When most people think of consumer debt, they think of credit card debt. Recently, however, student loan debt surpassed the total amount of consumer credit debt—totaling more than $ 1 trillion dollars.
Depending on the type of loans, consumers have a variety of repayment options and rights during the collection process.
Student loan repayment options
Depending on the what type of student loans you have—government or private loans—there are usually more than one way to repay your loans. A good starting point for information is the student debt repayment assistant on the consumer financial protection bureau’s website. The assistant provides a quick and easy way to learn what repayment options might be available to you.
In addition to a variety of repayment options, there are also ways to defer payments, request a forbearance, and even potentially have your loans discharged. By researching online, you can get a good idea of what repayment options you have, and which options might be best for you. At the same time, it is also a good idea to consult with a a tax adviser, tax attorney, and even a consumer rights attorney that handles student loans before making a decision.
Rights during the collection process
According to one source, there are currently $33 billion dollars in loans that are in default and in collections. This reportedly includes approximately 3 million borrowers. The bad news is that if your government loans are in default, you lose a number of governmentally-provided rights on those loans. For example, if your loans are in default, you cannot select a different payment plan and you are ineligible for additional government student loans.
The good news is that the collection companies that contract with the Department of Education still have to follow federal law—the Fair Debt Collection Practices Act (FDCPA). The FDCPA protects consumers against unfair, abusive, and harassing debt collectors. Some common violations include calling your family members about your debt, calling your workplace, and providing misleading information during a collection call.
Bottom line: you have options and you have rights
Student loan debt can be overwhelming, but depending on the type of loans, and the status of your loans, you should have more than one repayment option.
If you need help understanding and choosing a repayment plan or if your student loans are in collections, please contact me.