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Gerald, Esq
Gerald, Esq, Lawyer
Category: Legal
Satisfied Customers: 3914
Experience:  30 years of experience
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I have a student loan that was deferred. I was down to the

Customer Question

I have a student loan that was deferred. I was down to the last paperwork I mailed it but the loan office said they did not get it. I did not mail it certified (my fault but at the time I was really ill and could not get to the post office. When they notified me that I had defaulted on the loan in January 2015 they said I had my only chance that there was nothing I could do except pay it. I barely can get by on the ssi I get and I have no other means of paying it. I am at my ropes end as they have turned it over for collection and the high pressure loan officers call two and 3 times a day. I am alone and have no one to help pay it. background I had been deferred since the 90's because of hardship and then my husband left me. I became ill with sei
Submitted: 1 year ago.
Category: Legal
Expert:  Gerald, Esq replied 1 year ago.


Thank you for using Just Answer. I want to provide you the best service I can. Please feel free to ask any follow up questions you have.

I am an attorney with 30 years of experience, including significant experience in the student loan industry. I hope to provide you information that will help you in resolving your question.

Can you tell me whether this is a federally guaranteed student loan or a private student loan? The process is different for each one.

Once you provide this additional information I can try to provide you the information that you need.

Kind regards,


Customer: replied 1 year ago.
It is a federally funded loan.
Expert:  Gerald, Esq replied 1 year ago.

Excellent. This is good for you.

It would be easier to discuss this by phone. I do not want you to spend additional money unnecessarily;y so if you want to proceed with the posting that is fine. But I am going to send you an additional services offer at the lowest allowed charge. If you accept it you can provide me a phone number to call in the confidential posting area.

If you do not want to do the call just let me know and we can proceed this way.

Kind regards,


Expert:  Gerald, Esq replied 1 year ago.


I am going to be away from tomorrow (Friday) until Monday, and I do not want you delayed in a response.

Your loan is most likely serviced by American Education Services (AES), they also go by Fed Loan Servicing (FLS). They are the largest servicer of student loans. There are other servicers also, but they also use the AES platform.

Once a loan goes into default the servicer is generally not terribly interested in helping you because the lender gets paid on the federal guarantee. However, you are entitled to have your loan "Rehabilitated." A loan is rehabilitated when you bring it up to date by paying the arrearages. The servicer will then set up a new loan payment plan for you.

If you can not afford to rehab the loan, do not worry. You still have remedies. The remedies may seem counter-intuitive, but because you are dealing with the federal government the programs have a few quirks.

Normally, when you default on a loan the lender sues to get a judgment and then garnishes your assets to satisfy the debt. But the federal student loans are not the normal situation. Under the federal programs when you default, they must initiate collection litigation and obtain a judgment. BUT if a judgment is taken against you the maximum that can be taken from your income in a garnishment is 15% of your net disposable income. Your net disposable income is your income, less taxes, less ordinary living expenses, like rent, utilities, car payment, health insurance, etc.

Additionally, when the garnishment order is issued, you are entitled to a hearing before a hearing examiner. The hearing examiners routinely reduce the garnishment to 10% of your net disposable income. So when you get the garnishment notice ask for the hearing. The hearing take place over the phone so you do not have to travel to them.

Also VERY important, if you are on any type of financial assistance (food stamps, welfare, SSI) the hearing examiner will deny the garnishment and set a new hearing in a year to revisit your financial situation.

So the good news is that in the very worse case you will be looking at paying 10% of your income after your normal living expenses are deducted. For example say you receive $2000 per month. Subtract taxes, rent, utilities, health insurance, car payment, (even basic cable), and your net disposable income is $500.00. The maximum garnishment is between $50.00 and $75.00 per month. If you are on assistance the garnishment will be zero.

If you still would like to discuss this I may be available tonight. Otherwise I will respond Monday (Perhaps Sunday night if I get home early).

I hope the information I have provided is useful to you. I want you to be comfortable and satisfied with my attempt to assist you.

Please do not forget to give me a positive rating. It adds nothing to your costs but it helps me greatly. Thank you.

If you are dissatisfied with my response PLEASE let me know before giving me a negative review so that I may try to be of better assistance. Or if you prefer, let me know and I can “Opt Out” and your question can be re-posted without additional cost to you. I will be fair to you and only ask the same from you.

Good luck.

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