When it comes to federal student loan collection, lawsuits are not very common. But they aren’t unheard of either. Why is it less common for the government to sue in order to collect on student loans? Most would agree that it’s because they have a lot of other tools in their debt collecting arsenal. But that doesn’t mean that lawsuits aren’t a tool they have access to – they do. It’s hard to predict when student loan debt will end up in litigation, but the government will sometimes use that particular collection method when student loan borrowers are in default so it’s best to be prepared. Often, the marker is if you are a W-2 employee, then the government can file an administrative wage garnishment and take 15% of your gross income without even filing suit, so why should they file suit?

The reason private lenders are so much more likely to file a lawsuit in pursuit of a debt is because it is the main collection tool they have at their disposal. Both private lenders and the government often hire collection agencies to apply pressure to borrowers who are behind on their payments.

If someone files a lawsuit against you, don’t ignore it unless there is no possible way for them to force you to pay an eventual court judgment. If you are facing this situation, you may want to consult a professional to figure out your best response. As a general rule of thumb, you should always pick up certified mail and accept notices advising you of court actions. Even if you lose your case and the lender gets a judgment, this does not mean you must repay the debt. The judgment means that creditors may use particular collection tools to seek payment. How effective these particular collection tools are will depend on your income, your property, and the type of income and property you have. Certain types of property and/or income are protected from seizure by federal and state law.

If you are being sued, you might consider:

  1. Fighting back by raising defenses: The best way to deal with a lawsuit is by winning it. Do you have a defense to the lawsuit that could be raised in court? In some cases, just raising a defense will lead the creditor to drop the case. It is also important to consider the fact that it’s significantly cheaper and easier to respond to a lawsuit than to start your own later. Examples of defenses include: payments that were not credited to the account, debt is not owed or the account is current, the amount due is inaccurate, the creditor is seeking more than you agreed to pay, the debt is fraudulent, the debt was discharged in bankruptcy, the loan is not enforceable or, if regarding a private student loan, the creditor waited too long to file suit.
  2. Taking whatever action is necessary so that you have a full understanding of what could happen if you lose your case and a judgment is entered against you by the court. If you lose your case, the court will order a judgment against you. This gives the creditor the right to force you to pay using different methods. Some consumers are known as “collection proof.” This means that their assets and their income are small enough to fall under the protective umbrella of federal and state law – creditors are prohibited from seizing them. If this is the case, you don’t really need to worry about a judgment unless your financial situation significantly improves.
  3. And, if you are in the military, checking for any special rights pertaining to the situation.
  4. For federal loans, you can argue that the “cost of attendance” is cost prohibitive, thus dischargeable.
  5. And for private loans, there are several strong arguments to fight in state court.


If you are facing student loan litigation and you need assistance, please get in touch with one of the experienced student loan attorneys at Aronow Law PC as soon as possible.