Will debt collectors accept a voluntary payment or do they have to garnish wages for defaulted student loans?

Answer 1

In most cases, they'll accept a voluntary payment. Debt collectors buy old debts for pennies on the dollar and then try to collect as much of the original debt as possible. For instance, they may buy an outstanding debt of $5,000 for only $500. Anything they collect over the $500 is profit for them. That's why collectors are often so aggressive and sometimes act illegally. If you do work out an agreeable sum, make sure they issue something in writing that states that it's payment in full for the debt. This will protect you from having them hound you again and it will be proof for the credit bureaus, who will probably report the account incorrectly down the line. In the US, the above answer may be true for private student loans, but not Federally Guaranteed loans. Fed. Guaranteed loans are turned over to federally approved collection agencies that have to follow strict guidelines. The loans are not bought by the collection agencies. Each loan that is "Rehabilitated" or consolidated is paid a fee to the collection agency by the government. Rehabilitated loans are paid a much higher premium to the collection agency than consolidated ones.