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Student Loan Collection Harassment & the TCPA

The Best Way to Get Rid of Student Debt is to Sue the Collector!

If you're a Michigan resident, we can help.  Just like everywhere else in the country, Michigan consumers are burdened with an astronomical level of student loan debt. And just like everywhere else, Michigan consumers are facing abusive debt collection practices from about twenty three or so federal student loan collection agencies.

Here are some of the more common student loan collection agencies’ violations of the Fair Debt Collection Practices Act (FDCPA):

  • Robo-calls and artificial voice messages to your cell phone after revoking consent;

  • Threats to garnish wages without following the proper procedure to do so;

  • Threats to take federal benefits, including tax refunds and social security benefits, without following the proper procedures;

  • Misrepresentations about what is necessary to “rehabilitate” a federal student loan;

  • Misrepresentations about the option to consolidate a federal student loan in order to remove it from a default status;

  • Misrepresentations about what will happen with credit reporting when a loan is rehabilitated;

  • Misrepresentations about bankruptcy discharge not being available for student loans;

  • Misrepresentations about the options of cancelling student loans due to disability, school closings, etc.; and

  • Forbidden contacts with neighbors, employers, and family members.

The FDCPA protects against abuses by collectors, even collectors who are collecting student loans.  The FDCPA strictly prohibits collection agencies from lying to consumers.  Period. 

There is no reason, good or bad, for a collector to lie to a consumer.  If a collector is going to attempt to explain the law to consumers, they had better get it right.

The FDCPA prohibits the collectors, even of student loans, from threatening action which the collector cannot take or will not take.  For example, a collector cannot just snap his fingers and garnish your wages.  A process must take place including a letter sent to you, an opportunity for a hearing, etc.  So when collectors threaten to take an immediate

garnishment without following the steps, it is illegal as a threat that the collection agency cannot take.

Some student loan collectors feel that they are above the law.  They feel they have the right to bully student loan borrowers because student loan collectors have extra-ordinary collection powers, ie a fiduciary relationship with the government.  BUT student loan collectors still must follow the law. When student loan collectors refuse to follow the law, it is appropriate for a consumer to sue and to hold them responsible by forcing them to pay money damages.  This is the only way these collection agencies will learn to follow the law. Only when it becomes more expensive for student loan collectors to break the laws than it is to follow the laws will they listen. Otherwise student loan collectors will continue to violate the law and abuse student loan borrowers because most of the time it’s profitable to do so.

If you live in Michigan and are dealing with student loan collection agencies, let us know and we will be glad to discuss your situation with you.  You can call us at 810-653-3300 or 1-800-428-8973.

Private Student Loans vs. Federal Student Loans

Student loans now exceed 1 trillion dollars.  To put this incomprehensible number in perspective — that is more debt than all of the nation’s credit card debt.  When there is a default on student loans, collection activities begin.

  • Do student loan collectors have unlimited powers?

  • Can they really take your tax refunds?

  • Garnish your wages whenever they want?

  • Tell borrowers that student loans are not dischargeable in bankruptcy?

  • Is there really no statute of limitations on any type of student loan debt?

To get a handle on this situation, let’s look first at the similarities in collection powers and then the differences between private and federal student loans.

Similarities In Collection Of Federal And Private Student Loans

Under both types of loans, the proper party can sue you if you default on the loan.  This makes sense, as being sued is normally always an option if we default on loans.  You can face collection activities including:

  • Negative credit reporting.

  • Collection calls.

  • Collection letters.

You may also face abusive, illegal collection activities.

Under both types of loans, it is very difficult to file for and receive a bankruptcy discharge of student loan debt.  However, collectors will often lie and say it’s impossible to discharge student loans in bankruptcy. You have to show “undue hardship” which basically means you cannot work anymore and have no hope to paying off the loan. Another similarity is both federal and private student loan collectors must follow the Fair Debt Collection Practices Act (FDCPA).  They also must both follow the Telephone Consumer Protection Act (TCPA) that restricts certain types of auto dialed calls to your cell phone. In almost all student loan applications, the borrower consents to being robo-dialed for collection purposes at any current or subsequently acquired telephone numbers.  The TCPA allows the borrower to revoke consent to being robo-dialed on a cell phone. All you have to do is request the collector to stop calling you. The best way to do this is to write a letter and keep it simple and straight to the point.

Dear Collector,

Please stop calling my telephone number (XXX) XXX-XXXX. Please send me written evidence that I owe a debt and I will respond by mail.

Signed, XXXX, complete name and home address

Make sure that you save a copy of this dated letter and stamped envelope as it will serve as evidence of consumer law violations if the collector continues to call after receiving it. 

Differences In Federal And Private Student Loan Collection

Statute of limitations – none for federal loans. Private loans will be based upon the applicable state law and what the contract says.  This can be for a short period of time or it may be a long period of time but at least it is not unlimited like the federal student loans.

Options to rehabilitate or consolidate to bring out of default – on a federal loan you can rehabilitate or consolidate (i.e. refinance) one time each if you meet the requirements. A private student loan collector does not have to allow you to do either unless the contract requires it, (very rare).

The definition of default – a federal loan is in default if you go 270 days without making a payment. A private loan is in default whenever the contract says it is. This usually is one missed payment. Or re-locating without providing a new address. Or filing for bankruptcy. Sometimes it can be when you default on another debt.  You really have to read the contract closely to find out.  Given that there is a statute of limitations, you might find the default happened long enough ago that no suit can be filed against you because its time barred as to the statute of limitations and therefore false threats of a lawsuit would be an FDCPA violation.

Ability to wage garnish – under a federal loan, you do not have to be sued in order for your wages to be garnished. But student loan collectors still have to provide you with a notice letter and give you an opportunity to request an administrative hearing. Many collectors will lie about this — and tell you that they can garnish you whenever they want, which is illegal and violates the FDCPA. A private student loan collector cannot garnish your bank accounts, wages or tax refund unless they first file a collection lawsuit and win. Only then can you can be garnished if allowed under state law. This is the same as a credit card debt, mortgage loan, etc.

Ability to intercept government benefits or tax refunds – a federal student loan default can result in your government benefits being intercepted. There are some exceptions but this is a very powerful tool. A collection agency for a private student loan company cannot do this. Instead it is simply the same as a credit card debt, car loan, etc.

Powerful Collection Tactics But Still Governed By The FDCPA

All debt collectors, whether collecting student loans or credit card debt, must abide by the FDCPA and the TCPA and cannot violate those laws.  If they do, you can sue them.  In fact, if you don’t sue them, you will encourage them to continue violating the law against you and other consumers.  So appreciate the powers they have — especially if collecting a federal student loan — but understand these collectors are not all-powerful and can be brought down when they violate the law.

Some collectors are so used to being arrogant, overconfident, and breaking the law in such an outrageous manner that they believe they are unbeatable. Suing them, is your right under the law if they have violated the law, and is a way to remind debt collectors that while they may be arrogant, they are just like you when they are in a courtroom in front of a jury — someone who is subject to the laws and they will have to accept whatever the judge and jury decide.  If you have been abused by student loan collectors or have any questions, get with a consumer lawyer in your state.

If you live in Michigan, feel free to call us at 810-653-3300 or send me an email at

Click Here for Info on the Consolidation of Federally Guaranteed Student Loans:

Click Here for Info on the Consolidation of Private Student Loans:

[Credit to my good friends Peter Barry - Attorney at Law in Minneapolis Minnesota, and John Watts and Stan Herring, Attorneys at Law - Birmingham, Alabama, for much of this blog content.]


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