Strategies to Get Student Loan Debt Under Control, Part 1- Federal Loans - mhpllclaw
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Strategies to Get Student Loan Debt Under Control, Part 1- Federal Loans

According to, $1.31 trillion in total U.S. student loan debt exists. 44.2 million Americans have student loan debt. Approximately 11.2% of these outstanding loans are delinquent. Student Loans can be divided into three general categories: federal (public), state, and private. Each type of loan has its own remedies if a default occurs by the borrower.

Federal loans prior to July 2010 were called Federal Family Education Loan (FFEL). When the borrower (the student) wanted a student loan, the borrower would go to a third-party, such as, Wells Fargo Bank to get the loan. The bank was the originator of the student loan. The bank was guaranteed by the Department of Education if the borrower would default on the loan. FFEL loans were discontinued in July 2010. This difference is important because many of the repayment plans require the loans be direct loans and not FFEL loans.

A new federal student loan program was introduced the very same month and year. It was called the Federal Direct Loan Program (DL). Instead of the borrower going through a third party, like Wells Fargo Bank for the loan, the borrower borrowed directly from the Department of Education. The Department of Education was the originator of the loan, and guaranteed the public student loan directly. If the borrower defaulted on the loan, the Department of Education was the one who would sue to recoup the lost revenue.

If the borrower should default on his or her federal guaranteed loan, the Department of Education has several remedies at its deposal. It can collect through debt collectors, administrative wage garnishment, federal tax refund intercept, social security offset, or by lawsuit.

  • Debt Collectors-Companies that call you to collect on your debt
  • Administrative Wage Garnishment-15% of disposable income (amount after health insurance, social security, and other required deductions)
  • Federal Tax Refund Intercept-taking your tax refund before you get it
  • Social Security Offset-taking 15% of your social security benefits
  • Lawsuit-suing you in court which adds attorney fees to your balance

An experienced student loan attorney can help you get out of default and into a repayment plan which stops all of the above collection actions.

The Department of Education has created a website that borrowers can track and monitor all their loans regardless whether the loan is a DL Loan or a FFEL Loan, going to to retrieve their information.

To find out more about student loan help for Minnesotans, contact Hedervare Law Office. Call 651-383-4725 now to schedule an analysis of your situation.

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