Federal student loan collections in Indiana following federal guidelines
Federal student loan collections in Indiana follow federal guidelines, which include potential wage garnishment, tax refund offset, and collection of federal benefits.
Private student loans and institutional debts are subject to both federal and Indiana consumer protection laws.
For Federal Student Loans in Default
The U.S. Department of Education (ED) handles collections for defaulted federal student loans through its Default Resolution Group. The government does not need a court order to use certain collection methods.
Wage Garnishment: Up to 15% of your disposable pay can be withheld by your employer and applied to your debt.
Treasury Offset: Your federal and state tax refunds (with a few exceptions in Indiana) and certain federal benefit payments (like Social Security) may be withheld and applied to the debt.
Legal Action: The ED or its assigned agents can sue you to collect the debt.
Loss of Eligibility: You lose eligibility for further federal student aid.
Actionable Steps if in Default:
Contact the Default Resolution Group: To address a defaulted loan, contact the ED’s Default Resolution Group at 1-800-621-3115 or visit myeddebt.ed.gov.
Explore Options: You can get out of default through loan rehabilitation (making a series of on-time payments) or consolidation (combining loans into a new Direct Loan).
Seek Guidance: Indiana residents can contact INvestEd Indiana for free help and guidance on student loan status and options at 317-715-9015.
For Private and Institutional Loans
Private lenders or universities (like Indiana University’s Collections and Loan Services) use different processes for collections.
Fair Debt Collection Practices Act (FDCPA): Private collection agencies must adhere to the federal FDCPA and Indiana consumer protection laws, which prohibit harassment, misrepresentation, and other abusive practices.
Lawsuits: Private lenders must generally sue you in court and obtain a judgment before they can garnish wages or place liens.
Statute of Limitations: Unlike federal loans, private student loans may be subject to Indiana’s statute of limitations for legal action, which is typically six years for written contracts.
Seeking Legal Help in Indiana
If you believe your rights are being violated by a debt collector or need assistance navigating the process, consider the following resources:
Indiana Legal Services: Provides assistance and resources, particularly regarding bankruptcy options.
Private Attorneys: Law firm specialize in student loan law and can help defend against collection lawsuits and explore options.
National Consumer Law Center: Their Student Loan Borrower Assistance website provides comprehensive information on challenging offsets or wage garnishments.