65-day window were specifically the most motivated to resolve their default quickly, yet it was precisely those borrowers who were routed to delay agents. The scheme targeted the most engaged, responsible borrowers, not the most disengaged ones, because the engaged ones were the ones who called in time to avoid the fee under the law.
• The consent order notes that affected borrowers could not switch to a different debt collector, could not rehabilitate directly with the loan holder, and could not rehabilitate on their own. This is a textbook captive market: a private company with a government-assigned monopoly over a borrower’s only path out of default, using that monopoly to extract fees the law was designed to let those borrowers avoid.
• The disruption to federal student aid eligibility during the delay period meant that affected borrowers who may have wanted to return to school, complete interrupted degrees, or pursue vocational training could not access Pell Grants or federal student loans during the window Performant manufactured. This froze economic mobility for an already-disadvantaged population.
• The permanent ban on Performant collecting or servicing student loan debt, while a meaningful consequence, does not return the 16% already extracted from borrowers who completed rehabilitation during the relevant period. The consent order does not include a redress fund for affected consumers; the $700,000 penalty goes to the CFPB’s Civil Penalty Fund.

The “Cost of a Life” Metric

What Now: Who to Pressure and How

Performant Recovery is permanently banned from student loan servicing, but the conditions that made this scheme possible still exist, and the affected borrowers have received no direct restitution from this order.

The People Responsible

The consent order names the titles but not the individuals. Per the order, the Chief Executive Officer and Chief Financial Officer of Performant Recovery, Inc. bear ultimate compliance responsibility. The order requires their sign-off on all compliance reports under penalty of perjury. The internal managers who wrote the “DELAY, DELAY, DELAY” emails are not individually named in the public consent order.

Watchlist: Regulatory Bodies with Jurisdiction

• CFPB (Consumer Financial Protection Bureau): Issued this order. The CFPB’s Civil Penalty Fund can be used for consumer relief in other cases. File complaints about student loan servicers and debt collectors at consumerfinance.gov/complaint. The case contact is Enforcement_Compliance@cfpb.gov, File No. 2024-CFPB-0016.
• Department of Education: FFELP loans are federally regulated. The DoE contracts with guaranty agencies and collection companies. The agency has authority over the rehabilitation process that Performant exploited. File complaints about student loan servicing at studentaid.gov/feedback-center.
• FTC (Federal Trade Commission): The FTC enforces the Fair Debt Collection Practices Act alongside the CFPB. If you believe a debt collector has used deceptive or unfair practices, file at reportfraud.ftc.gov.
• State Attorneys General: Many states have their own versions of the FDCPA. If you are in a state with an active AG consumer protection division, a complaint about debt collection misconduct can trigger a parallel investigation independent of federal action.

For Affected Borrowers and Mutual Aid

• If you had a FFELP loan in default between July 1, 2015 and March 13, 2020 and called a debt collector within 65 days: You may be an affected consumer under this order. The CFPB is required to cooperate in identifying and locating affected borrowers. Contact the CFPB directly using the case file number above to ask whether you are in the affected class.
• Student loan legal aid: The Student Borrower Protection Center (studentborrowerprotection.org) and the National Consumer Law Center (nclc.org) provide free resources and can connect you to legal aid for student loan issues including FFELP disputes.
• Demand redress, not just penalties: The $700,000 fine goes to a government fund, not back to the borrowers whose loans were inflated. Contact your federal representatives and demand that CFPB enforcement actions against student loan servicers include mandatory consumer redress pools, not just civil penalties deposited into a bureau account.
• Organize locally: Local mutual aid networks, tenant unions, and community financial literacy organizations can help people in default understand their rehabilitation rights and the 65-day window before a new servicer pulls the same maneuver. Share this article with anyone navigating student loan default.
• Track corporate successors: Performant Recovery was formerly Diversified Collection Services, Inc. The consent order requires any sale or transfer of Performant’s operations to include the buyer’s written agreement to comply with this order. If Performant restructures, rebrands, or sells assets, those transfers must be reported to the CFPB and are publicly trackable through PACER and the CFPB’s enforcement action database.