When you’re thinking about student loan law, you’re really thinking about options.
When you’re trying to figure out how to deal with your federal student loans, you want to know the BEST options available to you. The range of options, however, changes depending on the nature of your federal student loan issue. If you were defrauded by your school, you should talk to any attorney who understands Defense to Repayment regulations as well as state-based options and bankruptcy alternatives in case your DTR is denied.
The best attorney for parents contending with a Parent PLUS Loan include one who can discuss income-driven repayment options and the impact of long-range retirement planning, but DTR likely won’t enter the conversation. Cosigners of private student loans will confront more state-based decisions, many of which involve asset protection and civil litigation defense strategies.
It’s not one-size-fits-all when it comes to student loan law. In fact, the world of student loans touches on many other aspects of life – and of the law.
Broadly, the fields of law included in student loan resolution includes the following:
Tax Law. Because of the wide variety of student loan repayment plans that hinge on your taxable income, an attorney needs to have at least a basic understanding of tax law. You’ve got issues like minimizing taxable income, maximizing retirement savings, and accounting for matters such as running a business or handling an inheritance. It’s also useful to know how settlements and forgiveness can impact your tax obligations – and when those tax liabilities can be minimized.
Consumer Lending. Student loans are personal debts, and many were originated by private lenders. There’s a litany of federal and state laws that govern the rights and responsibilities of lenders and borrowers in consumer credit transactions, so attorneys who handle private student loan issues should be well-versed in how that system operates.
Collection Laws. Most student loan borrowers are worried about collections – things like harassment, dealing with lawsuits and the consequences of their aftermath. Federal laws such as the Fair Debt Collection Practice Act, Fair Credit Reporting Act, and Telephone Consumer Protection Act all control the methods of collection of debt, but a number of states have their own laws as well. If you’re in default on your student loans or are concerned about being in that position in the future, having an attorney who knows nothing about consumer collection host of different state laws governing how debts can be collected.
Civil Litigation. Private student loan companies need to file a lawsuit against you in order to enforce the terms of the promissory note. Holders of federal student loans can sue you in federal court. State and federal court systems each have their own laws covering practice and procedure, evidence and defenses. A student loan lawyer in Texas, for example, would likely be of limited value to someone being sued in Ohio.
Bankruptcy. Public perception is that you can’t use the bankruptcy laws to your benefit when you have student loans. Though it is more difficult to have your student loans wiped away at the end of a bankruptcy case, it’s not impossible. Bankruptcy can also provide other significant benefits to people with student loan debt. This is one of the most overlooked solutions for student loans, probably because it requires years of hands-on experience with actual bankruptcy cases to fully understand. In handling bankruptcy cases for over two decades, I have seen firsthand just how difficult it can be for a new attorney to navigate the complexities of the bankruptcy court system.
Corporate Finance and Securities Transactions. Most private student loans, as well as federal student loans originated under the FFEL program, are bundled and sold to investors in a complex process called securitization. Securitization usually involves a number of transfers of the loan, with the resulting investment vehicle overseen by a variety of entities that are charged with servicing, collecting and distributing payments. Of all the areas I’ve ever taught to aspiring student loan lawyers, this is the one that is most complex for them to understand because the world of corporate finance is radically different from that of consumer protection.
Military Issues. Laws governing lending to, and collecting from, members of the military may impact the loan and repayment options. For example, the Military Lending Act regulates lending practices and products offered to service members and their dependents. The Servicemembers Civil Relief Act provides protection from collectors as well as modifying the terms of some loans. HEROES Act enables you to get a waiver of certain documentation requirements, and there may be ways to get the DOD to repay your loans. Beyond that, student loan borrowers are often concerned about security clearance and benefits.
Immigration. In this global economy, people often move from place to place. You may be concerned about being deported or losing your ability to maintain your status if you default on your student loans. Your ability to bring in a fiancee or family members, ability to retain your employment-based visa, and other questions will require the advise of a student loan lawyer who also understands immigration issues. If you are thinking about moving to a different country, you likely want to know how that impacts your responsibilities as well.
Estate Planning and Asset Protection. This is tied closely with bankruptcy because of the questions many borrowers have regarding enforcement of defaulted student loan debts. What can the government and loan holders take, and under what circumstances? What, if anything, can you protect – and how can that be accomplished? How does student loan debt impact the ones left behind after the student or borrower’s death? The answers to these questions rely on state law issues as well as a knowledge of various estate planning and asset protections vehicles.
Family Law. Married couples and those who are interested in getting married are understandably concerned about the ways in which their finances will impact a spouse. Questions about liability for premarital student loans, the impact of community property laws, and how judgments against one spouse affect the other are just some of the points of intersection between student loans and family law. Navigating the student loan waters with an attorney who is unable to resolve these issues could lead to an unwelcome outcome.