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Student Debt “Slavery”: A Serious Consumer Protection Issue


Huffington Post recently did a two-part series on the second highest consumer debt category (next to mortgage debt): student debt; graduates leaving their education with massive debts on their backs.

Unfortunately, student debt isn’t just a consumer debt issue, but a consumer fraud issue as well. For example, in 2017, the Consumer Financial Protection Bureau sued Navient, alleging that the company had systematically and illegally failed borrowers at every stage of the student loan repayment process.

Student Loan Debt Collection

Student loan debt—unlike other forms of debt—cannot be discharged via bankruptcy. Rather, with exorbitantly high loan rates, these debts tend to follow graduates throughout their lives, oftentimes compromising their futures. And yet, the government spends a reported $38 for every $1 it recovers from defaulted debt, with $37 going to debt collectors.

Student loans are now facing the same consumer fraud and misrepresentation issues that many mortgage loans do; packaged into financial products and sold as asset-backed securities. Similar to mortgage-backed securities, banks are free to trade, sell, or bet on these securities. This has led to some ethically-questionable incentives for loan servicing—another issue that occurred with mortgages.  Many student loan borrowers have reported massive, widespread mishandling of accounts by the student loan companies, unexplainable and likely illegal fees, and severe deception; the kind that haunted homeowners during the foreclosure crisis. Litigation is regularly filed over borrowers unable to obtain basic information about their loans and accounts, and those pushed into default by mysterious fees.

Federal Changes Could Make Things Worse

Unfortunately, newly proposed changes at the federal level do not appear to be making things any easier. Some of these changes include wiping out particular income-based repayment plan programs, ending the program designed to help students who were ripped off by consumer fraud diploma programs, implementing harsher terms for graduate student loans, and strengthening the recycling of defaulted loans into new, larger loans, which make it more difficult for borrowers to pay the principal instead of the interest.

What Can Students Do?

Given that the government isn’t moving in the direction of relieving these debt burdens, it is crucial that students and other borrowers become familiar with their rights. For one, you can get your loans completely discharged under the Borrower’s Defense to Repayment program if you can prove that they were based on consumer fraud or deception. Even without the program, you can bring a class action lawsuit for damages against any offending institutions, as fraud remains a viable, legal argument against contracts like these. 

Reach Out to Us Today for Help

The Florida commercial litigation and consumer fraud attorneys of Lavalle, Brown & Ronan, P.A. have a combined 130 years of experience working in consumer fraud protection in Boca Raton and surrounding areas. If you have been the victim of a debt collection and/or consumer fraud issue, contact us for a free legal consultation.

For more information and in depth analysis, please contact Attorney Ken Ronan at and Case Manager Richard Bagdasarian at


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