What happens when your student loans go into default? If you’ve ever wondered what really happens when you default on your student loans, the answer is not so simple.
College grads are carrying anywhere from hundreds to hundreds of thousands of dollars in student loan debt.
While it’s not good to ignore your student loan payments, there may be some circumstances where you can’t make payments on time or end up missing payments altogether.
This will most likely result in a serious situation called student loan default.
And if your student loans go into default, your loans will be transferred from your student loan servicer to a third-party debt collection company. And this can be strange to many borrowers. You might have spent years dealing with a company like Fedloan or Nelnet, then suddenly you're receiving a call from a company named Educational Credit Management and you're very confused. Is it a scam? What's going on?
Here's what you need to know about dealing with student loan debt collectors, including the full list of all debt collection agencies that work on behalf of the Department of Education so that you can be sure you're not going to be scammed.
If you're not quite sure where to start or what to do, consider hiring a CFA to help you with your student loans. We recommend The Student Loan Planner to help you put together a solid financial plan for your student loan debt. Check out The Student Loan Planner here.
Repercussions Of Defaulting On Your Student Loan Debt
If you do find yourself in default on your student loans, you'll need to communicate with the collections agency that has been assigned to your debt. You'll have a couple of options, including student loan rehabilitation, setting up a repayment plan with them, or potentially even settling the debt.
Once your loans are transferred to a student loan debt collector, you'll need to use a new portal to access your loans. You can see your loan information here: https://myeddebt.ed.gov/
There are over 30 different student loan collections agencies, many with names you're not going to be familiar with. If one of them reaches out to you, you need to take it serious.
Below is a list of common student loan collection agencies along with their contact information if you need to reach out to them.
Debt Collection Laws Protect You
Remember, these companies are third party debt collectors, and there are laws that limit what they can and can't do. The Fair Debt Collection Practices Act (FDCPA) is a federal law that provides limitations on what debt collectors can do when collecting certain types of debt. The federal Fair Credit Reporting Act covers how debt collection is reported in credit reports. In addition, there are state laws that provide protections.
These companies may NOT:
- Contact you before 8am or after 9pm. Also if a debt collector knows that you're not allowed to receive the debt collector’s communications at work, then the debt collector is not allowed to contact you there.
- The debt collector may not harass you or anyone else in regards to the debt.
- If you tell the debt collector to stop contacting you in writing, they must stop contacting you except to take legally allowed actions against you, such as filing a lawsuit (if this happens, you need to get a student loan lawyer ASAP).
If you are contacted by a debt collector for your student loan debt, they are required to tell you the following information about your debt:
- The name of the creditor (this will be your student loan servicer and should sound familiar)
- The amount owed (remember, this amount may be much larger than your original debt amount due to accrued interest and fees from being in default)
- That you can dispute the debt
- That you can request the name of the original creditor, if different than the current one
Student Loan Debt Collection Agencies
Here is the full current list of student loan debt collection agencies. These companies do change from time to time, and we strive to keep this information as current as possible.
1. Account Control Technology, Inc
P.O. Box 8012
Canoga Park, CA 91309
(888) 830-7770
2. Action Financial Services LLC.
2055 Cardinal Ave
Medford, Oregon 97504
888-253-4239
3. American Student Assistance Corp
4. Bass & Associates
Student Loan Department
P.O. Box 66080
Tucson, AZ 85728
(855) 533-1107
5. Central Research, Inc.
122 N. Bloomington, Suite I
Lowell, AR 72745
(479) 419-5456
www.central-research.com
6. Coast Professional, Inc.
P.O. Box 2876
West Monroe, LA 71294
(888) 815-2843
7. Collection Technology, Inc.
P.O. Box 2300
Rancho Cucamonga, CA 91729
(800) 743-4284
8. Collecto, Inc. dba Collection Company of America
PO Box 329
Norwell, MA 02061
(877) 395-5997
10. Credit Adjustments
330 Florence St.
Defiance, OH 43512
(800) 544-6359
www.credit-adjustments.com
11. Debt Management and Collections System
PO Box 5609
Greenville, TX 75403-5609
National Payment Center
PO Box 105028
Atlanta, GA 30348-5028
(800) 621-3115
12. Delta Management Associates, Inc.
P.O. Box 9242
Chelsea, MA 02150-9242
(855) 282-5983
13. ECSI Federal Perkins Servicer
100 Global View Drive Suite 800
Warrendale, PA 15086
(888) 549-3274
14. Educational Credit Management CORP
PO Box 16408
St. Paul, MN 55116-0408
(855) 810-4922
15. Enterprise Recovery Systems, Inc. now Alltran Education Inc.
17. Florida Department of Education OSFA
Local Metro Area
Tallahassee, Fl
850-410-5200
18. FMS Investment Corp
20. General Revenue Services (USA Funds)
4660 Duke Drive
Suite 300
Mason, OH 45040-8466
Phone: (800) 234-1472
21. Immediate Credit Recovery Inc.
6 Neptune Road
Suite 110
Poughkeepsie, New York 12601
(800) 234-4271
(855) 889-3111
25. New York Higher Education Loan Program (NYHELP)
99 Washington Avenue
Albany, New York 12255
(800) 888-0741
26. Pennsylvania Higher Education Assistance Agency
Pennsylvania State Grant Program
P.O. Box 8157
Harrisburg, PA 17105-8157
(800) 692-7392
27. Pioneer Credit Recovery, Inc.
26 Edward St.
Arcade, NY 14009
(585) 492-1234
28. Premiere Credit of North America, LLC
PO Box 19309
Indianapolis, IN 46219
866-808-7118
29. Progressive Financial
30. The CBE Group, Inc.
33. West Asset Management, Inc.
171 Mercy Rd., Omaha, NE 68106
(402) 391-5285
(800) 397-7243
Avoiding Student Loan Default
Of course, the easiest way to steer clear of having to deal with any of these companies is to avoid student loan default altogether. Make sure you understand what type of loans you have and commit to making your payments on time.
Also, seek out student loan debt relief options like refinancing, deferment or forbearance, and even student loan forgiveness.
Student loan forgiveness is not a quick fix and you'll still have to pay on your student loans but it's wise to see if you qualify if you hold federal student loans.
Continue The Conversation
Want to learn more about paying off your student loans and dealing with default? Check out our advice for dealing with student loan debt when you're unemployed or have a low budget.
How are you planning to stay on top of your student loan payments?
Joy Guillot says
Are these 3rd party debt collectors legally allowed to garnish wages without a court order or any further documentation stating you owe money? I understand it was originally a federal loan but once the loans have been sold to Delta or Windham can they request garnishment?
Robert Farrington says
Hi Joy,
Yes, the government (or their collection agency) can garnish your wages for Federal loans without a court order. You do have options to validate the debt and contest it. We break down everything you need to know about wage garnishment and student loans here.
Vicky Wray says
I keep getting calls that I believe is a scammer trying to “supposedly” collect on a student loan that I supposedly have or co-signed for and my mobile phone number is connected to it. The last number they called me from is 403-325-3325, which registers back to Alberta, Canada. I am located in the United States and have had my mobile phone number since 1995 and have NEVER signed or co-signed for a student loan and they will NOT take me off their list!!! Ugh! Any ideas how to get them to quit hassling me?
Robert Farrington says
You can report it to the Federal Trade Commission (FTC) at complaints.donotcall.gov or 1-888-382-1222.
Tonya says
Need help my student loans somehow went in to default and the Dept of treasury is taking my whole tax refund. Problem is I been in chapter 13 bankruptcy for 3 years what do I do?
Robert Farrington says
Bankruptcy doesn’t help you with student loans. You need to take action on your student loan debt to get it out of default.
Read this article and take action today: https://www.thecollegeinvestor.com/20755/stopping-tax-offsets-due-student-loan-debt/
Ayana says
why not? wherein the contract states that a student loan can not go into bankruptcy? transferring debt into a bankruptcy entity more beneficial than filing bankruptcy into your personal name/ssn?
Robert Farrington says
It’s a myth that student loans AREN’T dischargeable in bankruptcy – they totally are IF you pass a test. The test is the Burner Test, and you have to show you have an undue hardship paying your loans.
Bankruptcy won’t help 99.9% of people because the judge won’t pass that test. Why? Because Federal student loans offer a myriad of payment plans and loan forgiveness options that allow for $0/mo payments. So why discharge a debt when the payment is $0 per month? It doesn’t pass muster.
If you’re disabled? Loan forgiveness.
Basically, there are so many options, bankruptcy discharges are rare. Not unheard of, just rare.
Donna Fontimayor says
I just made my 7th payment out of 9.FMS told me my refund would not be offsetted,well it has twice..This put a hardship on me.What can I do?
Robert Farrington says
Until you are complete with your loan rehabilitation, you will see your tax refund offset. You might find this article useful: https://www.thecollegeinvestor.com/20755/stopping-tax-offsets-due-student-loan-debt/
Bill says
How many of these companies does Betsy DeVos own stock in? She’s actively making it easier for them to collect debts — no conflict of interest there!
Theodore Smith says
I payed off my student loan to a collections agency a few months ago but it still shows on my credit report. Anyway I can get that off of there.?
Robert Farrington says
Maybe… First off, you should know that delinquencies and defaults remain on your credit report for 7 years. However, you can:
1. Negotiate the removal from your report in exchange for payment (which is sounds like you didn’t do)
2. You can ask the creditor to remove it out of good will (worth a phone call or letter)
3. Some creditors allow you to pay for removal
4. If it still remains after 7 years, you can dispute it
Kate says
I received a letter from a collections agency called Emergency Planning Management, Inc. that claims they now hold my student loans. When searching on Google, I can’t confirm that this company is legitimate. I want to pay my loans off, but I don’t want to be involved with a scam company. Is there any way to find out if this is the real deal? Thanks.
Robert Farrington says
Never heard of this company and they’re not on the list. You can find your loan information (and who is servicing it) here: https://myeddebt.ed.gov/
DebtColl77 says
They are a subcontractor for Coast Professional Inc. contact coast and they will confirm.
Anna Lutz says
I received a call this morning from Reliant Capital Solutions, phone 877-404-8853. I spoke with Nabil Sheikuna at extension 6635.
They claim to be debt collectors for my defaulted student loans. I do not see them listed here, nor on the Dept. Of Ed. Website when I look at my loans there.
They have terrible reviews including harassment, calling people at work, etc. I was on a payment plan that was through the Dept. Of Ed. directly, automatic draft from my bank account. Not sure what is going on here, but this Reliant Capital Solutions makes me nervous.
I already had a very, very bad experience with FAMS, where they harassed me, cursed at me, laughed at me and were completely disrespectful.
What’s up with this Reliant Capital Solutions? Are they a scam?
Robert Farrington says
Do you have Federal loans or a private loan/Perkins loan through a school?
Looks like they collect school debt, but no Federal loan debt.
Ivy Sample says
I was sent an email by a company called The Dept. of Education’s Default Resolution Group saying that the U.S. Department of Education recently recalled my defaulted student loan account from ConServe.
They aren’t on your list. Is this company legit? They state that I can now make payment arrangements without paying additional collection costs, but I must call us before August 18.
Robert Farrington says
Go to https://myeddebt.ed.gov/ and see where you debt is and how you can contact them. I would definitely try to take advantage of anything that can avoid collection costs.
Janice Sullivan says
My defaulted student loan was placed with F.H. Can & Assoc. a year ago. I have filed several grievances with the Dept of Ed. to no avail. They are HORRIBLE they placed me in a rehab program in May 2018 it took 5 months for them to do that!
On Sept 10, 2018 I received papers from an attorney regarding my loan. I called F.H. Cann & Assoc. to find out what was going on. They informed me I was in a “fallout status.” I asked what does that mean they said my loan was in default. I was Furious because I didn’t understand how that could be!
I was told I was put in the rehab program but then I was taken out without notification in writing or verbally! How is this legal? What can I do. I have filed several complaints with the Department of Education. I have requested to be serviced by another agency. F.H. Cann & Associates said they would email consolidation forms on September 10. I called on September 12 to say I have not received it. I was then told they had to mail the forms because of the number of pages. Today is October 1, 2018 I still have no paperwork from F.H. Cann & Associates. I have endured one year of Horrible customer service from the Dept of Education & F.H. Cann & Associates. My credit & life are effected by both entities. Who governs this? What can I Do?
Robert Farrington says
You might benefit from speaking to an attorney, especially if you’re being contacted about potential legal action. Here’s a good starting point: How To Find A Student Loan Attorney.
Chuck says
I, too, am getting emails from Reliant Capital to collect on a Perkins loan that I got from a school back in the 80s. The contact information I am getting has them based in Ohio. Did you infer from a previous post that they do not collect Federal loans?
Robert Farrington says
Perkins Loans are serviced and collected by your school, so this company was contracted by your school to collect the debt.
Chuck says
Thank you for the clarification.
Jackie says
I have a student loan that is about 20 years old and I can’t pay them any amount maybe $5 a month and that’s it I am divorced living on my own, and with rent which is out of control on the monthly charge, water, electricity, car insurance which the government requires you to have now days, and groceries there’s nothing left. I have medical bills on the rise and will be out of work for 6 weeks due to a major surgery that I have to have this coming December which I was not prepared for and I have no family to help me out and now after 20 years they start contacting me. There needs to be limitations on how long you can be contacted, I mean really I don’t have a degree, life happened. I know that I’m not the only one in this situation otherwise there wouldn’t be so many collection agencies out there. What makes no sense is adding more money on top of money that could’nt be paid in the fisrt place.
Nicholas Myrben says
This is great information to publish. There are multiple companies that are on here that no longer have a contract or service accounts with Department of Education anymore.
Robert Farrington says
Know which specific companies need to be updated?
Georgana says
I am making payments to National Student Assist and now I’m starting to get worried I’ve been scammed. They have already got a significant amount of money. What can I do?
Robert Farrington says
I don’t believe they are a Federal student loan debt collector. It sounds like they are a third party company. We don’t know anything about your arrangement, but you should look at your documents carefully and see what you signed up for. This article might help you understand things better: https://thecollegeinvestor.com/16429/is-your-student-loan-repayment-company-a-scam/
Jackson says
My wife got a Pell Grant while she was living with her parents. She then dropped out of school for several years. We got engaged and she was motivated to re-enroll and finish. By that point, her job had changed at the department store she was working for, bringing a slightly bigger wage. We got married, she moved her official address over to our new apartment, and finished school. We now have a series of student loans we’re paying off.
A couple months ago, she found out that the school had rescinded her Pell Grant on grounds of “not updating her financial information” even though the Pell Grant’s coverage was less than the amount of schooling she attended before dropping out, long before she re-enrolled. They claim we owe them about $1200. Perhaps that’s normal, though it seems unreasonable to me, but the issue is that they sent all this information to her old address, where it went unanswered. Now the debt is owned by Bass & Assoc.
We have been unsuccessfully trying for two months to speak with them about getting the debt paid, but cannot get past being put on hold for 20, 30, 45 minutes at a time. Regardless of the time we call, even making sure to call during business hours in Arizona, we have never been able to talk to anyone but a receptionist or phone dispatch person who routes us to someone else who routes us back, or puts us in hold for so long they forget why we’re on hold. Saying nothing about their legitimacy, it doesn’t seem like many people have any other kind of experience with them, judging by their Better Business Bureau responses or other online search results.
How are we expected to pay off a rescinded grant to this company if we can’t get in touch with them to find out how to do so? What recourse do we have?
Robert Farrington says
Certified letter with return address and proof of delivery. Stop trying to call – always get it in writing and documented.
Amir says
Is Coastal Shores Financial Group a legit company? They said they work with student loans but I cannot find them anywhere on the internet. They said they can reduce my loan amount but I am a little nervous about the company.
Robert Farrington says
From what you said, they sound like a third party assistance company. Whether you use them or not is your decision. Here’s a guide we created to help you vet companies that provide assistance: https://thecollegeinvestor.com/16429/is-your-student-loan-repayment-company-a-scam/
DAISY LOPEZ says
Hello, I just found out that my refund was taken by a placed offset. I have never received any mail or calls in regards to my defaulted loans, which are now with Bass & Associates. In all honesty I didn’t realize this could happen. I want to make things right, is it too late to set up a repayment plan? I am worried they will start garnishing my wages.
Robert Farrington says
It’s too late for your 2018 return, but you can start the process to get out of default and avoid it next year. Read this: https://thecollegeinvestor.com/20755/stopping-tax-offsets-due-student-loan-debt/
Andrew Hunter says
Received a Debt Statement from U.S. Dept of Education in October 2018.
It talked about Treasury Offset so I paid of the outstanding balance in full.
Check was payable to US Dept of Education, National Payment Center in Atlanta, and cashed by them in October 2018.
Included in the payment was Interest of $1229.13.
Am I correct in assuming that US Dept of Ed should issue IRS Form 1098E to me ?
Robert Farrington says
Since you paid more that $600 in interest, you should receive a 1098-E.
Leslie says
If I’m already in a payment plan the rehabilitation one, can they still offset my taxes? I have been on this rehabilitation payment arrangement for 3 months.
Robert Farrington says
We recommend waiting until you complete the rehabilitation plan, because until you do, you’re still in default.
Cheryl Buzuleciu says
I have been making monthly payment to department of education. Set up though reliant capital for 2 years. My taxes were off set in 2016. Not for 2017 since I’d been paying over the 10 month mark. Now all of sudden my taxes were taken for off set. I’ve never been late or missed a payment in two years. Is this normal and why did they take my taxes. I received no mail or calls to this happening. I get my monthly statement and I pay it on time every month. Help.
Robert Farrington says
Who do you get monthly statements from? What do your loans say? Make sure you check all your loans here: https://thecollegeinvestor.com/19370/how-to-find-out-who-owns-your-student-loans/
Janet Miller says
I have paid thousands of dollars in the past 20 years towards a Perkins loan. In February 2019 my social security check was garnished, and my federal tax return will be taken. How do I find out if this payment went to reduce my loan balance or does it go to a service company to get my loan out of default like the other thousands of dollars that have been paid?
Robert Farrington says
That’s called an offset. In most cases, the amount garnished doesn’t ever make it to your loan balance – it goes to collection fees and accrued interest. Read this: https://thecollegeinvestor.com/20755/stopping-tax-offsets-due-student-loan-debt/
Jotika chandra says
A company call US Assets financial has been garnishing almost half of my checks every paycheck but they are not listed on the list of names. I have been calling the company amd spoke to a person named Reina who refused to give her last name had mo information about where my loan originated from or what school. She kept saying its a federal loan and she will call back with more information. Why does court approve garnishments to companies that we have no idea of who they are. I have looked up this company online but havent found them yet. My hard earned money is going to someone whom i have no idea of. On my nsdl website i cant find that loan amount or that company. West coast professional already has me on a rehab plan for all my student loans. I have 2 dependents at home and i barely can make it to pay my rent due to this garnishment plus the payment i make to west coast professional. I feel like im being punished to go to school which i never finished due to my student loan being capped before my degree ended. I feel so helpless and tired of working 2 dead end jobs to make ends meet for me and my family. I dont know how to make this garnishment stop.
Robert Farrington says
Federal loans require no court orders – you owe a debt to the US Taxpayer and they can use all types of means to recoup that debt.
Read this guide to stop the garnishments and get out of default: https://thecollegeinvestor.com/22174/student-loan-default/
You can find your loan information here: https://thecollegeinvestor.com/19370/how-to-find-out-who-owns-your-student-loans/
E.S. says
I have been contacted by an Agency called Rock Creek Capital. They told me that my private student loan is in default. I knew nothing about the loan being in default. No letters and the first phone call that I received was the one from them demanding that I pay the $15,000 debt or my wages would be garnished or a lien placed on my property etc. I pulled my credit report and see this loan no where on my report. All of my other loans are consolidated and listed as on time/deferred. I am very stressed about this situation because no one can give me answers about the loan and how i didnt know it was it was in deferrment, who it was sold to, etc. I am at a lost with this and need help with next steps.
Robert Farrington says
Well, if you’re shocked by this loan, you can always ask to validate the debt. Here’s a good guide to sending a debt validation letter, and they are required by law to provide this information to you: https://www.thebalance.com/debt-validation-requires-collectors-to-prove-debts-exist-960594
E.S. says
I sent the debt validation request and the letter can back from FAMS saying that they work on behalf of Rock Creek Capital. The reason why I feel like I am being scammed is because when speaking with them on the phone about possible payment arrangements, the lady was very nasty to me saying they wanted the whole payment and would garnish my wages or seize my assets if I didn’t pay that day. I was wondering how can all of that happen if I haven’t been taken to court? I have gone to a lawyer about the situation who will be in contact with me by tomorrow. It’s sad the way these people do hardworking professionals who are just trying to make ends meet.
CF says
I received a letter from Shafritz and Associates, a law firm in Florida, about an old student loan debt. It’s been over 20 years since I graduated and obviously they purchased the debt from the loan company which is also out of business. Apparently they’ve gone to court and are in the process of discovery. From what I understand, this is a “zombie debt” and it doesn’t even show up on my credit report anymore. How much should I worry about this? Should I hire a lawyer? Can they put the debt back on my credit report or garnish my wages?
Robert Farrington says
If they are going to court and suing you, you need to get a lawyer and defend yourself. Not showing up makes you automatically lose, and they can get a garnishment for your wages or other assets. So, get a lawyer ASAP.
Angela D says
I have defaulted loans with Debt collections and management. They haven’t got in touch with me ever, that I know of. I saw it on the nation financial aid site. Their website doesn’t even work. Are they a private lender? I am not sure if I should contact them. There is something on my credit report from USDOE and I think it’s them, but they have ‘ok’ ‘ed that I’ve been paying for years when I haven’t until the last few months. I’m hoping they go away and I don’t have to worry about them. The balance says it is zero. Will they come back and haunt me? Do you recommend anyone I can work with? I don’t want my inheritance or social security being garnished ever.
Robert Farrington says
If it’s Federal debt, it will haunt you for the rest of your life – even garnishing your Social Security. FAMS is the Department of Education’s default management group, and you should make contact and rehabilitate your loans ASAP. You don’t need to work with anyone – if you can fill out a job application you’re capable of filling out the proper forms. Read this: https://thecollegeinvestor.com/22174/student-loan-default/
Ed Meaux says
Amen! I received notification that I owed a loan 37 years after the school was closed and I was disabled and receiving SSDisability. To get a loa. Discharged your disability letter must have a review date. Mine did not because of my age, 62 and because I was permanently disabled so SSA said no review date necessary. Didn’t matter, I presume a clerk takes a look, no review date, denied. Just unbelievable, I can’t get anyone to listen.
Jessica Hunt says
Good evening,
My student loans are currently in default and are being held by Central Research Inc, I am in the process of filing for bankruptcy and my lawyer had said that student loans were not eligible to file but after speaking to someone at Central Research, they mentioned that I could indeed add the loans to my filing. Are there any additional resources to find out more about this subject? Am I able to add my student loans held by a collection agency to my Chapter 7? I also will be going back to school in the Fall and intent to pay out of pocket as much as possible but would like to qualify for grants and scholarships. I am unsure what to do and don’t want to risk not being able to get any aid in the future. I am in a current IBR and this month will be my 2nd month. Please advise. Thank you!
Robert Farrington says
It’s a myth that student loans aren’t eligible for bankruptcy. But (here’s the kicker), you have to show undue hardship on the loans to be eligible. If you’re on IBR, you have no hardship, since your payments could legally be $0 per month with a low enough income.
So, maybe your lawyer didn’t explain it well, but your loans simply won’t be considered because you have no hardship due to the programs you’re eligible for.
Since there are so many income-driven and loan forgiveness options, most judges won’t touch student loans unless there is some weird exception to eligibly, or you’re dealing with private loans and no options.
Jonas Vezia says
I keep receiving calls from various collection agencies talking about some bill that passed making it possible for loans to be forgiven. And it screams red flags. Have you heard about any of this?
Robert Farrington says
Loans can be forgiven, yes. New legislation, no.
If you receive a phone call, it’s not your loans… all correspondence will be in writing.
GS says
I was notified by Windham Pro. I owed $2143 and my school had assigned them to it. I was not aware of this prior to their phone call, but I was able paid it off in full a week later – will I still get a 1098-T?
Robert Farrington says
You may receive a 1098-E for any student loan interest you paid.
Nicky says
Can a vocational trade school use a collection agency for students that owe?
And would / could they garnish wages?
Robert Farrington says
Yes, and yes.