Debt Collector Calling About Your Student Loans? Here’s What to Do

Debt Collector

The first time you get a call from a debt collector, it can feel like your entire world is crashing down. As you realize your financial situation has escalated to a new level, you might also know from stories about debt collectors that you’re about to get barraged with calls and letters trying to collect on your debt.

What’s worse, every letter and phone call can serve as yet another reminder that your finances aren’t where you want them to be.

You’re not alone. The current student loan delinquency rate in America is 11.2 percent. That means there are a lot of people struggling to maintain control of their student loans. But you can stop the spiral before it begins.

The more you understand your options, the easier it will be to handle a call from a debt collector.

So a debt collector is calling on your student loans — what now?

Getting calls from a debt collector on your student loans? Here’s what can happen next and what you can do about it.

What happens when student loans go into default

Federal student loans come with more benefits and protections than private student loans. But the moment federal loans go into default, the entire balance of the loan comes due. This is known as “acceleration.”

At the point of acceleration, you lose your right to forbearance, deferment, and different repayment plans. And if you don’t contact your servicer to get your loans back into good standing, they’ll go to collections.

At that point, a debt collector might ask you to enter into a voluntary repayment agreement. If you don’t come to or don’t make your payments under a new agreement, the wage garnishment process begins. Once that happens, you could lose up to 15 percent of your disposable pay.

What’s more, you’ll be on the hook for the costs incurred if your student loan debt goes to collections. The only way to avoid this is to contact your servicer before your loans get sent to a debt collector. That way, you can work out a plan to get your loans out of default.

As for private student loans, there’s no standardized process. Leslie H. Tayne of Tayne Law Group P.C. says the best thing to do is negotiate a settlement of the total amount due or create a payment plan. And unlike federal student loans, a debt collector going after private student loans can’t garnish your wages or your tax refund without a court order.

What to do when a debt collector calls for your student loans

If a debt collector is trying to reach you about your student loans, ignoring their call is the worst thing you can do. The problem will only deteriorate as fees wrack up and your credit score dives.

Dr. Sean Stein Smith, assistant professor at Lehman College and member of the AICPA Financial Literacy Commission, talks about taking the first step.

“My one best piece of advice for anyone facing default is to address the issue head-on and have the conversation. It might be a difficult conversation to have, but the first step toward addressing these issues is to start the dialogue and to get yourself on a payment plan.”

Besides negotiating with a debt collector, consider the statute of limitations on private student loan debt. (Federal student loans are exempt from this.) After the statute of limitations is up, a debt collector can no longer win a collections lawsuit against you.

That said, your debt will still exist beyond the statute of limitations, so this shouldn’t be considered a way to get rid of your debt.

As for federal student loans, there’s a more standardized process. Here’s what you can do to get the loans back on track.

  • Agree to rehabilitate your loans. The debt collector will pull your loans out of default after you make nine consecutive payments. The amount of each payment will be no more than 15 percent of your income. (It’s possible to get a payment amount as low as $5 per month during the rehabilitation period.)
  • Consolidate your loans. Apply for Direct Loan Consolidation to pay off your federal loans by getting one new loan to cover them all.
  • Repay your loans in full.: This is also an option to rectify the situation, although it might be unrealistic, depending on your debt amount.

And if you feel their information about what you owe is incorrect, check the numbers yourself. Log into the National Student Loan Data System to get information on your federal loans. You can also go to to download the report on your private or federal loans.

Don’t forget you still have rights

There’s no question that this is a difficult situation to be in, but don’t let it also become a disempowering one. Even if your loans are in default, and even if you’re getting calls from a debt collector, you still have rights.

According to Federal Student Aid, debt collectors are not allowed to harass you, lie or obfuscate the truth about what you owe. They also cannot use “unfair or unreasonable means” to get you to repay your debt. If you think debt collectors are doing any or all of these things, you can file a complaint with the Department of Education.

Just because you lost track of your student loan debt doesn’t mean you deserve abuse. Know your rights and do what you can to get back on track with your student loans.

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