Co-Opting California Courts: How Private Creditors Have Turned the Judiciary Into a Predatory Student Debt Collection Machine

Abstract

In a report, Claire Johnson Raba, a SBPC fellow and clinical teaching fellow at the University of California Irvine School of Law’s Consumer Law Clinic, shows the effect of predatory private student loan collection practices on borrowers in California. With creditors dragging borrowers into court for debts they often do not owe and lacking the documents necessary to back up their claims, the report lays out the harmful long-term impacts to borrowers’ credit and finances.

With over 12,500 California borrowers having faced private student loan debt collection lawsuits over the past 13 years from large, out-of-state creditors including the National Collegiate Student Loan Trusts, lawmakers in the state are moving forward legislation that would protect borrowers from these harmful practices.

Keywords: student loan, student debt, private loan, predatory lending, lawsuit

JEL Classification: I22, I23, I24, I28