Friday, December 7, 2012

Being Harassed by Student Loan Collectors? How to Fight Back!

By Laura Whitley

Falling behind on any bill can cause concern, however defaulting on student loans can be especially frustrating.  Aside from damaging credit scores,  defaulting on student loans can carry long term and  painful financial consequences like wage garnishments.  Filing for bankruptcy can provide consumers temporary relief from student loan debt collections.  However, student loan debt can not be discharged in a bankruptcy and consumers should seek the advice of a licensed attorney.

Certain collection agencies specialize in collections for government student loans.  Private lenders often hire them as well, for a list click here.  At times, some agencies my engage in unethical or abusive tactics.  Those abuses can violate state and federal fair debt collection laws.  Federal and state laws offer protections to consumers from abusive and fraudulent collection practices.  In Texas collection agencies must follow the Texas Debt Collection Act.

Consumers who think a collection agency is violating their rights should contact the loan holder, guaranty agency or Department of Education and complain in writing. Those complaints are taken seriously.

There are a few ways student loan borrowers with government backed loans can complain to the Department of Education.

How to Complain:

A. Document every contact with collection agency noting, date, time, actions
B. Keep copies of all complaints filed
C. File complaints with 3 different agencies

1. the collection agency
2. the Office of Inspector General - Online Complaint Form
3. the Department of Education

-Send a letter and any evidence to
U.S. Department of Education
61 Forsyth St., SW 19T89
Atlanta, GA 30303

4. Contact the Department of Education's Default Resolution Group to be connected with the Special Assistance Unit

In May 2012 the National Consumer Law Center, released a comprehensive report detailing problems with complaint systems in the student loan collection agency industry.