Student Loan Debt
The Key Players in Student Loan Agreements
The identification of the key players is essential in obtaining an appropriate student loan debt resolution plan.
The Student Loan Lender
This is a bank that initiated the loan. This loan can be guaranteed by the federal government, making it a federal loan, or it could have been initiated by a private bank, so it’s a private student loan. The U.S. Department of Education could also have been the lender, which would make it a direct federal student loan.
The Student Loan Collector
This is otherwise known as the servicer. The servicer’s function is to collect money, send monthly reminders, operate their online platform and track payments. These are the entities that call you for payment.
There are many well-known servicers that have been around for quite some time, including Navient, Great Lakes, FedLoan and Nelnet.
Some servicers handle just federal loans. Some just handle private student loans. To add to the confusion and frustration, if you have private and federal student loans, they can be serviced by the same servicer. In this case, you really have no idea where your payments are going and to which loans the payments are being applied.
Some federal student loan servicers handle special repayment programs.
The Collector for the Student Loan Collector
This is a collection agency — and there are many of them, with all kinds of names. They come in all shapes and sizes and they come in varying degrees of proficiency. They can be collecting for federal and private student loans.
The Student Loan Holder
In a defaulted federal student loan situation, the holder of the loan could be the U.S. Department of Education, which has hired a debt collector to collect the loan.
The Attorney for the Student Loan Lender
This is the hired gun. The attorney’s job is to get the money flowing in the right direction, as they see it. Meaning, they will do whatever is needed to get your money out of your pocket and into theirs. This may come by way of collection letters or by a lawsuit. Exactly who their client is can be confusing because oftentimes it’s no one you have ever heard from or you simply do not recognize their name. The vast majority of lawsuits I see involve prosecution for the collection of private student loans.
If you hear from an attorney who is from the U.S. Department of Justice, the U.S. Department of Education is the client. I have only seen a very small number of these types of lawsuits. But the ones I have seen have been monsters.
Typically, federal collection lawsuits are initiated for the collection of student loans taken out by professionals, such as doctors, lawyers, psychologists and chiropractors who are in private practice, which has made collections difficult. These collection lawsuits involve very large sums of money.