It’s not unusual for student loan borrowers to get some outside help in paying off their balances. Read any number of student loan repayment success stories, and you’re likely to find many of them crediting a parent, partner, friend, financial aid office or even an employer. But when you think of people who might help you with repayment advice, one category you might forget about are student loan lawyers. And yet, in some cases, a student loan attorney can be of huge assistance. Consider these three real-life examples of how lawyers resolved their clients’ debt woes. This blog does not provide legal advice. If you need legal advice, please contact an attorney directly. These examples are unique. Individual results may vary:
Overwhelmed, stressed and scared, one borrower faced a double whammy on default — both his federal and private student loans were far beyond being simply delinquent. The government was about to garnish his wages, having already seized his federal income-tax refund. Plus, his private lender had filed a lawsuit aiming to collect on a $100,000-plus debt.
The federal loan fix didn’t require years of law school education. East Coast-based lawyer Adam Minsky simply helped his client navigate the black-and-white rulebook of federal student aid. He helped the client rehabilitate federal student loans and then switch to income-driven repayment to receive a more affordable monthly payment.
The private loan mess was harder to clean up. Fortunately for the borrower, what had made his repayment so difficult turned out to be the saving grace. The borrower’s private loan debt had changed hands several times, and the latest loan holder didn’t have the records to prove that it actually owned the debt.
“This is sometimes referred to as ‘chain of title’ or ‘proof of assignment,’” Minsky said. “We pressed them to produce records through a formal litigation process called discovery, and when they did not comply with our requests, we asked the court to dismiss the case. The court agreed.”
Minsky said his client’s balance remained, but thanks to the victorious judgment, the debt was now “effectively uncollectible and unenforceable.”
A single mom working for the Veterans Administration was struggling to convince FedLoan Servicing that she was entitled to Public Service Loan Forgiveness (PSLF). She had been making payments on her Direct Consolidation Loan, only to be denied for PSLF because of her repayment plan.
“About 30 of the 120 required payments were initially not counted because her loans were in a ‘paid ahead’ status,” said public interest lawyer and student loan consultant Heather Jarvis.
“This is tripping up a lot of borrowers: If a borrower pays more than what is due, servicers postpone the next due date unless directed otherwise,” she explained. “The servicer had insisted that payments made when a payment was not technically due are not ‘qualifying payments.’”
Jarvis informed the borrower about Temporary Expanded PSLF and how to apply.
“Unfortunately, she was again denied,” Jarvis said. “It’s sadly common for borrowers to be tripped up by the convoluted requirements of this broken system.”
After exhausting their efforts with FedLoan Servicing — the Department of Education’s default PSLF servicer — Jarvis handed her client off to pro-bono student loan lawyers.
“In this case, the attorneys helped the borrower set out the facts and law in writing, and the matter was reconsidered and resolved in the borrower’s favor,” Jarvis said. “Another unfairness in the system is highlighted here: The squeaky wheel gets the grease.”
Erica Atkinson, a resident of Lufkin, Texas, had repaid what she originally borrowed in private student loans (and then some), but her balance remained at about $180,000, due to interest rates ranging between 8.00% and 16.00%.
In 2016, Atkinson strategically defaulted on the remaining debt, only to face a barrage of harassing phone calls from the lender’s collections department. She turned down their settlement offer — 67% of the balance owed — and reentered repayment.
A couple of months after defaulting a second time, Atkinson phoned Missouri-based lawyer Stanley Tate. She wondered if she was paying more than she should, but a Tate-contracted Certified Public Accountant confirmed what she feared.
“These were just loans that had bad terms,” Tate said.
With no legal ground to stand on, Tate went about negotiating a settlement. Nine months after becoming her lender’s point of contact, he presented Atkinson with the best offer he thought he could snare from the lender: a lump-sum payment of $82,000, or about 40% of the balance owed.
“What helped in getting that settlement was detailing her past payment history, explaining her current financial situation, and demonstrating that it was unlikely the full amount owed would be recovered,” Tate said.
Do you need a student loan lawyer?
There are plenty of scenarios in which a student loan repayment problem could use some professional assistance. In the especially dire combination of bankruptcy and student loan debt, for example, a lawyer could help you prove undue hardship.
These guides can help you determine whether you should seek professional legal help for your repayment: