Student Loan Lawsuits are charged if you have defaulted on your student loans. Disputes regarding the ownership of student loans, bad accounting, can also be solved by Student Loan Lawsuits. By defending your lawsuits, you have a chance to make the creditor prove what they claim is right.
If you have defaulted for the first six months, you'll get calls and letters from the servicer. Though the student loan servicing company does not offer many options, they would prefer you to make on-time payments because, if your payments are made on time, then you receive the loan in good standing.
If you have an unpaid balance, then probably not just you but also your cosigner gets sued.
The statute of limitations for a Private student loan can vary from one state to the other and hence the time limit for Private Student Loan Lawsuits can vary.
Table of contents
- Tips to avoid student loan lawsuits
- What to do if you get sued
- How to raise a defense
- Navient Lawsuit
- How can Navient Lawsuits lead to loan forgiveness?
- What are the allegations of CFPB Lawsuits?
- Are Federal and Private Loans covered by CFPB lawsuits?
- Will the loans be forgiven?
- How has Navient acted against the borrowers?
- What to do if you are not happy
- Consumer Financial Protection Bureau's Student Loan Shakedown
- Loan Servicers facing Trials
- Flaws that halted Student Loan Collection Cases
- Things that a student loan servicer is not supposed to do
Tips to avoid student loan lawsuits
When it comes to student loans, you have all provisions do not create a situation for student loan lawsuits.
Adequate knowledge of student loan options is one possible solution. The various options for student loan servicing including student loan refinancing, federal student loan consolidation, income-driven repayment plans, and student loan forgiveness.
Monitoring of the latest student loan developments is another possible option.
Organized record-keeping of student loan repayments
If you find that you have been lied on, then you can file a complaint to the US Department of Education, Consumer Financial Protection Bureau, or the lender or the servicer.
Try your level best to pay off your student loans at the earliest
Attorneys and law officials have identified that miscommunication was one big reason behind most of the lender-borrower issues. However, the response of courts on these types of courses is quite unpredictable.
Procedures in a lawsuit
Once you receive the Summons and Complaint you need to verify the name of the entity that sues you, name and address of the law firm that represents the student loan company, the case number, and the court location, name of someone who is getting sued along with you, information about the student loan and the amount that you claim you owe.
Lawsuits are a proceeding of parties against each other in a court of law. ‘Suit in Law’ is the old-fashioned word used to describe these. In a lawsuit, a legal or equitable remedy is demanded. Before you make strong collection techniques like wage garnishment, private lenders need a wage garnishment.
As the collection options for the federal government are vast compared to the private lenders, lawsuits are brought less frequently. For private lenders, there is a strong limitation on how late they request in the court to sue you. Hence the proceedings in the case of private lenders are fast.
A student loan lawsuit begins by filing Summons and Complaint with your country's civil court. When the filing fee is entered into the court system, the court system is officially involved. After you are sued, there are different ways in which your creditor services you.
Types of Creditor Services in Student Loan Lawsuits
The major types of service for student loan lawsuits are given below.
The first type of service is the Personal Service in which a personal delivery of Summons and Complaint is made at your doorstep with details of the date, time and location of your delivery.
When the creditor is not able to deliver the Summons and Complaint at your doorstep, if someone over the age of 18 at your home or work-location, accepts the Summons and Complaints in your name, then it is known as Substitute Service.
Servicing by mail
Servicing by mail, allows you to receive the Summons and Complaint by mail to your home or mailing address. Proof of service is filled and then filed with the court. Service by mail remains valid only if you sign an acknowledgment and return it to the creditor.
In case you aren't reachable for contact, the court grants permission to publish the Summons and Complaint in the newspaper at a place where you are supposed to be.
Proceedings in a Lawsuit
The response has to be made to the plaintiff’s complaint. Plaintiff is successful if the judgment is in the Plaintiff’s favor. To prevent future legal disputes, a declaratory judgment is made. The conduction of a lawsuit is known as litigation.
The attorneys representing the plaintiffs and defendants are known as litigators. Separate statutory laws, case laws, and constitutional provisions define the rights of parties to a lawsuit. The procedure of litigation varies from jurisdiction to jurisdiction. The rules of procedures are very important for litigants to know
What to do if you get sued
In cases of Federal or Private loans wherein you don’t try to get out of the default, then you’ll probably get sued. In cases where you have delinquent private student loans, the lenders try for a court order in order to use severe collection techniques such as wage garnishment.
The first point is to respond on time
Secondly, look for a valid defense
Identify your possessions in case you lose any of them
Try all possible methods of negotiation with your lender.
Seek advice from any student loan lawyer
1. Respond on time
Certified mails and all notices about court cases are to be opened on time. The best possible method is to hire a lawyer to fight a student loan lawsuit. If you have any defense against the lawsuit, a lawyer can help you figure it out. A lawyer would also help you in completing the complicated paperwork on time, and representing you in the court.
If an affordable and competent lawyer is not found out, then you will have to proceed with it all your own. Do it yourself resources help you in dealing with these resources. Arming yourself with the right resources help you in ensuring that important court rules and essential deadlines are met on time.
2. Look for a valid defense
Effective defenses to student loan lawsuit are as given below.
The lender made you wait for too long before being sued
Being a victim of identity threat that you never repaid your loan
The loan holder failed to credit your account on what you owed on the loan
You are being sued for more than what you agreed to pay
You are unable to finish your education from the school due to negligences from the school authority or the cancellation of the loan
If the school has fraudulently obtained the loans in your name, even then you can raise a valid defense
The debt is discharged in a bankruptcy proceeding
If the loan holder hasn’t provided you the proof that it has the legal right to sue you, even then you can be sued.
3. Identify what you can keep if you lose
If a judgment is raised against you then you won't have to pay, anything as judgment proof. That is because you earn very little, the creditors are prevented by law from taking what you have.
Equity in your home and car, earnings and retirement accounts are protected by law. Clothes, household goods, tools you need for a job, and, some public benefits are also kept safe.
4. Consider negotiating with your lender
A payment plan can be negotiated. Loan holder who has a way to settle the debts, it would be easier to go to the additional expense and trouble of trying to collect it. Facing a lawsuit can’t be done alone.
However, if you are smart enough you wouldn’t have to engage a lawyer into your case. But it is always recommended to choose someone who would help you with your strategies.
5. Accountability of student loan companies
There were several instances wherein the State has passed several laws to regulate student loan companies. Thus, the student loan companies requested the Department of Education to not let the state governments draft laws for the companies.
Hence, the accountability of student loan companies against court laws would be decided by the trials that happen in the courtrooms.
Complaints against student loan companies
The complaints that are usually made against student loan companies are given below.
Borrowers only thought they were on auto payment
Autopayment helps in deducting a stipulated amount towards loan payment every month. However, there were student loan companies, who turned off the auto-payment options for companies, thus reducing their payments.
Payments were not made to the exact loans that were supposed to be repaid
This happened in cases where the borrower had several loans, and repayments were made keeping one particular loan in mind but were not paid.
Delay in processing income-driven repayment plan applications
Some income-driven repayment plans were not sanctioned by the student loan companies.
Borrowers were mistakenly placed on the loan repayment plan
Student loan choices made by the borrowers were sometimes not offered to them. Instead, they were compelled to pay for plans that were least beneficial to them.
Sometimes people who didn’t even have a loan were asked to repay their loan
Sometimes monthly payments were significantly increased for the borrowers which further worsened the situation.
Report on incorrect information to credit agencies
Credit scores increased for the borrowers even when the accounts were not delinquent. Because credit scores are used to check the availability of loans, for jobs and renting approvals, incorrect information cannot be reported to credit agencies.
Private lenders use lawsuits as the greatest weapon to collect loans from students. Collection agencies are sometimes hired by private lenders or the government to collect the amount back from you. If you do not have any defenses you cannot ignore a lawsuit. Even if your case lost, you wouldn’t have to repay your debt.
Creditors use special collection tools to try to collect. Based on the type of income and property, is the effectiveness of the special collection tools that are implemented by the collection agencies. Strategies that are to be considered if you are sued include the following.
Raise defenses to fight back
Understanding the outcomes of losing a case
Finding out if you are eligible for any special right if you are a part of the military
How to raise a defense?
Winning a lawsuit is the best possible method to deal with a lawsuit. Raising a defense can sometimes cause the creditor to drop the case.
Common defenses to be considered are as given below.
You can defend saying that you have paid the amount, but the money was not credited to your account
The debt is not owed and that you are not current on your payments
A miscalculation of the due amount
The creditor is trying to collect an amount that is beyond the promise on the agreement
It was not you who agreed to pay the debt. Someone else in your name collected the loan and agreed your repayment
The debt has already been discharged in bankruptcy
For a private student loan, the creditor has waited so long to sue you.
Another defense is that the loan is not enforceable. Forgery, mistake or other reasons can be a reason for the loan to be not enforced. Some defenses are similar to the government loan discharges. If you qualify for a discharge, you should get help from a lawyer.
The court cannot be approached to grant these discharges. Separate applications should be made to the loan holder. Because of the problems you had with the school, you can defend a lawsuit. These claims can be raised as a defense to repayment.
An appeal is made to the higher court if you lose your case. Appeals that are filed are short and are strictly enforced. Appeals are not an entirely new presentation of the case. If your case is lost in the court, then the creditor has rights to use several methods to collect the money back from you.
The creditors can use several special collection tools to collect the money back from you.
You get a title as a 'collection proof’ if you lose a lawsuit cannot hurt you as your assets and income are small and are protected by federal and state law. Until there is an improvement in your financial situation, you wouldn’t have to worry about the judgment.
Moreover, the exemption laws vary based on your State of Residence. A legal professional can grant you more insight on the exemption laws of your state. At a minimum a publication that allows your state laws should be minimum.
Exemption of rights
A few of the exemption rights available are as given below.
Exemptions to protect the car, household goods, and other properties
Some exemptions are mentioned in terms of dollar amounts of property. There are some other states which grant an exemption to goods and property, irrespective of their dollar worth. In this case items such as tools for occupation, clothing, car, bible and household goods are granted the exemption.
Exemptions to protect your home
Homestead exemptions can be equivalent to $100,000 or more and can be less in some other states. To receive the homestead exemption, a declaration of the exemption along with property registry in your community is performed. In a few of the states, protection is automatic.
Exceptions protect your home and cash from garnishment. Garnishment takes money away from your wages or bank account. A request for garnishment is filed with the court clerk, sheriff or another local official and a notice is issued to the garnishee. A hearing is requested to prove federal or state law.
Incomes such as government payments are exempt from garnishment. Even if some part of your income is high, few sources of income are protected under federal or state law. Even if your stay isn’t affected, your case will move forward.
States including California, Illinois, Pennsylvania, Washington, and Mississippi, have sued the Navient.
Navient has been accused of the following.
Provided wrong information to the borrowers, thus creating an obstacle for repayment.
Payments were processed incorrectly
Did not take up the responsibility even after consistent complaints from the borrowers
Many struggling borrowers were compelled to overpay their payments, even when they only had to make lower payments.
Private student loan borrowers were asked to release their co-signer from the loan.
The credit of disabled borrowers including severely injured veterans were harmed.
How can Navient lawsuits lead to loan forgiveness?
The illegal doings that lead to the Navient Lawsuit are given below.
Payments were mishandled against borrower’s best interests.
Struggling bearers used forbearances to force for monthly payments.
It was difficult for borrowers to understand, apply and receive an approval.
The process of re-enrollment and annual certification completion is purposefully obscured
The consumer financial protection bureau has asked the Navient to offer compensation to borrowers.
Navient faces lawsuits from Consumer Financial Protection Bureau, State Attorney General of Illinois, Washington and Pennsylvania.
What are the allegations of CFPB lawsuits?
The allegations of the Consumer Financial Protection Bureau against the Navient are given below.
Failed to apply borrower payments to the accounts.
Strong-arming borrowers were ready to pay an amount more than they had to.
Details were hidden for people to make lower payments.
The firm lied to private borrowers about the requirements essential to release the co-signers.
The credit scores of disabled borrowers including veterans were ruined.
Navient was also accused of taking shortcuts when the borrower’s situations were handled. Income-based repayment eventually offered loan forgiveness. The BDAR program can be used to file a complaint against your school.
Are Federal and private loans covered by CFPB Lawsuits?
One popular complaint against CFPB Lawsuit is that the firm prevented easy repayment, by providing insufficient and at other times unrequired information. The CFPB aims to deliver significant relief for the borrowers if they are harmed by illegal servicing failures. If Navient didn’t have guaranteed government contracts, this would have been a great day.
Specific Lawsuit by State Attorney General’s Lawsuit against Navient is that the firm allegedly leads many numbers of borrowers into millions of dollars of debt.
The complaints against Navient by Illinois Lawsuit is that the firm kept on continuing with the current plans, even though they were aware that these loans would default at extraordinarily high rates.
Student loan debt problem has an increased impact on the country’s economy than the credit card problem. There is another allegation that the firm has failed to support the borrowers and had misled them to successive forbearances that increased the overall cost of loans.
Misleading has also happened in the case of the Rehabilitation Program of the Federal Student Loan. Moreover, the eligibility requirements for disabled student loan borrowers, for student loan forgiveness was also given wrongly.
Washington Lawsuit against Navient
Another lawsuit was launched against Navient by the Washington State Attorney General Bob Fergusen which alleged multiple student loan lending, servicing and debt collection practices. Navient is also accused of improperly steering financially distressed students, toward short-term forbearances, engaging in aggressive and misleading tactics and more.
Navient did terrible things such as determining to whom they would lend money to, how they would approach the process, extracting every possible benefit from the student loan forgiveness, which in other ways is stealing tax-payer dollars.
The Washington Lawsuit accuses Navient of allowing predatory loans for students, to colleges where the graduation rate is less than 50%, despite the knowledge that students would not be able to repay the loans. A deceptive promotion of co-signer release was also performed by the Navient.
The Pennsylvania State Attorney General has accused Navient of badly handling their student loan administration duties.
Pennsylvania's abuses against Navient include disregarding of evidence that students were likely to default at significant rates, increase in subprime even after receiving a warning about it, to convince lenders to become a preferred lender and hence increasing the profitability of loans. The court in this regard aims to offer,
Complete restitution to the borrower’s impacted by illegal lending, servicing, and practices
The Navient should disgorge all the money collected by illegal means.
Navient should stop collecting any illegal loans
The firm should also delete negative credit details from consumers impacted by unlawful practices.
Civil penalties should also be determined by the courts
Will the loans be forgiven?
Navient’s loans may not be forgiven completely. However, there can be offerings from the government based on the state that you are residing at. But the sad truth is that Navient has influential powers in the higher authorities of governance.
The changes that President Trump plans to implement regarding federal student loans and loan repayments are as given below.
Reformation of Federal Income-Driven Repayment Plans
Elimination of Public Service Loan Forgiveness
Elimination of 100% of Subsidized Student Loans
How has Navient acted against the borrowers?
Even borrowers with genuinely low incomes were not enrolled into student loan forgiveness, because of the plans and policies chosen for them by the Navient. Navient not only provided wrong information over the phone but also sent out wrong information in writing.
Moreover, the firm has through its plans, unqualified several candidates to pay for several illegal and immoral activities, against its borrowers and proves to be punished if the allegations are wrong.
1 - Forbearance
Navient will push you into forbearance even if you are not able to do it or not. Though this scheme allows you to take a temporary break from paying the loans, the interest for these loans will keep on accumulating.
The representatives at the Navient, behave in a really friendly manner, so as to seek the interest of people. Dealing with high balance borrowers isn’t as good for Navient. An average college student graduates with quite a good amount to be repaid as student loans.
If you try for an off-time from the internship, you can pay back your loans before your payments are due.
One common question about Navient is whether it can take away your house.
However, the truth is that if the loan has defaulted, then the government can probably deal with collecting your loans by placing a lien on your loan, that would not allow you to sell your home, refinance your mortgage, get a home equity line where you are not allowed to pay off the loan and more.
2 - Wage Garnishment
The Navient itself is not able to garnish wages, but the government is able to garnish 15% of your disposable income. If it happens so, you’ll receive a notice at least 30 days prior to garnishing.
A hearing can be requested within 30 days of receiving this letter.
3 - Loan Forgiveness
Another question is if the Navient loans are eligible for forgiveness. The answer to this is that, as forgiveness isn’t automatic, you’ll have to meet the requirements of each program.
Social security benefits cannot be received via, Navient, but by Federal Government. It is also possible to consolidate federal student loans, including those of the Navient services. Private loans serviced by Navient can have variable interest rates.
However, the interest rates of federal loans remain to be the same.
4 - Refinancing
Federal loans, serviced by Navient with a private student loan company can be refinanced. The protection offered to private student loans is really less and includes Private Student Loan Forgiveness, income-driven repayment plans, and even forbearances.
The duration for capitalization of interest of Navient is another topic of interest. Your interest can also be capitalized if you change your repayment plans.
Capitalization also happens if your loan has defaulted, or if you are in forbearance, or if you miss your certification on an income-driven repayment plan.
It is necessary to ensure that the interest is accrued and grows at a simpler rate than an exponential one with capitalization.
What to do if you are not happy
It is general manners to the first complaint to the firm’s complaint redressal forum if in case you are not happy with the services that the firm offers.
Same can be done with Navient, wherein all the complaints regarding the firm can be addressed to the complaint redressal group of the organization.
The email address of the Navient’s complaint department is firstname.lastname@example.org. It would also be possible to refinance your Navient student loan. Refinancing becomes difficult if you do not have your private student loans to start with.
If not payments are made for federal student loans, then it will be possible to consolidate all loans into federal direct loan consolidation.
The interest rate, in this case, remains the same. If credit was created towards loan forgiveness, the consolidation creates new loans and wipes out credits.
It is also better to pay off the loans as fast as possible. This can be better done by earning some extra income or earning more money with a side hustle.
Free debt calculators will help you figure out the amount of debt that you’ll have to pay finally.
The job of Navient is to minimize the likelihood of default. The Department of Education has listened to about 2400 calls from 2014 to 2017, from almost 219,000. In nearly one out of 10 calls, there was no mention of the estimated size of monthly payment from a borrower, based on his/her income. This has clearly trapped the borrowers.
Consumer Financial Protection Bureau Student Loan Shakedown
The Navient faced legal actions from the Consumer Financial Protection Bureau, for steering borrowers to sub-optimal repayment plans. The Navient holds contract from the Department of Education to hold $1.4 trillion, in outstanding government-issued loans.
Borrowers are entitled to forbearance to save on administrative expenses, provided these borrowers are placed into an income-driven repayment program instead. In income-based repayment, borrowers would have to submit paperwork documenting their income and family size.
Relative to the debt, a borrower’s income must be low. Interest accrual also happens along with this plan. Sometimes, even when the borrower makes correct monthly payments, unpaid interest grows each month as the payments are set low enough.
Forbearance - Good or bad?
According to CFPB, Forbearance is less beneficial than income-based repayment and does not include loan forgiveness possibility and are enrolled in forbearance. Though income-based repayment is the best option, forbearance cannot be denied to candidates who seek for it.
For the case to receive any benefit, CFPB has to present evidence on how the Navient has steered borrowers into forbearance when income-based repayment would have been the best for borrowers.
However, Navient was able to present before the court evidence including phone call records and other related documents, that clearly depicted how the borrowers were informed about income-based repayment programs.
Loan servicers facing trials
The other loan servicers, who are facing trials regarding student loans are given below.
Pennsylvania Higher Education Assistance Agency was sued by the Massachusetts government regarding improper payment processing of borrowers in Federal Public Service Loan Forgiveness Programs. There was a recent denial of PHEA’s motion to dismiss.
PHEA was accused of deceptive practices, that made public servants lose benefits, as well as financial assistance for two federal programs. This also included student loan forgiveness after 10 years of the loan. Because of the issues from PHEA borrowers were not able to make 10 qualifying monthly payments which entitled them to student loan forgiveness and overcharged students.
A collection of debt by the National Collegiate couldn’t be proved that it could be owned or consumers could owe it. Thus, National Collegiate including the Transworld Systems, reached a settlement with the Federal Government in 2017, for over $21.6 million settlement
Discover was fined for $18.5 million in 2015 for sloppy student loan servicing, by the Consumer Financial Protection Bureau
It was in 2016 that Wells Fargo was fined for $3.6 million, for having misled student loan borrowers and for charging illegal fees
ACS Education Services were ordered to pay $2.4 million to Massachusetts state for abusive collection practices, overcharging active-duty members, delaying of borrower’s applications for income-based repayment and related problems.
There was a settlement for Nelnet with $55 million in 2010, wherein 8 student lenders were accused of defrauding taxpayers, by overbilling government for interest subsidies.
The student loan servicers with most complaints include Navient Solutions LLC, AES/PHEA, Nelnet, Great Lakes, SLM Corporation, Wells Fargo, and more.
Flaws that halted student loan collection cases
There are several flaws that have been successfully used to halt student loan collection cases. A few of them are as given below.
The creditor cannot prove his ownership of the debt
Loans are transferred from lenders to investors using through the process called securitization. Securitization process involves the pooling of loans together and selling it as a package. The proof that the chain of title remained intact through ownership, can be a challenge for debt holders.
The inadmissibility of creditor’s records
Each state has a different rule about business records, promissory notes, payment ledgers and more. Rules are established on who can qualify for authenticity and accuracy. The requirement of direct firsthand knowledge of record creation is suggested by most jurisdictions.
In the National Collegiate Student Loan Trust versus Nohemi Macias case, it was ruled by an appellate court that, collection firm was not qualified to verify creditor’s loan records. Without loan records, plaintiffs were left without anything to support the case.
Debt is beyond the statute of limitations for collections
Federal loans receive an exemption from when they can be collected. But private loans do not have these benefits. Collectors would lose their right to sue after years without payment. Because the creditor had waited too long to sue, a lawsuit was struck down by the court in Arizona. By law, if no repayment is made within 6 years, the servicer is supposed to sue the student, for which servicer, in this case, has actually waited for 7 years.
The creditor is not licensed to do business in the jurisdiction
Foreign corporate are required to register in the open area. Failure, in this case, can prevent creditors from using the local court system. Four securitized investment trusts owned by Navient had filed four lawsuits which were later dismissed by the court as these trusts were not registered to do business in the State.
Creditor’s failure to comply with court requests for additional information
When creditors were asked by the court for additional information, most of them withdrew the cases. Jay S. Fleischman who is a lawyer for borrowers in student loan collection cases says that it is all a number’s game.
Cases are dismissed if there is no victory or settlement. For a New Hampshire case, a discrepancy was criticized by the judge, in the creditor’s records and was asked for a clearer proof that the creditor owned the loan.
As there was no further response from the creditor, the case was disclosed. If sufficient effort is not taken by the plaintiff to move the case forward, courts are allowed to dismiss the case for ‘lack of prosecution’. Hundreds of student loan cases have been dismissed on that ground.
Things that a student loan servicer is not supposed to do
A few of the things that the student loan servicer is not supposed to do is as given below.
No servicer is permitted to compel you to take up forbearance
Though this technique, appears beneficial in the beginning, this can accumulate a lot of unwanted interest over the years. This would benefit servicers by reducing the number of debt defaulters. However, this is not beneficial in the long run for lenders.
The servicer is not supposed to place your IDR Plan on cruise control
Income-driven plans would help you to pay monthly installments of your loans, based on your incomes. The servicer should remind you to recertify your income every year, in order to receive your benefits.
Early payment of your loan must be supported by the servicer
This would be highly beneficial for the borrower because there would be a significant reduction in the amount of money that he has to return as interest.
After making 12 to 48 monthly payments, borrowers are allowed to apply for cosigner release
At times, co-signer release would have been denied because of prepayment. This should be predicted and prevented by the servicer.
Allocation of partial payments in ways that hurt you should be prevented by the servicer.
A bill that sums minimum monthly payments, for each of your loans should be available. The allocation of partial payment involves covering of what is owed on the loans with the highest interest rates. The direction of partial payments along with potential ramification must be performed by the servicer.
You’ll have to be informed by the servicer if a pay-off attempt failed
Autopay must be arranged in a way that is beneficial for you. The firm should allow you to discharge loans in case of bankruptcy.
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Can student loans take you to jail?
No, you cannot go to jail or be arrested for not paying your student loans. Failing to pay a student loan, credit card, or hospital bill are considered "civil debts" and you can not be arrested for not paying your student loans or civil debts.
Can a lawyer help with student loans?
If you're dealing with delinquency or default, filing for bankruptcy, or applying for a disability discharge, a student loan lawyer may be able to help. Student loan lawyers can help you with the nuances of private student loans as well.
Can your wages be garnished due to student loans?
Student loan creditors can garnish your wages if you go into default. Whether your loan is a federal student loan or not dictates whether the creditor must first sue you in court, and how much it can garnish from your paycheck.
Can you negotiate a payoff on a student loan?
If your private student loans are in collections, you have a few main options. You can pay the entire bill, negotiate a payment plan or try to settle the debt.
Does settling student loan debt hurt your credit?
A student loan debt settlement can have a negative impact on your credit report and FICO score. Since it indicates that you've gone into both delinquency and default on a loan. However, a settlement may be the lesser of two evils and doesn't affect your credit score as badly as a collection or judgment might.