When you're struggling with student loan debt, it can sometimes be hard to know where to go to find help. While you can do most things with your Federal student loans for free on StudentLoans.gov, many borrowers opt to find "professional help". And while there are services that can help you with your student loan debt, how do you know when that's not enough? How do you know when you might need a lawyer for your student loan debt?
The fact is, most issues with your student loan debt doesn't require the services of a lawyer. For many things, such as changing your repayment plan or applying for student loan forgiveness programs, you can fill out the paperwork or online form yourself.
However, there are scenarios where it can be very beneficial to pay a lawyer for help with your student loans. For example, what if your lender is suing you because you defaults? That's a situation where you definitely want professional legal help.
Here are some other scenarios where you might consider a lawyer for your student loan debt. Plus, we answer some common questions with the help of a real student loan debt lawyer.
The Difference Between An Attorney And Other Student Loan Debt Assistance
First off, it's important to distinguish between paid help for your student loan debt, and legal help for your student loan debt. Many borrowers who need help fall into the first category - they are just looking for professional advice for their student loan situation.
And there are companies that you can pay to help you with this. Just make sure that you fully understand what you're paying for. When hiring for any professional service that has to do with your finances, you want to be clear about what's expected, what the payment is, and follow up to ensure everything is done correctly.
If you do pay for help, do your research to avoid student loan scams. Sadly, there are a lot of companies the prey on borrowers seeking help for their student loans, so make sure you're not taken advantage of. Here is a guide we wrote to determine if a student loan assistance company is a scam, and big red flags to look for.
If you need more than just assistance determining your repayment plan, you might need legal assistance. Let's look at when legal assistance might make sense.
When Does It Make Sense To Find A Lawyer For Your Student Loan Problem?
It's important to remember that every situation is different, and whether you contact a student loan lawyer really depends on your unique situation.
According to Adam Minsky, an experienced student loan lawyer, finding representation could be helpful in the following situations:
- If you're dealing with a difficult or complex issue like a dispute with a loan servicer, or you’re being harassed by a debt collection agency.
- If you've been sued in court and want legal advice and representation.
- If you're not sure of your options or legal rights regarding a particular student loan issue, such as eligibility for a student loan repayment or forgiveness program, or what your options and strategy might be regarding a defaulted student loan.
- If you're feeling overwhelmed by a student loan issue and want some guidance to make sense of it all.
A good rule of thumb to follow is asking yourself whether you can do it yourself, or do you feel you need an advocate to work on your behalf to resolve the issue.
What Can A Lawyer Help With Your Student Loans?
So, now that you know when it might make sense to speak to a lawyer, what can a lawyer actually do for you that you can't do yourself?
First, according to Adam Minsky, it's important to remember how attorneys are different that student loan assistance companies. Attorneys are a regulated profession, overseen by state licensing boards (called the "bar") and held to strict rules about confidentiality and obligations to serve their clients. In other words, attorneys are accountable not just to you, but also to their state bar. This provides you with a lot of protections and recourse if you get mistreated or defrauded, as compared to unlicensed companies and organizations.
On the other hand, some non-attorney consulting companies may be able to provide some generalized assistance, especially when it comes to standardized forms and applications for the most popular federal student loan programs. But they may not always be equipped to understand the nuances of the student loan system, troubleshoot a situation when there’s an error or unexpected problem, or advise their clients appropriately when there are unique circumstances. Consulting companies also are much more limited in terms of what they can do for borrowers who are in collections or are being sued, since it is a crime for non-attorneys to engage in the practice of law.
According to Adam Minsky, a lawyer will typically help with the following when it comes to student loan debt:
- Advice and counsel regarding your legal rights and options for your student loans.
- Direct representation and advocacy in communications with student loan lenders, servicers, debt collection agencies, credit bureaus, dispute bodies, and other relevant entities.
- Negotiations with student loan lenders, servicers, and debt collection agencies to obtain a desired resolution.
- Assistance in the preparation, completion, and review of student loan-related documentation such as program applications, letters and correspondence, and contractual agreements (such as student loan rehabilitation or settlement agreements).
- Representation in court to defend you against a student loan collections lawsuit or to pursue companies that have harmed you.
How Much Does It Cost?
This can be the scariest part of potentially working with a lawyer for student loan borrowers. How much are you going to have to pay and is it worth it? Given that student loan borrowers are already in debt, many feel that paying a lawyer for help simply doesn't make sense.
However, it's important for borrowers to know that there are a variety of fee structures and ways to pay a lawyer so that it can make financial sense.
According to Adam Minsky, there are four basic fee structures for working with a lawyer.
1. Consultation Fee: You might be able to pay an attorney for a limited session to obtain advice or counsel, or to get assistance with a specific issue (such as reviewing a settlement agreement or looking over a credit report). The fee would depend on the location, length of the consultation, and the attorney’s pricing.
2. Hourly Fee / Retainer: This is the most traditional type of attorney-client fee arrangement and involves paying for the attorney’s time at that attorney’s hourly rate. The client usually pays an initial “retainer” – also known as an advance fee deposit – to cover a certain amount of billable time up front (say $5,000 or $10,000). The attorney then draws from that retainer as he or she completes the relevant asks. If the retainer doesn’t get used up when the matter is completed, the balance gets returned to the client. If the retainer gets depleted, the client may have to replenish the retainer. The size of the retainer and the number of billable hours for a case really depends. For example, defending a collections lawsuit may take significantly more billable hours than assisting with a loan consolidation application.
3. Flat Fee: Some attorneys provide specific services for a set fee, no matter how long it takes the attorney to complete the service. This is also known as project-based work. This can provide some protections for the client, so that if something takes longer than expected, the client isn’t on the hook for additional fees. But the fee would likely only cover a specific task or set of tasks that the attorney has been hired to perform. A good example of this might be completing an income-driven repayment application.
4. Contingency: For certain types of cases, a lawyer may be able to take a case on a contingency fee basis – where he or she only takes a fee if they prevails in a case through a judgment or a settlement. A contingency fee arrangement is only available for specific types of cases, such as consumer rights lawsuits against third-party debt collectors or other similar companies for violations of specific laws. Often, those are laws that allow for something called “fee shifting,” where the losing side is legally required pay for the winner’s attorneys fees. An attorney is only going to take a case on a contingency fee basis if there is a solid claim under one of these laws and he or she believes that there is a strong likelihood of succeeding in court.
How Can You Find A Reputable Student Loan Debt Attorney?
So, if you think getting a lawyer is the best route for your student loan situation, how do you go about finding a reputable one? This can be especially challenging given that many borrowers aren't familiar with the law and how the process works.
Furthermore, there are sadly so few lawyers that are experienced in student loan law. Minsky recommends that borrowers looking for a lawyer for their student loan debt do the following:
- Check the directory for the National Association of Consumer Advocates (NACA). NACA is a bar association for attorneys who only represent consumers and borrowers, and you can search for local attorneys who have listed “student loans” as an area of practice.
- Contact your state bar association for a referral (many state bar associations have referral services).
- Search for attorneys on a platform like Avvo, which has attorney profiles. Avvo also provides a record of client reviews and peer endorsements, which can be helpful in selecting an attorney.
- Once you find an attorney you might want to work with, cross-reference the attorney with your state bar association to see if that attorney has any record of public discipline.
- Do a Google Search of that attorney to see if their name comes up in a good way (for example, through press or publications) or in a bad way (such as being sued by a government agency or regulatory body for misconduct).
Dealing with a difficult student loan situation can be tough. It's not only financially draining, but it can be extremely hard emotionally.
If you find yourself wanting professional help for your student loan debt, make sure you consider whether a lawyer is the right choice. Depending on your situation, it can make a lot of sense to seek out a lawyer for your student loan debt.
Have you ever received help from an attorney for your student loan debt?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.