How to Stop Student Loan Harassment and Deal With Debt Collection

October 21, 2020 Loans & Finance

Note that the situation for student loans has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Currently, collections have been halted on all federally held student loans, and interest-free deferment has been extended on repayment. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.

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More than 75,000 consumers wrote to the Consumer Financial Protection Bureau (CFPB) in 2019 to complain of shady debt collection practices, alleging everything from threats to lies and beyond. In fact, student loan harassment, specifically, might not be so uncommon when you consider that the student loan delinquency rate in America is 11.1%.

Fortunately, by learning about your rights, you can stop student loan debt collection harassment in its tracks.

To understand why collections agents are barraging you in the first place, let’s look at the following three topics:

What happens when student loans go into default
What to do when a debt collector calls for your student loans
How to stave off student loan harassment from debt collectors

What happens when student loans go into default

Federal student loans come with more benefits and protections than private student loans. But the moment federal loans go into default, the entire balance of the loan comes due — a phenomenon known as “acceleration.”

You’ll also lose your right to forbearance, deferment and different repayment plans. And if you don’t contact your servicer to get your loans back into good standing, they’ll go to collections.

At that point, a debt collector might ask you to enter into a voluntary repayment agreement, rehabilitation or consolidation. If you don’t come to an agreement — or if you don’t make your payments under the new agreement — the wage garnishment process begins.

Once that happens, you could lose up to 15% of your disposable pay — and what’s more, you’ll be on the hook for the costs incurred if your student loan debt goes to collections. The only way to avoid this is to contact your servicer before your loans get sent to a debt collector and work out a plan to get out of default.

Potential consequences of defaulting on a federal student loan
● Entire balance becomes due
● Losing access to repayment plans and programs, as well as eligibility for additional federal financial aid
● Dinged credit report and decreased credit score
● Garnishment of wages, tax refunds and other federal benefits
● Collection costs plus additional fees if you’re sued and need to hire a lawyer
● Facing illegal student loan debt collection harassment from unruly debt collectors

As for private loans…

If you have outstanding education debt with a bank or other private lender, there’s no standardized process for handling student loan default.

Leslie H. Tayne, a New York-based debt settlement attorney, told Student Loan Hero that the best thing to do is:

Negotiate a settlement of the total amount due
Create a payment plan that’s manageable for your budget

And unlike with federal student loans, a debt collector going after private student loans can’t garnish your wages or tax refund without a court order.

What to do when a debt collector calls for your student loans

If a debt collector is trying to reach you about your student loans, ignoring their call is the worst thing you can do. The problem will only be exacerbated as fees rack up and your credit score dives.

According to Sean Stein Smith, an assistant professor at Lehman College and a member of the AICPA Financial Literacy Commission, it’s wise to “address the issue head-on” with frank conversation.

“It might be a difficult conversation to have,” Stein Smith said, “but the first step toward addressing these issues is to start the dialogue and to get yourself on a payment plan.”

As for federal student loans, there are three universal options for removing the default status:

Rehabilitate your loans: Agree to rehabilitation, and the debt collector will pull your loans out of default after you make nine consecutive payments at an amount that will be no more than 15% of your income (it’s possible to get a payment amount as low as $5 per month during the rehabilitation period).
Consolidate your loans: Apply for Direct Loan Consolidation to pay off your federal loans by getting one new loan to cover them all.
Repay your loans in full: This is also an option to rectify the situation, although it might be unrealistic, depending on the amount of your debt.

As for private loans…

Besides negotiating with a debt collector, consider the statute of limitations on private student loan debt (note that federal student loans don’t have a statute of limitations). After the statute of limitations is up, a debt collector can no longer win a collections lawsuit against you. That said, your debt will still exist beyond the statute of limitations, so this shouldn’t be considered a way to get rid of your debt.

If you feel the collector’s information about what you owe is incorrect, check the numbers yourself. Go to to see what’s being reported on your private (or federal) loans.

How to stave off student loan harassment from debt collectors

There’s no question that this is a difficult situation to be in, but don’t let it also become a disempowering one. Even if your loans are in default, being the victim of student loan harassment isn’t OK — you still have rights.

Debt collectors are not allowed to harass you, lie or obfuscate the truth about what you owe, or use “unfair or unreasonable means” to get you to repay your debt.

According to the CFPB, consumers in 2019 complained of the following practices:

Types of debt collection complaints
Percent of complaints
Attempts to collect debt not owed 45%
Written notification about debt 18%
Took or threatened to take negative or legal action 12%
Communication tactics 12%
False statements or representations 11%
Threatened to contact someone or share information improperly 3%
Source: CFPB Annual Report 2020 on the Fair Debt Collection Practices Act

If you think debt collectors are doing any or all of these things, you can file a complaint with the Department of Education (for federal loans) or the CFPB (private).

Specific examples of illegal student loan debt collection harassment
● Calling before 8 a.m. or after 9 p.m.
● Making physical threats or using obscene language
● Providing misleading information about the debt or its consequences
● Failing to provide a debt validation notice within five days of contact
Source: Federal Debt Collection Protection Act

Just because you lost track of your education debt doesn’t mean you deserve to face student loan harassment. Know your rights, and do what you can to get pay off student loans in collections.

You might start by requesting your collection agency offer proof of your outstanding loans by writing a debt validation letter.

Andrew Pentis contributed to this report.

Interested in refinancing student loans?
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.

2 Important Disclosures for Laurel Road.
Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.

Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.

After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.

Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.


This information is current as of September 9, 2020. Information and rates are subject to change without notice.

3 Important Disclosures for SoFi.
SoFi Disclosures
Student loan Refinance: Fixed rates from 2.99% APR to 6.09% APR (with AutoPay). Variable rates from 2.25% APR to 6.09% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.25% APR assumes current 1 month LIBOR rate of 0.18% plus 2.32% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. See eligibility details. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 

4 Important Disclosures for Earnest.
Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of July 31, 2020, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 7/31/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit, email us at, or call 888-601-2801 for more information on our student loan refinance product.

© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

5 Important Disclosures for LendKey.
LendKey Disclosures

Refinancing via is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.

1.89% – 6.66%1 Undergrad & Graduate

Visit Splash

1.89% – 5.90%2 Undergrad & Graduate

Visit Laurel Road

2.25% – 6.09%3 Undergrad & Graduate

Visit SoFi

1.99% – 5.64%4 Undergrad & Graduate

Visit Earnest

1.98% – 8.55%5 Undergrad & Graduate

Visit Lendkey

2.39% – 6.01% Undergrad & Graduate

Visit Elfi

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

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