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I. Extent of student loan debt

Outstanding student loan debt in the United States has tripled over the last decade and now exceeds $1.5 trillion. This exceeds the amount of both auto and credit card debt.

More than 1 million student loan borrowers each year go into default. For many borrowers, the payments are proving unmanageable. By 2023, nearly 40% of borrowers are expected to default on their student loans. Almost 33% of people who owe less than $5,000 for their education default within four years, compared with just 15% of borrowers who owed more than $35,000. This appears to be because the persons who owe the smaller amounts failed to complete their educational programs, incurring less debt but also not acquiring the means to get a better job and repay it.

II. Federal student loans

A. Federal Family Education Loan Program loans and Federal Direct Loans

Until 1994, federal student loans were originated and funded almost exclusively by private lenders pursuant to the Federal Family Education Loan Program (“FFELP”). Under this program, loans were originated by private lenders and insured by FFELP “guarantors,” generally non-profit organizations and state agencies which had agreements with the Department of Education under which they administered a loan guarantee program. 34 C.F.R. §682.200; 20 U.S.C. §1078(a)(1). The guaranty agencies were, in turn, reinsured by the federal government.

In 1994, with the beginning of the William D. Ford Direct Student Loan Program, the federal government started making “Direct Loans” directly to borrowers. Direct Loans are made, funded and held by the Federal Government, but are serviced by private companies under contract with the Department of Education (“loan servicers”).

The FFELP program was wound down over time and no new FFELP loans were made after 2010. However, the elimination of the FFELP program did not affect the existing FFELP loans. These still constitute more than 20% of outstanding federal loans, or about $335 billion.

Although FFELP loans are held by private entities and Direct Loans are held by the Government, they are otherwise the same in all material respects. Chae v. SLM Corp., 593 F.3d 936, 945 (9th Cir. 2010), citing 20 U.S.C §1087e(a)(1) (“In the rules governing the Direct Loan Program, Congress created a policy of inter-program uniformity by requiring that loans made to borrowers under the Direct Loan Program shall have the same terms, conditions, and benefits, and be available in the same amounts, as loans made to borrowers under the FFELP.”).

All federal student loans are governed by a “Promissory Note” which sets forth the terms and conditions applicable to the loan. All federal promissory notes provide that the loan (or loans) governed by the note must be administered in accordance with the Higher Education Act and Department of Education regulations. These regulations establish the various repayment plans that are available to federal loan borrowers, and impose various servicing requirements on “loan servicers.”

The “loan servicers” collect payments, handle borrower inquiries, and enroll borrowers in the repayment plans offered by the Department of Education. Major servicers include Navient, Nelnet, Great Lakes, Conduent, and Fedloans (PHEAA). Under the servicing contracts, the Department of Education or other owner of the loan pays the servicer a monthly fee for each loan that the company services. In some cases, loan servicers have acquired portfolios of FFELP Loans.

B. Income Driven Repayment Plans

There are multiple repayment options for federal student loans. Under the “standard repayment plan,” monthly payments are calculated such that the borrower’s balance is fully paid off within 10-30 years. Because the standard repayment plan requires a complete payoff of the debt within a fixed period, the monthly payments can be high.

Borrowers who cannot afford payments under the standard repayment plan often enroll in the various Income Driven Repayment (“IDR”) plans that offer significantly lower monthly payments.

Under the Income Based Repayment plan (“IBR plan”), the borrower’s monthly payments are capped at 15% of discretionary income, and the remaining debt is discharged after 25 years of qualifying payments. Under other programs, the borrower’s monthly payment is capped at 10% of discretionary income. If the borrower’s income is low enough, their monthly payment could legally be zero.

To enroll in an IDR plan, the borrower must send an application and proof of income to her loan servicer. Once received, the loan servicer must “promptly” determine the new monthly payment.

An IDR plan is effective for a one-year period. To renew the plan for each subsequent year, borrowers must annually recertify their income by sending the loan servicer a new IDR application and proof of income before an annual renewal deadline. (OMB Form No. 1845-0102, available at If the borrower fails to do so, the loan servicer may increase their monthly payments to the higher amount required under the standard repayment plan. Additionally, any accrued interest may be “capitalized,” or added to the borrower’s principal loan balance, if the IDR plan is not timely renewed. 34 C.F.R. §682.215 (b)(5). On the other hand, if the borrower timely submits the IDR renewal application and proof of income, the loan servicer is prohibited from cancelling the IDR plan. Rather, the servicer must maintain the borrower’s income-driven payment amount until the application has been processed.

C. Forbearance

In contrast to IDR plans, which provide affordable monthly payments, borrowers may have their loans placed into temporary hardship forbearance. This halts monthly payments, but any unpaid interest that accrues during the forbearance gets capitalized. Forbearances are less beneficial to the borrower because they prevent the borrower from making qualifying payments toward eventual loan forgiveness.

D. Perverse incentives on the part of servicers

Although both the borrower and the Federal Government benefit when a student loan is repaid, servicers have an incentive to delay repayment of loans. The longer it takes a borrower to pay off their loan, the more income is received by the loan’s servicer. This is the case with both FFELP and Direct Loans. With respect to Direct Loans, the servicer receives a monthly fee from the Department of Education for each loan serviced. Delaying repayment or discharge of loans increases the servicer’s fee income. With respect to FFELP Loans held by third parties, the servicer similarly receives a monthly fee for each loan that is serviced. With respect to FFELP Loans owned by the servicer, the servicer receives more interest the longer the loan remains on the books.

Servicers thus have financial incentives to (1) steer borrowers into forbearances rather than income based repayment plans and (2) process loans in a dilatory manner, so as to extend the life of the loan as long as possible.

In several cases, we are alleging that servicers delayed borrowers’ enrollment in IDR plans and unlawfully cancelled timely renewed IDR plans. Reports published by the Consumer Financial Protection Bureau (“CFPB”) and the Department of Education indicate that this is a widespread problem. A 2017 audit of Navient by the U.S. Department of Education reviewed about 2,400 calls between Navient and borrowers from 2014 to 2017. In about 10% of the calls, the Navient representative did not offer the borrower all of the options they could have offered, mainly income-based repayment options. These representatives did not ask questions to find out if the borrower would have benefitted from such a plan, according to the audit.

A lawsuit against Navient by the CFPB is pending. The CFPB alleged that the failure to offer income based repayment plans was deceptive, and that between 2010 and 2015, Navient added about $4 billion in interest to those borrowers’ loans through use of forbearance for persons qualifying for income based repayment.

E. Rehabilitation and consolidation

Federal student loans generally are considered to be in default when they are 270 days delinquent. Borrowers can get out of default through loan rehabilitation or loan consolidation.

Loan rehabilitation takes several months to complete, while loan consolidation can be immediate. However, loan rehabilitation provides certain benefits that are not available through loan consolidation.

Neither type of program is ordinarily available for private student loans.

1. Loan Rehabilitation

One option for getting a federal student loan out of default is loan rehabilitation. To start the loan rehabilitation process, a borrower must contact the loan servicer. If you’re not sure who your loan holder is, you can log in to “My Federal Student Aid” to get your loan servicer’s contact information.

a. William D. Ford Federal Direct Loan (Direct Loan) Program and Federal Family Education Loan (FFEL) Program

To rehabilitate a defaulted Direct Loan or FFEL Program loan, you must (1) agree in writing to make nine voluntary, reasonable, and affordable monthly payments (as determined by your loan holder) within 20 days of the due date, and (2) make all nine payments during a period of 10 consecutive months.

Under a loan rehabilitation agreement, your loan servicer will determine a reasonable monthly payment amount that is equal to 15 percent of your annual discretionary income, divided by 12. Discretionary income is the amount of your adjusted gross income (from your most recent federal income tax return) that exceeds 150 percent of the poverty guideline amount for your state and family size. You must provide documentation of your income to your loan servicer.

If you can’t afford the initial monthly payment amount described above, you can ask your loan servicer to calculate an alternative monthly payment based on the amount of your monthly income that remains after reasonable amounts for your monthly expenses have been subtracted. You’ll need to provide documentation of your monthly income and expenses, including a completed Loan Rehabilitation: Income and Expense Information form. Depending on your individual circumstances, this alternative payment amount may be lower than the payment amount you were initially offered. To rehabilitate your loan, you must choose one of the two payment amounts.

Depending on your income, your monthly payment under a loan rehabilitation agreement could be as low as $5.

Your loan servicer may be collecting payments on your defaulted loan through wage garnishment or Treasury offset (taking all or part of your tax refunds or other government payments). These involuntary payments may continue even after you begin making payments under a loan rehabilitation agreement, but they can’t be counted toward the required nine voluntary loan rehabilitation payments. Involuntary payments may continue to be taken until your loan is no longer in default or until you have made some of your rehabilitation payments.

Once you have made the required nine payments, your loans will no longer be in default.

b. Federal Perkins Loan Program

To rehabilitate a defaulted Federal Perkins Loan, you must make a full monthly payment each month, within 20 days of the due date, for nine consecutive months. Your required monthly payment amount is determined by your loan servicer. Find out where to go for information about your Perkins Loan.

2. Benefits of Loan Rehabilitation

When your loan is rehabilitated, the default status will be removed from your loan, and collection of payments through wage garnishment or Treasury offset will stop. You’ll regain eligibility for benefits that were available on the loan before you defaulted, such as deferment, forbearance, a choice of repayment plans, and loan forgiveness, and you’ll be eligible to receive federal student aid. Also, the record of default on the rehabilitated loan will be removed from your credit history. However, your credit history will still show late payments that were reported by your loan servicer before the loan went into default.

If you rehabilitate a defaulted loan and then default on that loan again, you can’t rehabilitate it a second time. Rehabilitation is a one-time opportunity.

3. Loan Consolidation

Another option for getting out of default is to consolidate your defaulted federal student loan into a Direct Consolidation Loan. Loan consolidation allows you to pay off one or more federal student loans with a new consolidation loan.

To consolidate a defaulted federal student loan into a new Direct Consolidation Loan, you must either (1) agree to repay the new Direct Consolidation Loan under an income-driven repayment plan, or (2) make three consecutive, voluntary, on-time, full monthly payments on the defaulted loan before you consolidate it. If you choose to make three payments on the defaulted loan before you consolidate it, the required payment amount will be determined by your loan servicer, but cannot be more than what is reasonable and affordable based on your total financial circumstances.

There are special considerations if you want to reconsolidate an existing Direct Consolidation Loan or Federal (FFEL) Consolidation Loan that is in default. To reconsolidate a defaulted Direct Consolidation Loan, you must also include at least one other eligible loan in the consolidation in addition to meeting one of the two requirements described above. If you have no other eligible loans that can be included in the consolidation, you cannot get out of default by consolidating a defaulted Direct Consolidation Loan. Your options are repayment in full or loan rehabilitation.

You may reconsolidate a defaulted FFEL Consolidation Loan without including any additional loans in the consolidation, but only if you agree to repay the new Direct Consolidation Loan under an income-driven repayment plan. If you include at least one other eligible loan in the consolidation, you’re eligible to reconsolidate a defaulted FFEL Consolidation Loan if you meet either of the two requirements described above.

In addition, if you want to consolidate a defaulted loan that is being collected through garnishment of your wages, you cannot consolidate the loan unless the wage garnishment order has been lifted.

If you choose to repay the new Direct Consolidation Loan under an income-driven plan, you must select one of the available income-driven repayment plans at the time you apply for the consolidation loan and provide documentation of your income. If you choose to make three consecutive, voluntary, on-time, full monthly payments on your defaulted loan before you consolidate it, you may repay the new Direct Consolidation Loan under any repayment plan you are eligible for.

F. Unavailability of most defenses and procedural safeguards

Enforcement of federal student loans can be draconian. There is no statute of limitations. Recent federal student loans cannot be discharged in bankruptcy without a showing of serious hardship. (Older loans may be subject to more lenient standards.)

The Government or servicer does not have to file suit to enforce the loan, but can issue an “administrative wage garnishment” and seize a portion of the borrower’s wages. 20 U.S.C. §1095a(a) (“Notwithstanding any provision of State law, a guaranty agency ... may garnish the disposable pay of an individual to collect the amount owed by the individual, if he or she is not currently making required repayment under a repayment agreement....”). The employer is obligated to comply. 20 U.S.C. §1095a(a)(6) (“[T]he employer shall pay to the Secretary or the guaranty agency as directed in the withholding order....”). The borrower is theoretically entitled to notice and a hearing before an impartial hearing officer. 20 U.S.C. § 1095a(a)(5) (“[T]he individual shall be provided an opportunity for a hearing ... concerning the existence or the amount of the debt.”); 34 C.F.R. §§682.410(b)(9)(i)(E) ( “The guaranty agency shall offer the borrower an opportunity for a hearing ... concerning the existence or the amount of the debt.”), 682.410(b)(i)(J) (“The guaranty agency shall provide a hearing, which, at the borrower's option, may be oral or written, if the borrower submits a written request for a hearing on the existence or amount of the debt.”). The hearing officer “may be any qualified individual, including an administrative law judge, not under the supervision or control of the head of the guaranty agency.” 34 C.F.R. §682.410(b)(9)(i)(M). However, notices are often not received and the “hearing” is summary in nature. The borrower is entitled to a hearing “concerning the existence or the amount of the debt” and, in certain cases, “concerning the terms of the repayment schedule.” 20 U.S.C. §1095a(a)(5). If the debtor requests a hearing on or before the 15th day following the mailing of the notice, a hearing must be provided before a garnishment order is issued to the debtor's employer. 20 U.S.C. §1095a(b). If the debtor requests a hearing more than 15 days after the pre-garnishment notice is mailed, however, the debtor is still entitled to a hearing but the hearing need not be conducted before garnishment begins. Id.

There are also provisions for intercepting tax refunds and other sums which the Government owes the borrower.

G. Closed school discharges

The closed school discharge for a federal student loan is available if the borrower attended a school that closed while they were enrolled or if the borrower withdrew within a period beginning 120 days before the school's closure. 34 CFR 685.214 (The period changed from 90 days to 120 days as of July 1, 2014). There is an extended period for Corinthian loans.

Only loans received at least in part on or after January 1, 1986 may be discharged. FFEL and Direct Stafford loans, PLUS, and Perkins loans are eligible. With respect to consolidation loans, if any of the underlying loans that were consolidated could be canceled, the borrower can apply for a closed school discharge for these loans only, which if granted, will result in a credit for the amount of the underlying loans related to the closed school.

Borrowers are eligible for a closed school discharge only if they were unable to complete the educational program because the school closed. If a school had a number of different branches, the student must have been attending a branch that closed. If the program was an online program, the physical headquarters of the online school must have closed.

Borrowers are not be eligible for a closed school discharge if they complete their program through a teach-out at another school or through the transfer of one or more credits from the closed school. The closed school discharge form states that this provision only applies if the program completed at the new school is the same or comparable to the program of study at the closed school. Borrowers should be eligible if they enroll in the same program at another school, but do not transfer any credits from the closed school.

The closed school discharge form is:

III. Private Student Loans

A. Litigation:

We are seeing an increasing volume of collection lawsuits on private student loans. Our firm is active in defending such cases.

The same restrictions on discharge of the loans in bankruptcy apply as in the case of federal laws. In addition, there is no right to income based repayment plans.

However, holders of private student loans have to file suit in order to collect the debts. If you are being sued on a loan, it is probably a private loan.

There are a number of defenses which can be litigated on behalf of borrowers. We also have filed affirmative lawsuits against originators, servicers and holders of private student loans.

In many cases, it is possible to settle private student loans with a lump sum settlement or payment over time.
Issues which frequently arise in such cases include:

1. Statute of limitations.

Unlike federally-guaranteed student loans, private student loans are subject to state statutes of limitations. Depending on the precise documentation in a particular case, these can be subject to either the 5 or 10 year Illinois statute. Eul v. Transworld Systems, 15cv7755, 2017 WL 1178537, *8-11 (N.D.Ill., March 30, 2017); Trujillo v. Asset Recovery Solutions, LLC, 17cv2303, 2017 WL 6816536 (N.D.Ill., Aug. 9, 2017). In this regard, it is quite rare for a student who has been granted a student loan to actually sit down and execute a note which sets forth all material terms of the transaction. Often the only document signed is an application in which the student promises to repay such amounts as shall be approved and which often leaves the loan program and repayment terms to be determined by the lender.

Also, if the legal residence of the student was in another state at the time of default, Illinois may apply its “borrowing statute” to apply the limitations law of that state. 735 ILCS 5/13-210, “Foreign limitations,” provides that “When a cause of action has arisen in a state or territory out of this State, or in a foreign country, and, by the laws thereof, an action thereon cannot be maintained by reason of the lapse of time, an action thereon shall not be maintained in this State.”

2. Title to the loans / licensure of claimed holder.

There are often substantial questions concerning title to private student loans, if they are not held by the party to whom the documents are originally payable. SLM Private Credit Student Loan Trust 2004-B v. Bonet, 49 Misc.3d 1204(A), 26 N.Y.S.3d 216 (Table), 2015 WL 5737936, 2015 N.Y. Slip Op. 51399(U) (Civ.Ct., Sept. 14, 2015).

Also, we have seen cases where defaulted student loans were supposedly transferred to unlicensed debt buyers.

3. Computation of amounts due.

There are often substantial questions concerning the servicing of the loans and the computation of the amounts due, often arising from improper servicing of loans and provisions relating to forbearances and deferments. Russo v. Navient Solutions, LLC, 1:16cv316, 2017 WL 4220455 (D.Vt., Sept. 21, 2017); In the Matter of Citibank, N.A., 2017-CFPB-0021 (settling charges of “erroneous termination of borrowers' in-school deferments, resulting in late fees and student loan interest capitalizations”). We have seen “forbearances” that are not agreed upon by the borrower; these would not serve to extend the statute of limitations.

4. Closed / fraudulent schools

We have raised defenses based on fraudulent or unaccredited schools. There are issues as to whether such matters are defenses with respect to the lenders under 16 C.F.R. part 433 – the Federal Trade Commission regulation abrogating the holder in due course doctrine – or otherwise.

5. Cosigners

We have alleged noncompliance with protections for cosigners, including 815 ILCS 505/2S.

6. Usury

Some student loans are made at interest rates exceeding the maximum permitted under state law. In some cases, lenders have arranged to place the names of banks or other entities with rate exemptions on the loans. The efficacy of such devices is the subject of litigation.

7. Licensing

Some companies purchase defaulted private student loans and try to collect them. These companies are engaged in the collection of debts and must comply with the licensing requirements of the Illinois Collection Agency Act.

B. Please contact us if any of the following parties is trying to collect a private student loan from you:

Accesslex / Access Group
Alltran Education
Archerfield Funding
Arrowood Indemnity
Firstmark Services
National Collegiate
Pioneer Services
Student Loan Solutions
US Asset Management

IV. Fair Debt Collection Practices Act

Attempts by “debt collectors” to collect student loans – federal or private – must comply with the Fair Debt Collection Practices Act. The Seventh Circuit and at least four other Courts of Appeal have held that educational debts are covered by the FDCPA. Williams v. OSI Educational Services, Inc., 505 F.3d 675, 678 (7th Cir. 2007) (debt owed to Great Lakes Higher Education Guaranty Corporation is “debt incurred for personal, family or household purposes”); Easterling v. Collecto, Inc., 692 F.3d 229 (2nd Cir. 2012) (misrepresentation concerning dischargeability of student loans in bankruptcy); Peter v. GC Services, LP, 310 F.3d 344 (5th Cir. 2002); Rowe v. Educational Credit Mgmt. Corp., 559 F.3d 1028 (9th Cir. 2009); Juras v. Aman Collection Service, Inc., 829 F.2d 739 (9th Cir. 1987); Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1123-24 (11th Cir. 2004) (law school tuition; “third-party debt collectors acting on behalf of guaranty agencies to collect federal student loans must comply with the FDCPA”).

A “debt collector” is a person or firm that regularly collects defaulted debts for another, such as a collection agency that duns consumers on defaulted loans, or whose principal purpose is the collection of debt, such as a debt buyer. Collection agencies hired to collect defaulted student loans are covered by the FDCPA. In a 1990 “Notice of Interpretation,” the Department of Education stated that third parties collecting on defaulted loans on behalf of guaranty agencies are covered Notice of Interpretation, Stafford Loan, Supplemental Loans for Students, PLUS, and Consolidation Loan Programs, 55 Fed.Reg. 40,120, 40,121 (Oct. 1, 1990) (observing that “the Secretary [of Education] took particular note of the existence of Federal law that regulated the conduct of ... third party collectors of defaulted student loans” and concluded that these debt collectors “remain subject to the FDCPA”).

However, FFELP guarantors are not debt collectors. Rowe v. Educational Credit Mgmt. Corp., 559 F.3d 1028, 1034-5 (9th Cir. 2009); Bennett v. Premiere Credit of North Am., LLC, 504 Fed.Appx. 872 (11th Cir. 2013); Lasserre v. Educational Credit Management Corp., 3:12cv00091, 2012 U.S. Dist. LEXIS 83043, 2012 WL 2191628 (M.D.La., June 14, 2012); Donohue v. Regional Adjustment Bureau, Inc., 12cv1460, 2013 WL 607853 (E.D.Pa., Feb. 19, 2013); Davis v. United Student Aid Funds, Inc., 45 F.Supp.2d 1104 (D.Kan. 1998).

Companies that service student loans are exempt from the FDCPA if they become involved with the loans prior to default. Coppola v. Connecticut Student Loan Foundation, 87cv398, 1989 WL 47419 (D.Conn. Mar. 22, 1989); Diaz v. First Marblehead Corp., 643 Fed.Appx. 916 (11th Cir. 2016); Obot v. Sallie Mae, 602 Fed.Appx. 844 (2d Cir. 2015). When a loan is restructured and the restructured loan is not in default, the fact that the loan was in default prior to being restructured does not make entities purchasing or servicing the restructured loan FDCPA debt collectors. Bailey v. Security National Servicing Corp., 154 F.3d 384 (7th Cir. 1998).

“[D]efault” reflects the meanings found in relevant contractual agreements and non-FDCPA federal and state law. De Dios v. Int'l Realty & RC Invs., 641 F.3d 1071, 1074–75 (9th Cir. 2011); Skerry v. Mass. Higher Educ. Assistance Corp., 73 F. Supp. 2d 47, 52-54 (D. Mass. 1999) (applying federal regulations governing student loans at issue to determine if they were in default).

A loan must be for “personal, family or household purposes” to be covered by the FDCPA. The fact that the loan was to finance basic professional or vocational training or licensure does not take it outside the scope of “personal, family or household purposes” as required for FDCPA coverage. In Smith v. Progressive Financial Services, Inc., 6:12cv1704, 2013 WL 3995004 (D. Ore. Aug. 1, 2013), the court held that a loan made to finance training as a commercial pilot is a consumer debt:

[P]laintiff's purpose in obtaining her loan was to finance her education at Falcon Aviation Academy. Defendant argues that an educational loan is akin to venture capital. Venture capital is "money made available for investment in innovative enterprises or research, especially in high technology, in which both the risk of loss and the potential for profit may be considerable." [citation] Contrary to defendant's argument, "education" encompasses something broader than mere investment in pursuit of profit. Brown v. Bd. of Ed. Of Topeka, Shawnee Cnty, Kan., 347 U.S. 483, 493 (1954) (". . . our recognition of the importance of education to our democratic society. . . . It is the very foundation of good citizenship."); Meyer v. Nebraska, 262 U.S. 390, 400 (1923) ("The American people have always regarded education and acquisition of knowledge as matters of supreme importance which should be diligently promoted."). Education, unlike venture capital, cannot be taken by creditors upon default and remains with the consumer throughout his or her life; any skill or knowledge acquired by plaintiff is hers and hers alone. In contrast, if plaintiff invested her loan in a business and then defaulted, defendant would be provided with ample opportunities to reach such an interest. These factors, when viewed "as a whole," indicate that plaintiff's educational services were primarily for personal purposes. Thus, plaintiff's student loan is "debt" subject to the FDCPA. . . .

Accord, Felty v. Driver Solutions, LLC, 13cv2818, 2013 WL 5835712 (N.D.Ill. Oct. 30, 2013) (commercial truck driving school); McComas v. Financial Collection Agencies, Inc., Civ. A. 2:96-0431, 1997 WL 118417 (S.D.W.Va. March 7, 1997) (tuition for “Professional Office Assistant Program”); Malone v. Academy of Court Reporting, 64 Ohio App.3d 588, 594, 582 N.E.2d 54 (1990) (paralegal school); Matulin v. Academy of Court Reporting, No. 14947, 1992 WL 74210 (Ohio App., April 8, 1992) (paralegal school); Rude v. Nuco Education Corp., No. 25549, 2011 WL 6931516 (Dec. 30, 2011) (nursing school); Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1123-24 (11th Cir. 2004) (law school); Padilla v. Payco General American Credits, Inc., 161 F.Supp.2d 264 (S.D.N.Y. 2001) (law school); Strohbehn v. Access Group Inc., 292 F.Supp.3d 819 (E.D.Wisc. 2017) (law school).

In this regard, the IRS classifies the costs of the “minimum education necessary to qualify for a position or other trade or business” as personal expenses that may never be deducted as a business expense. 26 C.F.R. §1.162-5; Holmes v. C.I.R., 66 T.C.M. (CCH) 516 (T.C. 1993) (“educational expenditures are nondeductible if they are made for education which is part of a program of study which will lead to qualifying the taxpayer for a new trade or business”). Depending on the occupation, this can be anywhere from a certificate issued after a few weeks of study to a Ph.D.

FDCPA claims based on student loan collections have involved such matters as:

1. Misrepresenting that student loans are never dischargeable in bankruptcy (it is difficult, but not impossible, to secure a discharge). Easterling v. Collecto, Inc., 692 F.3d 229 (2d Cir. 2012).

2. Attempting to collect time-barred debts or failing to disclose that the statute of limitations has run on private student loans. Strohbehn v. Access Group Inc., 292 F.Supp.3d 819 (E.D.Wisc. 2017).

3. Adding or threatening to add unauthorized late charges to Perkins loans. Hovermale v. Immediate Credit Recovery, Inc., 15cv5646, 2018 WL 6322614 (D.N.J., Dec. 4, 2018).

4. Misleading statements in complaints filed in state court to collect private student loans. Marquez v. Weinstein, Pinson & Riley, P.S., 836 F.3d 808 (7th Cir. 2016).

5. Improper matters on outside of envelopes containing collection letters. Peter v. GC Services L.P., 310 F.3d 344 (5th Cir. 2002).

6. Deceptive affidavits filed in collection lawsuits. Hoffman v. Transworld Systems, Inc., 18cv1132, 2018 WL 5734641 (W.D.Wash., Nov. 2, 2018).

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