Unfortunately, in today's economy, there are not enough jobs for college graduates entering the workforce. When you also consider that college costs have skyrocketed in recent decades, and so have the number of students taking out student loans, there's a recipe for disaster.
In the U.S., there are about 5.9 million people who are at least 12 months behind on their student loan payments. About one in every six borrowers is in default. And shockingly, the amount of student loans in default - $76 billion - is more than the tuition for a year for all students at public two and four year colleges in the U.S.
Because most of these loans are guaranteed by the federal government, that means the Department of Education is responsible for finding the delinquent borrowers. Last year, the Department of Education paid over $1.4 billion to collection agencies to attempt to collect on the loans. Unlike most creditors, the federal government can use tough collection tactics, such as garnishing tax refunds or Social Security payments. The government actually recovers about 80 percent of defaulted loans, while private lenders typically only recover 20 percent on defaulted credit cards.
These defaulted loans can mean big business for collection agencies. If you are in default on student loans, you have options. Although you can't discharge them in bankruptcy, and there are no statutes of limitation on student loans, unlike other debts, there are ways to dig yourself out of the hole. There are forbearance and deferment options, as well as an income-based repayment plan, of which many borrowers are unaware.
If you are receiving harassing phone calls from a debt collector because of a student loan debt, you have options.
Call FDCPA attorney Paul Mankin at 800-654-9517. He will help you learn more about your legal options. We will also explain how to stop harassing phone calls and determine whether your student loan company has committed FDCPA violations.