California-based student debt collector Account Control Technology is laying off 100 workers from its call center in Dallas as its legal challenges to recent contracts awarded by the Department of Education continue to wind through federal courts.
The company, which offers other outsourcing services, is also letting go of 72 employees from its center in San Angelo, Texas, according to recent filings to the Texas Workforce Commission.
A spokesperson for ACT declined to comment.
The Dallas layoffs took place earlier this month, while the ones in San Angelo will begin in August.
The layoffs come amid a major fight between companies that are profiting off the more than $1.5 trillion in student loan debt held by U.S. borrowers, specifically billions of dollars in default.
Several companies in the industry have protested Department of Education decisions dating back to 2016 to award new contracts to a smaller number of firms and recall borrower accounts other companies were already handling.
The agency came under heavier criticism earlier this year when contracts were awarded to just two companies – Windham Professionals and Performant Financial Corp. – which DOE Secretary Betsy Devos had previously invested in.
ACT banded together with other student loan servicers FMS Investment Corp., GC Services and ConServe to challenge the bidding process.
Their legal protests continued earlier this month even as the Department of Education cancelled its contracts to revamp how it chooses companies to handle loans that are in default.
The industry has also faced its share of criticism for how it treats borrowers. There have been nearly 300 complaints about ACT filed with the Consumer Financial Protection Bureau claiming the company was pursuing debts not owed, mismanaging paperwork and contacting employers.