Student Loan Collection Abuses and the FDCPA

There is one main point that I will make in this post: The Fair Debt Collection Practices Act ("FDCPA") applies to debt collectors seeking to collect defaulted student loans.

It is the practice almost all student loan lenders, including the federal government, to hire third-party debt collectors to collect defaulted student loans.  Just like with other collectors of consumer debts, the conduct of these student loan debt collectors is governed by the FDCPA.  Consequently, these are some examples of things that a debt collector attempting to collect a student loan cannot lawfully do.

1. The debt collector cannot makes threats that are unlawful, untrue, or that it doesn't intend.  For example, a private student loan cannot administratively garnish wages and must go to court to get a garnishment order like any other creditor. (A Department of Education loan can garnish wages without a court order).  So, if wage garnishment is threatened without a judgment, it will likely be a false threat under the FDCPA.
2. A debt collector can't lie about your rights and remedies.  For example, a debt collector pay say that a certain payment is required by the law, but if this is untrue (which it often is), this will be a FDCPA violation.
3. A debt collector collecting a student loan is subject to the same notice and verification requirements as anyone else subject to the FDCPA.  You can read about those here.

This is just a smattering of potential FDCPA violations in the student loan context.  You can read the entire FDCPA here (opens PDF).  There is a great deal of illegality in student loan collections and, if nothing else, a good FDCPA case can be valuable leverage to remove a loan from default status and to enter into a reasonable repayment agreement.