Help! Defaulted Student Loans (and other debt fun)

[PleaseBlitz]

56 minutes ago, China said:

 

“I saw the parallels and it really freaked me out because I realized that this cycle was only going to repeat,” said Allison Pyburn, an asset-backed securitization expert and former editor-in-chief at Debtwire ABS. She continued, “I think one of the key ways to uncover the similarities between student loans and mortgages is to look at the affordability issue.”

 

This doesn’t make any sense. So much so that I looked this person up on LinkedIn because I suspected she is a fraud. I’m pretty sure she is. She’s moved on from her Debtwire thing, and now describes herself as, “Allison Pyburn is a writer, speaker and consultant. She is the founder of the consultancy Victoria Le Aelius, where the focus of any energetic system -- whether individual or collective -- is stewardship to one common value: Life. When we view all of the Earth's vast resources as regenerative by nature, we empower ourselves to consider how we might best live in harmony, with her.”

 

https://letsrethinkthis.com/article-index/item/allison-pyburn.html

 

I have no idea what that means, but this person can safely be ignored in terms of economic prognostication. 

 

 

56 minutes ago, China said:

 

The national cohort default rate for student loans has plummeted, according to the U.S. Department of Education, boosted by the payment pause during the Covid-19 pandemic. But the Consumer Financial Protection Bureau estimates that one in five student loan borrowers have risk factors that could cause them to struggle when federal student loan payments resume in October.

 

“I think what’s scary about it and what was scary about 2008 was the tremendous uncertainty that everyone had about what valuation even was,” said Pyburn.

Note that 90+% of student debt is federally guaranteed, whereas in 2008 the debt was secured by homes which rapidly declined in value. 

 

1 hour ago, China said:

Increased credit enhancement, following the devastation of the 2008 recession, was put forth to protect against this exact scenario.

Credit enhancement in this context means mortgage insurance, increases to which was one of like 50 structural changes to the mortgage market that happened in 2008-2013. This, combined with the reliance on Ms. Pyburn, makes me think the author doesn’t know what they are talking about either. 

[Ball Security]

Yeah, but that was the first time I’ve seen the acronym SLABS. So much better than MBS which also serves as the Crown Prince.

[China]

Sinema got $27K from student loan industry after helping GOP kill Biden’s debt forgiveness plan

 

Earlier this year, Sen. Kyrsten Sinema (I-Arizona) voted with Senate Republicans for legislation to kill President Joe Biden's student debt forgiveness proposal. In the months following that vote, she was a major recipient of the student loan industry's largesse.

 

The bill itself, H.J. Res 45, would have blocked Biden's plan to forgive up to $20,000 in federal student loan debt per borrower, though the president promised to veto it if it reached his desk, and the Supreme Court ultimately struck down the proposal at the end of its 2023 session. The bill narrowly passed the Senate in June, with 52 votes in favor and 46 in opposition. Sinema joined forces with all Senate Republicans to give the bill the narrow majority it needed for passage. Sens. Mark Kelly (D-Arizona) and Jon Tester (D-Montana) also voted with the GOP to pass the measure.

 

According to the Phoenix New Times, Sinema proceeded to rake in thousands of dollars in contributions from various donors connected to student loan servicers, for-profit colleges, banks and debt collectors after her vote.

 

Click on the link for the full article

[EmirOfShmo]

My son has student loans with Mohela. I haven't been involved with the entire process. So I'm pretty much in the dark as to what has/hasn't occurred. I do know the loans have been ****ed up since his repayments started ~2014. I don't know the details but he was late getting his payments started due to miscommunication (his words) from Mohela. At the time he started the payments, he had already bought a house and had decent credit. But his credit was destroyed by the non-payments that Mohela filed hit his credit score. Since then (and prior to Covid), he's made timely payments & kind of fixed his credit score (this is minor issue compared to the loan debacle). With the re-instatement of payments post-Covid his monthly payment has tripled. I looked at his Mohela account & it's as if he's never made 1 payment. There's no history of payments and his balance is essentially the beginning loan balance. In addition, it shows the consolidated loan has 284 payments starting 11/2/23 that need to be made to pay it off. He has almost 10 years of County work. I don't know all of the details about the forgiveness, especially with the Covid payment suspension, but he should be close to meeting the requirements. My son told me the criteria is you have to make 120 payments with 10 years gov't service to get the loans wiped out but I'm not sure this is 100% accurate since payments were suspend for Covid.

 

I read that Mohela is being sued by borrowers for mismanagement of loans but I'm unsure how/if that impacts him. 

https://www.businessinsider.com/student-loan-borrowers-sue-mohela-delay-public-service-debt-forgiveness-2023-12

 

Does anyone know if there is an independent agency to assess his Mohela loans? Any other advice to figure out WTF is going on with his loans?

 

[The Evil Genius]

Did he apply for the PSLF program? My previous understanding was that it had to be 120 consecutive payments but I'm not sure if Covid changed that. 

[just654]

5 hours ago, EmirOfShmo said:

My son has student loans with Mohela. I haven't been involved with the entire process. So I'm pretty much in the dark as to what has/hasn't occurred. I do know the loans have been ****ed up since his repayments started ~2014. I don't know the details but he was late getting his payments started due to miscommunication (his words) from Mohela. At the time he started the payments, he had already bought a house and had decent credit. But his credit was destroyed by the non-payments that Mohela filed hit his credit score. Since then (and prior to Covid), he's made timely payments & kind of fixed his credit score (this is minor issue compared to the loan debacle). With the re-instatement of payments post-Covid his monthly payment has tripled. I looked at his Mohela account & it's as if he's never made 1 payment. There's no history of payments and his balance is essentially the beginning loan balance. In addition, it shows the consolidated loan has 284 payments starting 11/2/23 that need to be made to pay it off. He has almost 10 years of County work. I don't know all of the details about the forgiveness, especially with the Covid payment suspension, but he should be close to meeting the requirements. My son told me the criteria is you have to make 120 payments with 10 years gov't service to get the loans wiped out but I'm not sure this is 100% accurate since payments were suspend for Covid.

 

I read that Mohela is being sued by borrowers for mismanagement of loans but I'm unsure how/if that impacts him. 

https://www.businessinsider.com/student-loan-borrowers-sue-mohela-delay-public-service-debt-forgiveness-2023-12

 

Does anyone know if there is an independent agency to assess his Mohela loans? Any other advice to figure out WTF is going on with his loans?

 

 

He had to have applied for PLSF. I am going through this with my wife right now and the counts just came back at the start of December. She hit the 120 payments.

 

Did he recently consolidate his loans? If not I would strongly suggest he does before 12/31. The one time payment adjustment (IDR) will count for all his loans. And if he consolidates it takes the latest date. Like if you have undergrad loans and grad school loans. I just did this for my wife 12K forgiven and 90% was her grad school loans. But since we consolidated studentloans.gov sees it as one loan. This all changes back to normal after 12/31. 

 

Once you consolidate payment trackers go back to zero, it took about 5 months to get them back. if he thinks he is at 120 payments. I would call Mohela, call when they first open. Start the call about 3 mins before they open, they have a lot of messages and automated stuff u have to get through. 

 

For the payment pause all those non payments count towards the 120 payments. In fact if he hit 120 during the pause and paid more he can get a refund.  

5 hours ago, The Evil Genius said:

Did he apply for the PSLF program? My previous understanding was that it had to be 120 consecutive payments but I'm not sure if Covid changed that. 

 

The rules changed during the pause, they are counting all payments now. But you must apply before 12/31. I have been living this battle for 2 years now. But I won it, wife is getting 12K forgiven. I haven't paid her loans since April 2020.  

[mattsb84]

On 8/31/2023 at 9:49 PM, PleaseBlitz said:

 

This doesn’t make any sense. So much so that I looked this person up on LinkedIn because I suspected she is a fraud. I’m pretty sure she is. She’s moved on from her Debtwire thing, and now describes herself as, “Allison Pyburn is a writer, speaker and consultant. She is the founder of the consultancy Victoria Le Aelius, where the focus of any energetic system -- whether individual or collective -- is stewardship to one common value: Life. When we view all of the Earth's vast resources as regenerative by nature, we empower ourselves to consider how we might best live in harmony, with her.”

 

https://letsrethinkthis.com/article-index/item/allison-pyburn.html

 

I have no idea what that means, but this person can safely be ignored in terms of economic prognostication. 

 

 

Note that 90+% of student debt is federally guaranteed, whereas in 2008 the debt was secured by homes which rapidly declined in value. 

 

Credit enhancement in this context means mortgage insurance, increases to which was one of like 50 structural changes to the mortgage market that happened in 2008-2013. This, combined with the reliance on Ms. Pyburn, makes me think the author doesn’t know what they are talking about either. 

 

Old quote - but thought id add two cents as this was bumped;

 

She's a real person - i used to work with her when she worked for Debtwire (i worked for the parent company). But I agree with your asessment to ignore her advice wholeheartedly =).

[EmirOfShmo]

43 minutes ago, just654 said:

 

He had to have applied for PLSF. I am going through this with my wife right now and the counts just came back at the start of December. She hit the 120 payments.

 

Did he recently consolidate his loans? If not I would strongly suggest he does before 12/31. The one time payment adjustment (IDR) will count for all his loans. And if he consolidates it takes the latest date. Like if you have undergrad loans and grad school loans. I just did this for my wife 12K forgiven and 90% was her grad school loans. But since we consolidated studentloans.gov sees it as one loan. This all changes back to normal after 12/31. 

 

Once you consolidate payment trackers go back to zero, it took about 5 months to get them back. if he thinks he is at 120 payments. I would call Mohela, call when they first open. Start the call about 3 mins before they open, they have a lot of messages and automated stuff u have to get through. 

 

For the payment pause all those non payments count towards the 120 payments. In fact if he hit 120 during the pause and paid more he can get a refund.  

 

The rules changed during the pause, they are counting all payments now. But you must apply before 12/31. I have been living this battle for 2 years now. But I won it, wife is getting 12K forgiven. I haven't paid her loans since April 2020.  

 

I really appreciate the info. Yes, I saw on his account that he applied for PLSF and consolidated the loans in September 2023.

The bolded part was something I wasn't aware of and I know my son doesn't know. But it explains how my brothers son-in-law got his debt relieved about a month ago after the SIL 10 years in the gov't.  

Thanks again for the info...

[PleaseBlitz]

6 hours ago, EmirOfShmo said:

My son has student loans with Mohela. I haven't been involved with the entire process. So I'm pretty much in the dark as to what has/hasn't occurred. I do know the loans have been ****ed up since his repayments started ~2014. I don't know the details but he was late getting his payments started due to miscommunication (his words) from Mohela. At the time he started the payments, he had already bought a house and had decent credit. But his credit was destroyed by the non-payments that Mohela filed hit his credit score. Since then (and prior to Covid), he's made timely payments & kind of fixed his credit score (this is minor issue compared to the loan debacle). With the re-instatement of payments post-Covid his monthly payment has tripled. I looked at his Mohela account & it's as if he's never made 1 payment. There's no history of payments and his balance is essentially the beginning loan balance. In addition, it shows the consolidated loan has 284 payments starting 11/2/23 that need to be made to pay it off. He has almost 10 years of County work. I don't know all of the details about the forgiveness, especially with the Covid payment suspension, but he should be close to meeting the requirements. My son told me the criteria is you have to make 120 payments with 10 years gov't service to get the loans wiped out but I'm not sure this is 100% accurate since payments were suspend for Covid.

 

I read that Mohela is being sued by borrowers for mismanagement of loans but I'm unsure how/if that impacts him. 

https://www.businessinsider.com/student-loan-borrowers-sue-mohela-delay-public-service-debt-forgiveness-2023-12

 

Does anyone know if there is an independent agency to assess his Mohela loans? Any other advice to figure out WTF is going on with his loans?

 

 

***Not legal advice***

 

Mohela is the servicer for Sofi (which is the private student lending company that held my student loan for roughly 6 years), but they also service all kinds of government loans as well.  My experience with Mohela was excellent, but I also made all of my payments on time, via automatic deductions, and otherwise made big prepayments, so there was nothing for Mohela to **** up.  

 

An extremely important fact that is missing from your description is what type of loan your son has.  If they are private, and he is on a path towards student loan forgiveness due to working in the public interest for 10 years, he never should have refinanced out of the public system.  If they are federal, then there is some additional process he has to go through for the forgiveness to kick in.  I'm not exactly sure how that works since I never had the slightly intention to work in the public interest.   Your son (or you) needs to do A LOT more research on how the process works and he shouldn't just assume it's going to work out.  He needs to basically document (1) every payment he's ever made and (2) the specific government program that entitles him to loan forgiveness and what the requirements are for it to kick in. Saying "you have to make 120 payments with 10 years gov't service to get the loans wiped out" is nowhere close to the amount of diligence that needs to be done here.

 

As far as the complaints against student lenders go, that's just a fact of how student lending works (poorly).  Prior to Biden somewhat fixing the system, there were like less than 10 major student loan servicers, and more than one got sued into oblivion and had to rebrand (e.g., Sallie Mae had to spin off its servicing operation, now called Navient, after it got sued like a kazillion times). 

 

If Mohela gives you the runaround, the place to lodge a complaint is with the CFPB, here:  https://www.consumerfinance.gov/complaint/

 

 

[EmirOfShmo]

58 minutes ago, PleaseBlitz said:

 

***Not legal advice***

 

Mohela is the servicer for Sofi (which is the private student lending company that held my student loan for roughly 6 years), but they also service all kinds of government loans as well.  My experience with Mohela was excellent, but I also made all of my payments on time, via automatic deductions, and otherwise made big prepayments, so there was nothing for Mohela to **** up.  

 

An extremely important fact that is missing from your description is what type of loan your son has.  If they are private, and he is on a path towards student loan forgiveness due to working in the public interest for 10 years, he never should have refinanced out of the public system.  If they are federal, then there is some additional process he has to go through for the forgiveness to kick in.  I'm not exactly sure how that works since I never had the slightly intention to work in the public interest.   Your son (or you) needs to do A LOT more research on how the process works and he shouldn't just assume it's going to work out.  He needs to basically document (1) every payment he's ever made and (2) the specific government program that entitles him to loan forgiveness and what the requirements are for it to kick in. Saying "you have to make 120 payments with 10 years gov't service to get the loans wiped out" is nowhere close to the amount of diligence that needs to be done here.

 

As far as the complaints against student lenders go, that's just a fact of how student lending works (poorly).  Prior to Biden somewhat fixing the system, there were like less than 10 major student loan servicers, and more than one got sued into oblivion and had to rebrand (e.g., Sallie Mae had to spin off its servicing operation, now called Navient, after it got sued like a kazillion times). 

 

If Mohela gives you the runaround, the place to lodge a complaint is with the CFPB, here:  https://www.consumerfinance.gov/complaint/

 

 

Thanks for the info. He has a FFEL loan. I already told him to expect to spend a lot of time tracking down the process to get the loans forgiven.

I really appreciate your help!

[PleaseBlitz]

https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-identifies-challenges-faced-by-borrowers-in-resumption-of-student-loan-payments/

 

CFPB Report Identifies Challenges Faced by Borrowers in Resumption of Student Loan Payments

 

Quote

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) published an issue spotlight today on the CFPB’s oversight of student loan servicing practices in the early months of the resumption of federal student loan repayments after over three years of a payment pause due to the COVID-19 emergency. Borrowers are encountering long hold times when trying to reach their student loan servicer, experiencing significant delays in application processing times for income-driven repayment plans, and receiving inaccurate billing statements and disclosures.

 

“The resumption of student loan payments means that borrowers are making billions of dollars of payments each month,” said CFPB Director Rohit Chopra. “If student loan companies are cutting corners or sidestepping the law, this can pose serious risks to individuals and the economy.”

 

The CFPB has been closely monitoring student borrowers’ experiences during the return to repayment, using consumer complaints to identify emerging problems and using its supervisory authority to examine loan servicer conduct and performance. The issue spotlight highlights a number of key concerns including:

 

Long hold times and abandoned calls: The report finds that borrowers are frequently forced to wait on hold for more than an hour when calling their servicer, and many give up without ever receiving assistance. Many servicers were able to boost their financial performance by dramatically reducing staffing during the pandemic. However, servicers have not met the foreseeable borrower demand for help with their loans. Average call wait times to speak to a live representative have risen from 12 minutes in August 2023 to over 70 minutes in October 2023. As a result, roughly half of all calls were abandoned in October 2023, more than double August 2023’s rate of 17%. This is leaving borrowers unable to fix errors, get answers to questions, or enroll in an affordable repayment plan or cancellation plan.
Significant delays in processing income-driven repayment plan applications: Millions of income-driven repayment plan applications were submitted between August and October 2023. As of late October, servicers reported more than 1.25 million pending income-driven repayment plan applications – with more than 450,000 of those applications pending for more than 30 days with no resolution. Processing times vary across servicers, with some servicers taking five times longer than others to process applications. These delays put borrowers at risk for making significantly higher payments than they can afford.
Inaccurate and untimely billing statements: Borrowers are receiving faulty and confusing bills from servicers. Errors include listing premature due dates before the end of the payment pause, inflating monthly payment amounts due to the servicer using outdated poverty guidelines, or using the incorrect income when calculating a borrower’s new income-driven repayment plan payment. These mistakes can cause significant borrower confusion, and can further strain the servicers’ resources by forcing borrowers to contact their servicer to resolve the errors.

 

[PleaseBlitz]

And to follow up on the bad report card.

 

https://www.ed.gov/news/press-releases/biden-harris-administration-takes-additional-action-hold-student-loan-servicers-accountable-failing-meet-contractual-obligations

 

Quote

The Biden-Harris Administration today announced it is withholding payments to three student loan servicers as part of the U.S. Department of Education’s (Department) continued efforts to strengthen protections for student loan borrowers and hold servicers accountable. The Department has found that Aidvantage, EdFinancial, and Nelnet all failed to meet contractual obligations to send timely billing statements to a combined total of 758,000 borrowers for the first month of repayment. As a result of identifying these errors, the Department is withholding payment of $2 million from Aidvantage, $161,000 from EdFinancial, and $13,000 from Nelnet - amounts based upon the number of borrowers impacted by these errors.

 

“Today’s actions make clear that the Biden-Harris Administration will not give student loan servicers a free pass for poor performance and missteps that jeopardize borrowers,” said U.S. Secretary of Education Miguel Cardona. “As millions of Americans return to repayment, the Department of Education will continue to engage in aggressive oversight of student loan servicers and put the interests of borrowers first. When unacceptable errors are uncovered, servicers should expect to be held accountable and borrowers should count on this administration to hold them harmless.”

 

To remedy the impact of these errors on borrowers, the Department directed each servicer to place affected borrowers into administrative forbearance until the issues were resolved. While their loans are in administrative forbearance, borrowers will not owe payments and any accrued interest will be adjusted to zero. Additionally, any months that borrowers spend in administrative forbearance will count as progress toward Public Service Loan Forgiveness or income-driven repayment forgiveness. The Department’s action will ensure that borrowers are not harmed by these servicer errors and that servicers are held accountable for their actions.

 

[China]

 

[The Evil Genius]

 

Quote

Starting next week, the White House will also email about 380,000 borrowers to inform them that they are on track to have student debt canceled within two years.

 

[China]

Missouri AG Bailey files lawsuit to block Biden’s latest student loan forgiveness plan

 

Missouri Attorney General Andrew Bailey on Tuesday filed a lawsuit to block President Joe Biden’s latest attempt to provide student loan debt relief for more than 30 million Americans.

 

Bailey, a Republican, is leading the lawsuit, which was filed alongside six other Republican attorneys general. The suit seeks to challenge the plan, which Biden has introduced as a series of programs after the U.S. Supreme Court struck down an earlier attempt to cancel student loans that would have offered broader relief.

 

The lawsuit filed in U.S. District Court makes similar arguments to a lawsuit filed last month by Kansas Republican Attorney General Kris Kobach and alleges that the Biden administration is overstepping its authority in attempting to forgive student loan debt. It also takes issue with the cost of the plan and alleges that it would be more expensive than the administration’s earlier attempt.

 

“With the stroke of his pen, Joe Biden is attempting to saddle working Missourians with a half trillion dollars in college debt,” Bailey said in a statement on Tuesday.

 

The Republican attorney general argued that Biden lacks the authority to cancel student loan debt without permission from Congress.

 

Click on the link for the full article