If you’re struggling with student loan debt, you’re not alone. According to the Institute for College Access and Success, nearly 45 million borrowers have more than $1.5 trillion in student loans. This staggering total makes it the second-largest consumer debt category behind mortgage debt. Around 5.1 million of those borrowers are in default and are more than 360 days delinquent in their payments.
Finding yourself in a student-loan related bind may make you feel like filing for bankruptcy is your only option. Luckily, some professionals are skilled in helping folks in this very situation. Student loan lawyers assist those facing lawsuits from lenders. They can also help people being harassed by collection agencies or who are simply unsure how to tackle their student loan payments.
What Does a Student Loan Lawyer Do?
Student loan attorneys are legal professionals who specialize in both private and federal student loans. The fine print of loans can be confusing for the average person. Still, these attorneys have training and experience in dealing with loans and lenders.
Student loan lawyers can provide a variety of services for their clients. For one, they can help you negotiate with financial institutions to change repayment terms or lower your interest rates. They can also give legal advice and represent you if you end up in court.
If you have private student loans, a student loan lawyer can be especially beneficial. Typically, these types of loans are subject to state laws. An attorney licensed in your state will have a thorough understanding of what options are available.
When Should You Call a Student Loan Lawyer?
It is not necessary to call a lawyer in every situation. Many student loan problems can be solved by contacting your loan servicer or filling out paperwork online. If you need to change your repayment plan, go into forbearance, or apply for a student loan forgiveness program, you can do this without the help of a lawyer.
However, legal representation can be helpful if you find yourself in one (or more) of the following situations:
- You are being sued over a student loan and want representation or advice
- A loan servicer or debt collection agency is harassing you
- You are unsure of your legal rights concerning a student loan issue
- You are looking for an advocate to communicate with credit bureaus, dispute bodies, debt collectors, lenders, and servicers
- You need assistance in preparation, completion, or review of any contractual agreements
- To wish to take any entities related to student loans that may have harmed you in some way to court
What’s the Difference Between Student Loan Lawyers, Consumer Credit Counseling, and Debt Relief Agencies?
A student loan lawyer is just one form of assistance. Debt relief agencies and consumer credit counseling are two other potential sources of help. Let’s take a look at the benefits— and risks— of working with these other two services.
Debt Relief Agencies
It might sound like a good idea to utilize a debt relief agency to settle your student loan debt. These debt settlement companies often claim that they can negotiate with your lenders, which isn’t always true. The Consumer Financial Protection Bureau (CFPB) warns of the dangers of using a debt relief agency. Often, these services are expensive and can even drag you further into debt.
Furthermore, there are a plethora of scammers out there posing as debt relief agencies. You might have received a robocall from someone claiming to have solutions to your debt issues or been sent an email about new debt forgiveness programs. Be very careful of communication like this, as it’s one of the first signs of a scam.
Other major red flags to look out for include:
- The company isn’t your loan servicer or fails to identify themselves at all
- There is pressure to act quickly or are told you must take action immediately
- They claim that there is a new program that now makes you eligible for forgiveness or lower payments
Never give out your personal information without first verifying the company is legit. Before entering into any contract, make sure that you fully understand the terms. In these cases, the services of a lawyer can prevent you from falling prey to scams.
Consumer Credit Counseling
Non-profit organizations typically conduct consumer credit counseling. Their primary function is to educate people on the ways that they can manage all of their debt and finances.
Depending on the situation, they may also work with your lenders and come up with a student loan repayment plan. Unlike debt relief agencies, the CFPB suggests using consumer credit counseling if you need help getting out of debt. You can often receive comprehensive credit counseling for free.
Consumer credit counselors, however, do not provide legal representation. Their job is to provide information to consumers. If you need someone who can offer legal advice, a student loan lawyer is usually your best bet.
How Much Do Student Loan Lawyers Cost?
If you’re already struggling financially, footing the bill for an attorney many seem totally out of the question. After all, you could be paying anywhere between $500 and $5,000 for their services. But if you’re facing situations such as wage garnishment, what you pay now will save you money down the road.
In some cases, attorneys may offer financing plans and other forms of assistance to clients. They understand the position that you might be in and don’t want to make help out of reach. Before you move forward with any legal representation, be sure you are comfortable with their rates and payment plans.
But because the services of a legal professional aren’t free, it’s usually best to do what you can on your own before resorting to outside help. Talk to your loan servicer to see if you can negotiate your loan terms without bringing in a third party.
If you feel like you will never be able to escape your student loan debt burden, remember that you have options. Unlike for-profit loan servicers, a student loan lawyer will serve as your advocate and look out for your best interest. They can advise, represent, and help you avoid sticky situations that will have lasting implications on your financial health.