How to Spot Unfair Student Loan Practices
Student debt has and continues to be a problem here in the United States and up until 2014 there were around 7 million people who defaulted on their student loans and student debt currently stands around $1.5 trillion. Understanding why and how all of this debt is being accrued and has been a difficult task, however, after years of research there are some very clear indications as to why so many Americans are defaulting on their student loans for college.
Unfair student loan services have been the main culprit and many lawsuits have been filed against certain loan companies who have practiced unethical behavior. Below we’ll be reviewing how you can spot predatory loan companies and unfair behavior, and also learn how you can repay your student debts.
Unfair student loan practices
Ideally, student loan providers would exist to help students pay for college but also to help students come up with fair and easy ways of repaying the loans. Unfortunately, many loan companies exist solely to lend money without any intention of providing any additional services to help students understand repayment options. Many companies simply do not provide assistance or answer any questions throughout the lifetime of the loan. Nobody enjoys paying back loans but it certainly helps to have support in the process.
Illegal student loan practices
Let’s look at some illegal practices that many loan companies are using on their borrowers.
Automated phone calls
Many loan service providers in the past would harass or repeatedly call student borrowers to inform them of payments or late payments. Currently, many consumer action groups are calling on the federal government to take action against predatory loan providers to stop “robocalls” and harassment over the phone. Many loan providers are no longer allowed to call on borrowers as those rights have been taken away.
Loan providers are not allowed to operate outside of ethical business practices and business norms which include professional behavior and politeness. Use of threatening, obscene, abusive, or intimidating language is strictly prohibited.
Public lists of people who have not paid their debts
Student loan providers do not have the right to make any of your loan information public. They do have the right to report to credit reporting companies but they can not make any of your information publicly available.
Unethical student loan practices
Below is a list of unethical practices that student loan companies may use against you or any student. Please keep an eye out for these practices and make sure to report a company that uses these.
If your loan provider attempts to hide information about the terms of the loan or the repayment process they are operating in a very shady and unethical area. Loan providers like this may not be transparent about things like completed paperwork, interest rates, repayment plans or increased minimums.
Unethical loan companies may tamper with payment data to confuse the borrower and create a higher chance of missed payments. Delays in reporting, under reporting payments, and adding late fees when there were none are just a few examples. If you feel like a student loan company has been tampering with your payment data please report them to the better business bureau.
Misleading payment options
Some companies will mislead you about your repayment options and they may have you make dangerous financial decisions without your understanding of the impact. They purposely mislead you in order to achieve an outcome more favorable to them. While you may inquire about certain repayment options they may give you inaccurate information to make sure you pay more or pay for longer at a higher interest rate.
Student loan practices to watch for
There are many “red flags” and warning signs that you’ll encounter with a student loan provider that could be trying to cheat you out of money. Here’s what to look for.
Low-quality customer service
When you encounter a loan service provider that has unusually long wait times or it is very difficult to actually speak with a representative, you should begin to worry. Many companies will use stall techniques like these to frustrate you so that you give up on your questioning. Some representatives may even purposely “disconnect” from the call in order to prevent you from reaching any dispute resolution.
Hiding information about loan cancelation
In rare cases, some loans can be fully or partially canceled and it may be your right to do so, however, a shady loan provider will convince you otherwise by withholding information or flat out lying to you. Some examples of loan cancelation reasons may include: Disability, death, false loan certifications, bankruptcy and more.
Loan consolidation avoidance
There are services to help people consolidate their loans and lump them into one giant loan with a reduced interest rate. Shady student loan companies will withhold information about your repayment options and or avoid your questions in regard to consolidation.
Need help with student loan abuse?
Here are some resources to help you if you believe that you are being misled about your student loans or if you believe that a company may be trying to mislead you about future student loan options.
Debt collector harassment
There are certain practices that are considered illegal by the Consumer Financial Protection Bureau and the Fair Debt Practices Act. More information can be found at consumer finance.gov.
The Federal Trade Commission
The FTC provides information on its website dedicated to helping consumers understand loan repayment, forgiveness, consolidation and the key signs of loan scams.
Student loan cancelation
Students can learn more about canceling loans and qualifications of loan termination by contacting the U.S. Department Of Education. The DOE can also provide excellent information on loan services and illegal practices.