In America, student loan debt has reached an all-time high, amounting to a whopping $1.5 trillion. With millions of student borrowers in default on their loans, America’s student loan debt problem has received attention from financial experts and economists alike. Recent research suggests that one of the main culprits of the dramatic rise in student loan debt is unfair and unethical loan servicing practices. As a result, lawsuits continue to emerge that highlight the predatory behavior of certain loan financing companies.
If you are struggling with student loan debt, it’s important to seek financial advice from a student loan expert who can assess your debt and provide you with the best strategy for your situation. A skilled student loan lawyer is a great resource for dealing with your debt and getting back on your feet. Here is some helpful information on how to deal with unfair private student loan practices.
How to Identify Illegal and Unethical Student Loan Practices
In an ideal world, lenders would provide sound support to student loan borrowers, answering their questions, offering good advice, and supplying helpful resources. Unfortunately, many student loan lenders engage in predatory, unethical, and sometimes illegal behaviors. If you have student loans or are shopping around for a student loan, it’s important to be able to identify unethical and illegal loan practices. There are federal laws in place to protect students from harassment-like behaviors from lenders and debt collectors. Illegal collection practices include:
- Repeated calls from lenders or debt collectors outside of permissible times or at inconvenient places when contacting you about payment
- The use of threatening, abusive, or profane language by debt collectors contacting you about your debt
- Contacting family members, coworkers, or others you have not authorized them to speak with about your debt
- Failing to honor your instructions about how any payments you make should be applied, if they are contacting you about multiple debts
If you have private student loans, these are a few illegal behaviors to be aware of. There are many other illegal practices that a lender or debt collector may commit. So if you are unsure if your rights are being violated, the best practice is to contact a knowledgeable attorney with whom you can discuss the specifics of your situation. Knowing your rights is the best way to protect yourself from repetitive harassment.
Additionally, if you are shopping for student loans, it’s important to educate yourself on unethical practices loan servicers engage in to prevent yourself from entering a predatory loan agreement. Some unethical behaviors to be aware of include:
- Lack of transparency. During the application process, some lenders will try to hide key information about the loan terms. Always be sure to get a clear, direct answer from your lender about the repayment plans you’ll be eligible for, whether your loan has a fixed or variable interest rate, and if your minimum payment could increase. Lenders are required by federal law to clearly disclose the cost of obtaining credit, finance charges, your payment schedule, and other key items when the loan is obtained.
- Failure to accurately portray repayment options. Some loan servicers will advise their borrowers to go into forbearance instead of educating them about income-driven repayment options, which are way more favorable to the borrower.
- Proper posting of payments. Loan servicers are required to accurately post payments when they are made by borrowers. However, unethical lenders will deceptively allocate funds, causing borrowers to accrue late fees even if they paid on time.
Tips for Identifying Predatory Student Loan Lenders
It’s no secret that predatory lending is a big problem with higher education loans. A trademark of deceptive lending is that it always looks good on the surface, but there’s always a catch, which usually doesn’t arise until the dotted line is signed. Misleading lenders are out to make a profit at a borrower’s expense, usually by making it challenging to repay the loan and easy for the borrower to fall into an unfavorable financial situation.
All predatory lenders look for students and parents who aren’t educated on lending. Therefore, the best way to protect yourself is to learn how to identify deceptive lending practices. When exploring various student loans, look out for the following things:
- Excessively high-interest rates. Technically, lending guidelines describe any interest rate below 36% APR as “affordable,” but companies that charge double-digit APR are much more likely to take advantage of consumers. For reference, interest rates on federal student loans range from 4–7%. It’s important to really shop around for a good rate.
- Unfixed interest rates. Predatory lenders often attract students by offering rates that start out extremely low but double or even triple over the course of the loan, making it nearly impossible to pay off.
- Rushed timelines for signing. Reputable lenders will ensure a borrower understands all the terms of a loan before signing. Conversely, predatory lenders will often have quick or rushed timelines, pressuring a borrower to sign before reviewing all the documents. Make sure not to sign anything unless you fully understand all the terms of your loan.
These are just a few qualities of predatory lenders. To ensure you enter a loan agreement that is fair, consider seeking counsel from a skilled student loan lawyer.
Consult a Student Loan Lawyer at McCarthy Law
If you are struggling to find the best strategy for paying off your student loans or are currently exploring various student loan options, it can be beneficial to seek the advice of a skilled student loan lawyer. Working with a skilled student loan lawyer is a great way to understand all your options and pick the best repayment plan or loan terms for your situation.
At McCarthy Law, we are dedicated to helping students and borrowers navigate the complexities of the student loan system. Under our student loan debt settlement program, we negotiate with lenders to help our clients save money, and often pay only a fraction of their original loan balance. To schedule a consultation, call (855) 976-5777 or fill out our online contact form.
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