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Feds go after past-due student loans with debt collection law firms

April 5, 2017
Neon Dollar bill sign photo by Jimi Filipovski via Unsplash

Federal authorities have reportedly ramped up collection efforts on past-due student loans with the help of debt collection law firms.

It is unclear how effective this increased litigation is because it appears to be mostly taken against low-income borrowers. However, the numbers remain small: federal officials pursued about 3,300 student loan debt lawsuits nationwide since 2015, but more than 8 million borrowers are in default.

Why are lawsuits so rare? The scarcity of student-loan lawsuits is likely to due to the government’s ability to garnish wages, tax returns, and federal benefit payments of delinquent borrowers.

Who is being targeted? Individuals who took out small loans in the 1970s or 1980s appear to be prime targets for student loan debt litigation. There’s some speculation that the collection lawsuits are an attempt to recover money before these individuals die off and the debt goes away.

More:Amid billions owed in student loans, U.S. taps law firms to recoup small debts from long ago,” Bobby Allyn, News Works


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Photo: Jimi Filipovski

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