Student loan debt is rising at alarming rates. It is estimated that by the time they graduate, more than two-thirds of students at four-year colleges and universities have student loan debt.
Student loan debt is different from other types of debt because it is incurred to purchase an education. It also differs because of the far-reaching collection powers the federal government has on federal student loans. In a default, those powers go far beyond those of most unsecured creditors, including the ability to garnish wages without a judgment, seize a tax refund (even an earned income tax credit), seize portions of federal benefits such as Social Security, and deny eligibility for new education loans or grants.
Economic pressure and slower wage growth have kept student loan defaults a serious problem for many borrowers, including households in Capac and across St. Clair County, Sanilac County, Macomb County, Lapeer County, Tuscola County, and Huron County.
The good news is that there is almost always something that can be done to challenge federal student loan collection actions — and in a majority of private-loan situations as well — and either cancel a loan or set up an affordable monthly payment plan.
It is important to reach out before defaulting, to avoid unnecessary default fees. In some cases, filing bankruptcy to discharge other debts may give a borrower the breathing room to keep an affordable student loan payment.
Student loan points
- No statute of limitations (on federal loans)
- Wage garnishment without a court order on defaulted federal loans
- Generally non-dischargeable in bankruptcy
- Collectors are allowed to charge fees that create ballooning balances
- The government can pursue borrowers to the grave
Student loan issues vary from person to person and depend on the borrower’s own facts. Contact the Capac office for help managing student loan debt.
Services — student loans
- Summarizing and teaching borrowers about different repayment options, including the pros and cons of each
- Assisting borrowers to get out of default and stay out of default
- Handling harassing and abusive debt-collection conduct and, if required, suing the collector
- Determining whether a borrower may qualify for a discharge and assisting with obtaining one
- Representing borrowers who have been sued by lenders or the Department of Justice
- Suing lenders, servicers, guarantors, and debt collectors that violate the law
Common questions
How is student loan debt different from other debt?
Federal student loans have collection tools most unsecured creditors do not, including wage garnishment without a court order, tax-refund offset, and Social Security offsets. There is generally no statute of limitations on federal loans.
What student loan help does Wheelihan Law provide?
The office can explain repayment options, help borrowers leave default, address abusive collection, review possible discharges, and defend suits by lenders or the Department of Justice.
Should I wait until I am in default to call?
No. It is important to reach out before defaulting when possible, to avoid extra default fees. Call the Capac office to discuss options based on your facts.