Nearly 75 percent of students graduate with student loans. Those student loans often result in huge payments for many years after college ends. Although an education can lead to a better job, it can also result in significant debt before you get settled into a career. With enormous payments and an economy where high paying jobs are hard to come by, many people are unable to make student loan payments.
If you have fallen behind on your student loan payments, you are likely dealing with the unforgiving collection tactics of student loan companies. Those tactics can sometimes violate consumer protection laws. You don’t have to handle this situation alone.
Contact an experienced Ohio student loan lawyer at Luftman, Heck & Associates at to find out how we can help.
Life of a Student Loan
You may obtain a student loan from an “originator,” such as the federal government, or a private bank or credit union. Bank of America, Chase, Charter One Bank, and many other organizations offer private student loans. Those loans are then transferred to servicers, or a depositor, such as the National Collegiate Student Loan Trust, who manage student loans, including the collection of payments. It is likely that the company that you contact regarding your student loans is not the same organization that lent you the money in the first place.
Federal vs. Private Student Loans
Student loans may be either federal or private. If your loan was funded by the federal government, it is “federal,” and there are various repayment options available that can help you get out of trouble if you fall behind. However, if your loan was funded by a bank or credit union, it is deemed a “private” loan. These loans often involve high-interest rates and payment arrangements are rarely as flexible. If you fall behind on payments on a private loan, you may face serious negative consequences.
Differences between federal and private student loans include:
- Entering Repayment – You do not have to begin repaying federal student loans until you graduate, leave school, or are enrolled less than half-time. However, many private student loans enter repayment status while you are still in school.
- Interest Rates – Interest rates for federal loans are fixed and often much lower than private student loan rates, which are often variable and can be three times that of a federal loan.
- Credit Score – Federal student loans do not require a credit check or a specific credit score for qualification. Private student loans, on the other hand, often require established credit and interest rates often depend on your credit score.
- Cosigner – Federal student loans do not require a cosigner in most situations; however, private student loans often require a cosigner. Cosigners are then on the hook if you’re unable to make payments.
- Consolidation – If you have multiple federal student loans, they can be combined into one loan with one payment. Private student loans cannot typically be consolidated.
- Prepayment Penalties – Federal student loans may be repaid at any time; however, private student loans may include a prepayment penalty fee that discourages you from paying off early so that you are forced to pay interest for a longer amount of time.
- Loan Forgiveness – If you work in public service, you may qualify for full or partial loan forgiveness for federal student loans. However, it is unlikely that your private lender offers loan forgiveness for any reason.
Many loans, both federal and private, can be repaid according to a variety of options. The following repayment options are available from federal lenders. Your private loan company may or may not offer these options as well. You should request information from your private student loan company about repayment options.
- Deferment – You may temporarily postpone repayment of student loans while you are attending college at last half-time, while experiencing economic hardship, during periods of active military service, and a variety of other reasons. Under deferment, your principle and interest payments are delayed. Interest does not continue to accrue.
- Forbearance – You may temporarily postpone student loan payments for several reasons, including poor health or financial hardship. Under forbearance, interest continues to accrue.
- Standard Repayment – Student loan payments are a fixed amount for a fixed number of years. Both federal and private student loans may use this type of plan. However, private student loans may periodically change payments based on a variable interest rate.
- Graduated Repayment – Student loan payments start lower and then increase gradually each year.
- Extended Repayment – Student loan payments may be fixed or graduated, but the length of time to repay is extended, essentially lowering monthly payments. This would also result in greater interest payments upon full repayment.
- Income-Based Repayment (IBR) – Student loan payments may be set according to your household income. If you start an entry-level job with lower pay, you will have lower payments. Those payments may increase as you advance through your career and receive a higher income.
- Pay As You Earn Repayment (PAYE) – Student loans may be based on 10 percent of your discretionary income. Like IBR plans, this may result in higher payments as your income increases; however, it also considers your expenses and is based only on your discretionary income.
Most federal student loans allow repayments according to any of these plans; however, private student loan companies are not likely to offer so many options. You may be able to defer or forbear private student loan payments for a short period of time, but once it falls into repayment, you will have significant payments that can be difficult to manage.
Student Loan Collection Tactics
If you are unable to repay your student loans, there may be significant consequences. Student loan companies might call and make threats, file a lawsuit against you in court, and possibly garnish your income. Their collection tactics are harsh and often illegal. If you are the victim of unlawful student loan debt collection practices, you need a skilled Ohio student loan lawyer. You have rights and LHA will make sure they are respected by lenders.
If your student loans are in collections, you may face the following:
- Collection Fees – Once your account goes into collections, lenders may begin assessing collection fees in addition to the loan principal and interest rates. Collection fees may add significantly to your balance.
- Collection Calls – Student loan companies will call often, sometimes violating the Fair Debt Collection Practices Act (FDCPA). National Collegiate Student Loan Trust (NCSLT), a series of trusts that contain private student loans to be sold as investments, often violates the FDCPA. The NCSLT is a depositor. Essentially, this means that the NCSLT holds onto the loan that you might have taken through a well-known financial institution and deposits that loan into a trust where it will later be packaged and sold to investors. The NCSLT is an incredibly complicated web of private student loan securitization that often only gets messier due to the lack of a paper trail and confusion surrounding the true owner of the debt. NCSLT may attempt to collect on a student loan but it is not often that they are able to prove the validity of the debt.
- Wage Garnishment – Student loan collection companies may garnish your wages without going to court first.
- Income Tax Refund Acquisition – Student loan collection companies may also intercept your income tax refunds and take all or part of them if you have failed to make payments.
- Lawsuit – If you fail to make payments and do not work with your lenders, they may file a lawsuit against you. However, many of those lawsuits are invalid and can be fought in court.
How an Ohio Student Loan Lawyer Can Help
If you have been sued by a student loan collection company, or, if you are dealing with unlawful student loan debt collection practices, you need an experienced Ohio student loan lawyer to advocate for your rights. Our attorneys at Luftman, Heck & Associates can help you navigate the legal process as well as negotiate with the student loan servicing company to help reach a positive outcome in your case.
Call us today at to start the process of getting your life and finances in order.