Editor’s Note: The Register’s April 21 editorial “Student borrowers should not be asked to waive their rights” noted court filings over the previous month when Iowa Student Loan filed previously signed admissions of judgment in within the framework of legal proceedings. By signing an admission of judgment, the borrower had waived all rights to participate if Iowa Student Loan initiated legal proceedings against the borrower, including the right to notice. One consequence is that borrowers have been subjected to court judgments that unknowingly freeze their bank accounts or garnish their wages. Four plaintiffs have filed lawsuits against Iowa Student Loan, asking the court to vacate the confessions of judgment they signed.
Recently, the Iowa Student Loan Liquidity Corporation’s use of admissions of judgment made headlines, but we believe the discussion lacked some information and misrepresented our practices as we work directly with our borrowers.
Some of our borrowers are struggling to repay their private student loans. As a nonprofit organization, we take extraordinary measures to try to help our borrowers achieve repayment success. We work with distressed borrowers to allow them to stop making payments for a period of time and adjust payment amounts to ease the repayment burden. Unfortunately, some borrowers still default on their loans. We then offer them generous settlement agreements so that both parties can avoid going to court. Admissions of judgments are included in these settlement agreements so that we can avoid taking legal action against borrowers at the time of default. A confession of judgment is not filed with the court unless the borrower breaches their settlement agreement and refuses, or does not respond to our attempts to contact them. In all circumstances, taking borrowers to court is a last resort, used only when borrowers refuse or do not respond to our attempts to help them.
Admissions of judgment are a serious legal matter and we have gone to great lengths to ensure that our borrowers knew what they were doing. We have always communicated with our borrowers verbally and by letter, advising them to review the document with their attorney. This letter also required borrowers to sign the admission of judgment in front of a notary, emphasizing the importance of the document.
Our critics confuse our practices with those of predatory lenders, and nothing could be further from the truth. Our federal regulators have cited our settlement agreements as an example for other lenders to follow. We used confessions of judgment as part of a generous repayment strategy for defaulting borrowers. Iowa Student Loan stopped including admissions of judgment in negotiated settlements some time ago to avoid the risk of bad publicity, if our practices were misinterpreted.
The Iowa Student Loan Liquidity Corporation shows compassion to our borrowers who are struggling to repay their…
