By Seth Frotman and Tamara Cesaretti | January 15, 2021
Despite the devastating public health and economic fallout caused by the COVID-19 pandemic, student loan companies continue to haul borrowers into courtrooms across the country. Every day, we see more of these unconscionable lawsuits, including cases brought by companies that once publicly pledged to halt these practices in the first days of the pandemic. Of even greater concern, these companies have a long history of illegal and deceptive tactics, often taking advantage of the court system to force borrowers to repay debts that these companies cannot prove borrowers legally owe.
To shine a spotlight on these abuses, the SBPC joined with the Maryland Consumer Rights Coalition and SEIU Local 500 to release a new report updating our 2020 analysis of Maryland student loan debt collection lawsuits filed in the past six years. Today’s report includes new data on cases pursued by student loan companies since COVID-19 struck in March 2020.
What we found demands immediate action in Annapolis.
Navient, the largest private creditor in the student loan market, has obtained default judgments and wage garnishment orders against Maryland borrowers, despite its public pledge to halt collections litigation in the wake of the pandemic.
Similarly, in Maryland alone more than 60 cases have been filed since early July by another large creditor in the student loan market, the National Collegiate Student Loan Trusts (NCSLT). Across all Maryland counties, NCSLT has filed over 1,330 cases against Maryland borrowers in the past six years.
This avalanche of litigation weighs most heavily on communities of color. For example, more than 1-in-4 of NCSLT debt collection lawsuits were filed in Prince George’s County—Maryland’s largest majority-Black county.
The breadth of these abuses, particularly in the midst of a pandemic and the resulting economic fallout, illustrate how the student loan industry continues to abuse Maryland’s judicial system to collect legally dubious debts from vulnerable borrowers. Fortunately, legislation by Maryland Delegate Lesley Lopez would ensure critical protections for Maryland borrowers against the predatory practices of these companies. Last year, labor, consumer, and veteran groups fought for this legislation, which had advanced in the Maryland legislature until COVID shut down the session.
These abuses aren’t unique to Maryland. For example, NCSLT filed nearly 100,000 debt collection lawsuits nationwide over the past decade, dragging borrowers to court from coast to coast. Fortunately, state lawmakers across the country are working to respond.
Maryland can join these states to address this mounting crisis by protecting the most vulnerable student loan borrowers during the pandemic and beyond. Now is the time to act.
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Seth Frotman is the Executive Director of the Student Borrower Protection Center. He previously served as Assistant Director and Student Loan Ombudsman at the Consumer Financial Protection Bureau, where he led a government-wide effort to crack down on abuses by the student loan industry and protect borrowers.
Tamara Cesaretti is a Counsel at the Student Borrower Protection Center. Prior to joining the SBPC, Tamara was a civil rights policy advocate for both educational opportunities and economic justice at the Lawyers’ Committee for Civil Rights Under Law.