Okay, so you just found Coast Professional has your federal student loans and is about to send a notice of garnishment to your job. Don’t worry.
Here’s what you need to know.
Coast Professional is a Collection Agency
The U.S. Department of Education hires private debt collectors to handle the collection of defaulted student loan debt. Coast Professional is one of those debt collectors.
Coast doesn’t own your loan. They haven’t bought it for pennies on the dollar. They’re simply a debt collection agency the Department of Education uses to handle debt collection.
On a separate note.
Since Coast offers professional collection services, they’re subject to the Fair Debt Collection Practices Act which means they can be sued for harassing you with phone calls. So if you believe they’re doing that to you, speak with a law firm that handles FDCPA cases or submit a complaint to the Consumer Financial Protection Bureau, or do both.
How to Stop a Wage Garnishment from Coast Professional
The key to stopping a wage garnishment from Coast Professional comes down to whether they’ve sent notice to your employer or not.
If Coast has already sent the garnishment notice to your employer, the only thing you can do to stop it from happening is filing bankruptcy.
But if Coast hasn’t yet sent notice to your employer, there are 6 options to stop the garnishment:
- Payoff the loan
- Settle the loan for a little less than you owe
- Enter into the loan rehabilitation program
- Consolidate your loan
- Request a financial hardship hearing
- Set up a voluntary repayment agreement
For most people, paying off the loan isn’t an option.
The same is true of settlements since federal student loans don’t settle for pennies on the dollar. (The best you’ll do is around 85% of principal and interest without collection fees.)
And since neither a financial hardship hearing nor a voluntary repayment agreement get your student loan debt out of default, those shouldn’t be your first options.
Setting up a voluntary repayment agreement usually only makes sense for borrowers who have defaulted twice and can’t consolidate their loans. Those borrowers have no options for getting out of default other than paying off the loan. The voluntary repayment agreement will stop the garnishment and get them a more affordable monthly payment amount.
Instead, you want to choose either consolidation or loan rehabilitation.
If you choose loan consolidation, visit studentloans.gov. They’ll handle your consolidation for free.
But if you choose the loan rehabilitation program, you’ll need to contact Coast Professional.
Unless you’ve rehabilitated your loans before, Coast should offer you a chance to enter into the loan rehabilitation program.
That program requires you make 9 monthly payments over a 10 month period.
You can stop a garnishment before it starts by entering into the loan rehabilitation program.
But if Coast has already sent notice to your employer, you’ll have to make 5 monthly payments under the rehab program before the garnishment will stop.
Loan Rehabilitation Income and Expense Form
When you first speak with Coast about the loan rehabilitation program, they’ll ask for the adjusted gross income from your most recent tax return filed in the last 2 years. The rep. will use your AGI to calculate your monthly payment amount under the rehab program.
The rep. should ask if you can afford that payment. In my opinion, if the payment is more than $5, you likely can’t afford the payment.
Your payments under the rehab program first goes towards collection fees, then interest, and then principal. For most borrowers, their monthly payment based on their AGI will barely cover collection fees and the daily interest. If that’s true, your money is going towards collection fees and not towards paying down your higher education debt. In that case, you’re incentivized to get the lowest payment possible. That way, you won’t be wasting your money by paying collection fees.
Under the loan rehabilitation program, the lowest payment possible is $5. To get that payment amount, you’ll need to complete the Loan Rehabilitation Income and Expense Form.
Coast will compare your income versus your expenses to calculate a reasonable and affordable monthly payment, which, hopefully, is $5.
Rehabilitation Agreement Letter
After you set up the monthly payments, make sure Coast sends you the Loan Rehabilitation Agreement Letter and that you sign it and return it to them.
Until you do so, you’re not fully enrolled in the program.
Coast Professional Phone Number & Contact Information
Department of Education DivisionCoast Professional Inc.PO Box 2899West Monroe Louisiana 71294800-964-0881 office866-681-1069 faxcoastprofessional.com
#1 What Happens When You’re in Default and Pay Coast Professional
The payments you make to Coast Professional for a defaulted student loan are first applied to collection fees, then to interest, then to principal.
#2 Will Coast Professional Settle Student Loans
Yes. Coast Professional will settle federal student loan debt. But the settlement terms won’t be great. You’ll typically pay around 85-90% of the balance owed less collection fees.
#3 IRS Offset
If Coast has your defaulted federal student loans and your tax refund was offset, contact Coast and ask them the necessary steps to get your refund back as a financial hardship.