Student Loan Collection

Student loan collection doesn't only involve phone calls from the U.S. Department of Education's account management department notifying you of your defaulted student loan debt. Granted, the long term consequences of defaulting on a federal student loan are far more severe than if you merely stop paying your credit card bills since the government can seize your tax refunds and do other equally nasty things that most collection agencies don't have the right to do.  But guess what? The U.S. Department of Education uses private collection agencies as a instrument in student loan collection.

Surprised? Don't be.

Check out this nifty news article: NCO Group to Pay Largest FCRA Penalty to Date

So, basically, NCO started re-aging accounts, got busted by the FTC (federal government) and got charged a 1.5 million dollar fine. Yet, on the other end, the federal government was paying NCO as one of its private collectors to collect defaulted student loan debts from consumers.

If you're being contacted by a collection agency due to being included in the government's database for defaulted student loan collection, the same rules apply that would apply otherwise. Private collection agencies don't get a free pass to harass you simply because they're collecting for the government. They still have to adhere to the FDCPA, they still can't harass you, they still have to validate your debt, etc. etc.

If you choose to rehabilitate your loan, those collection agencies must stop calling you. While student loan rehabilitation results in the U.S. Department of Education updating your loan status to "current" on your credit report, you can't expect the same treatment from a private lender. It also won't get rid of the collection agency notation. You'll have to work on that separately.

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Student Loan Collection

Reviewed by malaria
Published : 2010-08-16T08:55:00-07:00
Rating : 4.5