Enforced Collection Actions

pSLEnforceTo understand how Enforced Collection Efforts begin and the potential result, it is important to understand the various “players” (parties) who may be involved.

The Players


  • Private Banks- Make loans directly to students or parents.
  • Department of Education-
    Makes and guarantees Federal student loans.
  • Guarantors-
    For loans made before June 30, 2010, Guarantors insured FederalStudent Loans made by private banks.
  • Servicers-
    Collect payments and send statements to student loan borrowers.
  • Third Party Debt Collectors-
    Collect back payments from borrowers.
  • Department of Justice-
    Files lawsuits, sues and obtains judgments against delinquentborrowers for unpaid student loans.

If you fail to pay your student loan(s) your student loan will be considered delinquent.  Once you are 270 days (9 months) behind, your student loan is considered in default.  Once this occurs, Collection Efforts will begin which may include any or all of the following:

  1. Collection Calls – may be made by either the Servicer or Third Party Debt Collector.  Collectors may call your home or place of business.  The purpose of these calls are to get you make a payment.
  2. Tax Refund Offset – The Department of Education files documents with the Internal Revenue Service (IRS) in order to intercept (offset) your tax refund.  The IRS will remit an amount equal to the defaulted amount up to and including the entire amount of your refund.  Many of our clients find out they are delinquent when they do not receive their tax refund and instead receive a letter from the IRS explaining their refund was applied to the client’s defaulted student loan.
  3. Social Security Offset (Garnishment) – The Department of Education files documents with the Social Security Administration.  The Social Security Administration will withhold an amount up to 15% of your Social Security (including Social Security Disability Income) check.
  4. Wage Garnishment – The Department of Education serves your employer with an “Administrative” Wage Garnishment for up to 15% on your income.  An Administrative Wage Garnishment is different from a standard garnishment.  The primary difference is there are no court proceedings.  The DOE simply fills out the necessary documents and serves them on your employer.
  5. Department of Justice Lawsuit – This is the most serious Collection Effort.  If the actions above fail to resolve the issue or they are unsuccessful, the Department of Justice (DOJ) will file a lawsuit against you.  A DOJ lawsuit is almost impossible defend and nearly always results in a judgment against you.  Once the DOJ obtains a judgment, they may enforce the judgment by seizing your personal or business bank accounts, retirement accounts and other assets like your home, automobile or other valuables like jewelry.  Many self employed individuals (doctors, lawyers etc.) make the mistake of thinking because they can’t be garnished, nothing can happen.  The reality could be far worse than a garnishment.

Don’t make the mistake of ignoring your student loans and thinking they will go away.  They won’t!  The best thing to do is proactively engage the problem. Call us today and ask about our Free Case Review.