Student loan debt is perhaps the most grueling, tiresome kind of debt that you can owe. For you to go to school, Uncle Sam has doled out money, and he fully expects to get that money back. Unlike most other loans, federal student loans are extremely difficult to discharge in bankruptcy. A man that drove to Vegas and gambled himself into foreclosure has a much more realistic chance of being capable of walking away from the situation than a student who borrowed money to go to school. Also, federal student loans have no statute of limitations and can be collected even from debtors’ Social Security Payments after they retire.
So is a student fresh out of school struggling to make ends meet to do in a situation like this? Get educated, again. A Collections manual, 2009 PCA Practices, was temporarily posted in a public section of the Department of Education’s website. A guide for the private collection agencies that work with the Department of Education, this manual can prove to be an invaluable resource for former students who are trying to learn more about paying back their student loan.
This article is based on what I’ve learned from the manual, and it focuses on the circumstances under which collection activity might be suspended on a student loan account. It additionally briefly describes how you would go about ceasing collection activity on your student loan altogether if you really wanted to, although that is not recommended. According to the manual, collection companies have to immediately suspend collection activity on an account if the borrower disputes the amount that is being owed, for example, saying that the debt was paid off, was never owed, or should have been canceled.
Collection activity should immediately be suspended if the borrower raises a legal defense against repayment. These might include a closed school, an ability to benefit, or circumstances under which the Department of Education might not be allowed to pursue collection. If the borrower receives a 65 Day Notice of Federal Offset, or 30 day Administrative Wage Garnishment notice, and requests a written review or hearing in response, the collection agency needs to suspend collection activity. Finally, if the borrower files a written or verbal complaint against the collection agency, collection activity must be suspended.
Unlike suspension of collection activity, which is temporary, ceasing collection activity is permanent. If you want your student loan debt collector to stop contacting you, you must request in writing that the collection agency stop all communications with you. In these cases the collection agency is allowed to contact you one final time to let you know how they plan to proceed. Keep in mind that requesting that collection activity on your student loan be stopped is not a very good idea, as after the section on ceasing collection activity comes a section that informs the collection agency that the Department of Education expects the collection agency to evaluate the accounts with these requests for litigation. So even though you may experience a period of peace, that one final phone call you receive very well might be to inform you that you are being sued for all of the money you owe.
Mallory Megan works for Rapid Recovery Solution and writes articles on medical collection agencies. Free reprint avaialable from: Straight From The Department Of Ed’s Manual – Suspending And Stopping Student Loan Collection Activities.
