Help! Defaulted Student Loans (and other debt fun)

[TheGreatBuzz]

I think if we are going to cap interest and costs for higher level degrees (Masters and above), then people who took advantage of that service should pay an extra tax once their income crosses a high threshold (maybe $500k/yr).  That extra tax would then go to help offset the costs of lower level degree.  The tax would not be meant to be some sort of penalty but a "now that you have 'made it' with our assistance, it is your obligation to help others." 

Edited January 6, 2021 by TheGreatBuzz
stupid auto-correct

[PleaseBlitz]

7 hours ago, TheGreatBuzz said:

I think if we are going to cap interest and costs for higher level degrees (Masters and above), then people who took advantage of that service should pay an extra tax once their income crosses a high threshold (maybe $500k/yr).  That extra tax would then go to help offset the costs of lower level degree.  The tax would not be meant to be some sort of penalty but a "now that you have 'made it' with our assistance, it is your obligation to help others." 

I mean, just raise taxes generally on those folks.  

[China]

Schumer, Warren introduce bill calling on Biden to wipe out student loan debt

 

A group of Democratic lawmakers led by Senate Majority Leader Charles Schumer (N.Y.) and Sen. Elizabeth Warren (Mass.) reintroduced a measure Thursday calling on President Biden to forgive up to $50,000 in federally held student debt per borrower.

 

The resolution from Schumer, Warren and Democratic Reps. Ayanna Pressley (Mass.), Ilhan Omar (Minn.), Alma Adams (N.C.) and Mondaire Jones (N.Y.) is not legally binding, but would serve as a formal congressional endorsement of a popular but polarizing progressive proposal. A similar resolution was introduced in the previous Congress.

 

“We are not going to let up until we accomplish it, until $50,000 of debt is forgiven for every student in the country,” Schumer said during a Thursday press conference. “Let’s get it done.”

Biden has faced growing pressure from progressives and borrower advocates to unilaterally wipe out a massive portion of the $1.6 trillion in student loan debt held by the federal government, owed by more than 43 million people. 

 

White House press secretary Jen Psaki reiterated Biden's past support for $10,000 of student debt relief per borrower through legislation, but cast doubt on whether he would take executive action to do so if Congress doesn't send him a bill.

 

Click on the link for the full article

[China]

Only 32 Borrowers Have Ever Qualified for Income-Driven Repayment

 

For more than 25 years, student loan borrowers have had the option to base their monthly payments on their income. But throughout the entire history of the program, only 32 borrowers have ever qualified for full forgiveness from the federal income-driven loan repayment program, according to a policy brief released Monday by the National Consumer Law Center.

 

Depending on the plan borrowers choose, the remaining balance on loans is supposed to be forgiven after 20 to 25 years, the study said. “If the program worked as intended, more than 2 million borrowers would have had their debt cancelled by now,” the study said.

 

The report blamed “chronic mismanagement” by the Education Department, as well as loan servicers not steering borrowers to IDR plans, for the program’s failure.

 

“The fact that only 32 borrowers, out of the millions paying for 20 or more years, have received cancellation through the programs created to ensure an affordable pathway out of debt is proof that those programs have failed and are likely exacerbating racial and gender disparities in the student loan portfolio,” said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance project.

[China]

Cardona scraps DeVos policy, will fully cancel debt of many students defrauded by colleges

 

About 72,000 people will have their federal loans fully canceled after Education Secretary Miguel Cardona on Thursday scrapped a plan to give partial debt relief to students defrauded by their colleges, ending a controversial policy instituted by his predecessor Betsy DeVos.

 

The move — Cardona’s first major higher education announcement since being confirmed — amounts to roughly $1 billion in debt relief. But it only addresses a subset of the nearly 200,000 people who have filed claims in the last six years under a statute known as “borrower defense to repayment.”

 

“Borrowers deserve a simplified and fair path to relief when they have been harmed by their institution’s misconduct,” Cardona said in a statement. “A close review of these claims and the associated evidence showed these borrowers have been harmed and we will grant them a fresh start from their debt.”

 

Students are entitled to a discharge of their debt when their college uses illegal and deceptive tactics to persuade them to borrow, but the Trump administration tried to limit that relief.

DeVos created a methodology for processing claims that compared median earnings of graduates who have made debt relief claims with those of graduates from comparable programs. The bigger the difference, the more relief an applicant will receive.

 

Critics of the policy said graduate earnings were a faulty measure as many applicants never completed their degree and the formula created impossible standards for many to get full relief. The policy was a stark contrast from the Obama administration’s practice of granting full cancellation when it determined a college committed fraud.

 

Click on the link for the full article

[China]

Sanders, Jayapal introduce bill to make college tuition-free for many Americans

 

Sen. Bernie Sanders (I-Vt.) and Rep. Pramila Jayapal (D-Wash.) introduced legislation on Wednesday to make college tuition free for many Americans, a policy that would be paid for by a tax on Wall Street. 

 

The bill would make community college tuition-free for everyone and four-year public colleges tuition-free and debt-free for students from families making up to $125,000 per year. 

 

"In the 21st century, a free public education system that goes from kindergarten through high school is no longer good enough. The time is long overdue to make public colleges and universities tuition-free and debt-free for working families," Sanders said in a statement.

 

Click on the link for the full article

[BatteredFanSyndrome]

The arbitrary figures is where I resist getting behind the whole 'free education' platform by Bernie and the gang.  

 

Imagine being a family making $126k in Virginia vs. a family in Kansas making $124k.  The Kansas family gets their kids a free ride and the VA family gets a boatload of student debt.

 

Either do it or don't, but miss me with all this if you make X - you pay a lot, and if you are under X - it's free.  I appreciate the focus on making education more accessible and affordable, just not the way it's been conveyed.

Edited April 21, 2021 by BatteredFanSyndrome

[TheGreatBuzz]

25 minutes ago, BatteredFanSyndrome said:

The arbitrary figures is where I resist getting behind the whole 'free education' platform by Bernie and the gang.  

 

Imagine being a family making $126k in Virginia vs. a family in Kansas making $124k.  The Kansas family gets their kids a free ride and the VA family gets a boatload of student debt.

 

Either do it or don't, but miss me with all this if you make X - you pay a lot, and if you are under X - it's free.  I appreciate the focus on making education more accessible and affordable, just not the way it's been conveyed.

 

I like there being cutoffs but I agree with what you're saying regarding one number for the whole country.  I think there needs to be a lot of things that should be tied to cost of living in an area.  They already have a list that is used for allowances paid to military members based on zip code.  Use that same list and then make benefits a cutoff at a zipcode-dependent number.

[BatteredFanSyndrome]

20 minutes ago, TheGreatBuzz said:

 

I like there being cutoffs but I agree with what you're saying regarding one number for the whole country.  I think there needs to be a lot of things that should be tied to cost of living in an area.  They already have a list that is used for allowances paid to military members based on zip code.  Use that same list and then make benefits a cutoff at a zipcode-dependent number.

I also think it should be stepped down, not just you get all of it if you are under this, you pay all of it if you're over that.  

[TheGreatBuzz]

1 minute ago, BatteredFanSyndrome said:

I also think it should be stepped down, not just you get all of it if you are under this, you pay all of it if you're over that.  

 

I'd agree with that.

[Cooked Crack]

 

 

[PleaseBlitz]

That is extraordinarily helpful to millions of people  

[China]

Education Department will cancel student debt for more than 320,000 borrowers

 

The U.S. Department of Education announced Thursday it will cancel $5.8 billion in student debt for more than 320,000 borrowers.

 

The debt forgiveness, which will go to borrowers with a total and permanent disability, will be automatically granted using data already available to the Social Security Administration. People should start seeing the relief in September.

 

The Education Department said it also plans to stop asking these borrowers to continue sharing earnings data after they receive the relief.

 

Click on the link for the full article

[Renegade7]

 

[China]

4 things to know about possible changes to your student loan debt

 

Student borrowers, take note. In testimony before a House subcommittee, the head of the office of Federal Student Aid told lawmakers that his agency is preparing for federal student loan repayments to resume early next year.

 

Richard Cordray, FSA's chief operating officer, oversees the federal student loans of roughly 43 million borrowers. In a hearing Wednesday that ran just over three hours, he shared new details about those plans to resume repayment, his agency's handling of the Public Service Loan Forgiveness program, the possibility of broader loan forgiveness — and whether he would hold executives liable for the collapse of colleges that defrauded students.

 

Here's a rundown of what Cordray said, what he tried not to say and why it matters.

 

Because of the coronavirus pandemic, Congress and the Education Department paused interest and repayment requirements for borrowers with federal student loans back in March 2020. Now, a year and a half later, Cordray told lawmakers those payments will resume as early as Jan. 31, 2022.

 

"We know this will not be an easy transition," Cordray told lawmakers in his opening remarks. "This is a defining moment for FSA, and it's crucially important for millions of Americans that we succeed."

 

The core of FSA's plan to restart loan payments, Cordray said, "is clear communication, quality customer service and targeted support for those having trouble making their payments."

One of the biggest challenges that Cordray and FSA face is accommodating borrowers who have lost work during the pandemic and will need help adjusting their payments. 

 

Perhaps the biggest question Cordray faces these days is whether the Biden administration will pursue the kind of broad student loan forgiveness championed by Sen. Elizabeth Warren, D-Mass. During Wednesday's hearing, lawmakers asked Cordray if he would support a policy to forgive $10,000 in federal student loan debt for every borrower. Cordray's answer?

 

A bureaucratic bob and weave: "That's a policy decision. I have an operational job."

 

Click on the link for the full article

[China]

For a Decade, Elizabeth Warren Waged War Against a Student Debt Goliath. She Finally Won.

 

In 2006, a Harvard Law School bankruptcy professor named Elizabeth Warren went on 60 Minutes to talk about a student loan company called Sallie Mae.

 

At the time, Sallie Mae was functioning as both a lender of student loans and a debt collector. Because of how federal loans worked at the time, this amounted to a no-lose scenario. When students paid back their loans with interest, Sallie Mae made money. But even if students defaulted on their loans, the company still made money: The government paid Sallie Mae everything the lender was owed, and then the company’s collections arm also pocketed loads of fees from borrowers when it sought to recover the government’s money. It was this double-dealing that Professor Warren had gone on TV to talk about.

 

“It shouldn’t be the case that Sallie Mae gets to play every hand at the poker table,” Warren told host Lesley Stahl. “How do you lose in a game like that? It’s a great business model, right? I win from here, I win from there.”

 

Warren’s interview about Sallie Mae’s student debt servicing business, which spun off and rebranded as Navient in 2013, marked a definitive moment in what would become the senator’s multidecade crusade against the predatory business models of student lenders and servicers, and their painful effects on the millions of Americans buried in debt. Over the last few months, that crusade has come to something of an apex as Navient—one of the largest student debt servicers in the country—and two other debt servicers announced that they would no longer handle federal loans. These moves come amid a barrage of lawsuits calling out their bad practices, as well as a looming crackdown on servicers by a Warren protégé who is now in charge of overseeing them at the Education Department.

 

Click on the link for the full article

[China]

Here's How Much Debt Millennials Have on Average

 

Outstanding consumer debt in the U.S. is currently around $14.88 trillion, representing an average individual debt of nearly $93,000, according data from an Experian consumer debt study.

And for millennials specificially, who range in age from 25 to 40, that number is almost as high: Millennials owe an average of $87,448 in debt.

 

Experian analyzed its database of credit report information to measure the average credit card debt, student loan debt, auto loan debt and personal loan debt for millennials who hold each type of debt. Here's a look at each:

 

- Average credit card debt: $4,322
- Average student loan debt: $38,877
- Average auto loan debt: $19,011
- Average personal loan debt: $12,306

 

The generation had the second-highest debt growth of any generation, trailing only young Gen Zers whose debt growth "seemed to track with age," according to Experian. Millennials' average debt grew 11.5% between 2019 and 2020, while Gen Z's grew 67.2%.

 

Click on the link for the full article

[China]

108,000 people with medical debt are getting $212 million in relief, thanks to help from Stacey Abrams

 

Medical debt in America currently totals $140 billion, and failure to expand Medicaid in some states has pushed those people to carry huge hospital bills. Stacey Abrams - a prominent Democratic activist - donated $1 million to change that.

 

The Associated Press reported on October 27 that Abrams' Fair Fight Political Action Committee donated $1.34 million to the nonprofit organization RIP Medical Debt to wipe out $212 million in medical debt for 108,000 people in Georgia, Arizona, Louisiana, Mississippi, and Alabama. According to Fair Fight's press release, debtors will be notified of the relief via a yellow envelope in the mail, and it comes alongside the committee's efforts to promote full Medicaid expansion across the country.

 

"I know firsthand how medical costs and a broken healthcare system put families further and further in debt," Abrams said in a statement. "Across the Sunbelt and in the South, this problem is exacerbated in states like Georgia where failed leaders have callously refused to expand Medicaid, even during a pandemic. "

 

While Arizona and Louisiana have expanded Medicaid, Republican leadership in Georgia, Mississippi, and Alabama have blocked the expansion, making the medical debt burden in the South 30% higher than for those in the North. Fair Fight also noted that rural hospitals are closing at a rate 4.5 times higher in states that are not expanding Medicaid, compared to those who are.

 

Here is the relief breakdown for the 108,000 medical debtors, according to the press release:

- Georgia: $123,193,570.70 million in debt relief for 68,685 individuals;

- Louisiana: $17.476,259.35 million in debt relief for 8,265 individuals;

- Alabama: $1,857,166.42 million in debt relief for 1,953 individuals;

- Mississippi: $2,350,757.12 million in debt relief for 2,058 individuals;

- Arizona: $67,904,064.13 million in debt relief for 27,282 individuals.

 

Click on the link for the full article

[TheDoyler23]

17 hours ago, China said:

Here's How Much Debt Millennials Have on Average

 

 

Experian analyzed its database of credit report information to measure the average credit card debt, student loan debt, auto loan debt and personal loan debt for millennials who hold each type of debt. Here's a look at each:

 

- Average credit card debt: $4,322
- Average student loan debt: $38,877
- Average auto loan debt: $19,011
- Average personal loan debt: $12,306

 

 

BuT tHeY cAn aFfOrD sTaRbUcKs???????  ~ Boomers 

 

 

[China]

New rule will allow debt collectors to track you down on social media

 

One byproduct of the pandemic has been more debtors, and now collection agencies have new ways to track down the people who owe them money.

 

So watch out who you connect with on Instagram or befriend on Facebook. It could be a debt collector contacting you through a direct message.

 

Debt collection rules that went into effect Tuesday have expanded the ways debt collectors can chase down debtors. In practice, it may mean millions of consumers can now be bombarded with email and text messages and requests to connect on their social media accounts.

 

The changes to the Fair Debt Collection Practices Act (FDCPA), which is intended to eliminate abusive debt collection practices, were introduced during the Trump administration when the Consumer Financial Protection Bureau (CFPB) became friendlier to the business community.

 

The CFPB director at the time, Kathy Kraninger, a Trump appointee who resigned at Biden’s request, said the rules were intended to “modernize the legal regime for debt collection.”

But if left unchecked, this expanded access to consumers could very well contribute to new ways to harass struggling consumers.

 

At the end of the third quarter this year, 77.6 million consumers had at least one debt in collections with $188 billion in outstanding balances, according to a report by TransUnion.

Study paints stark picture of how some get mired in collections because they can’t pay medical bills.

The collection industry praised the update, arguing that text and email are now the preferred methods for communication for many people.

 

Click on the link for the full article

[PleaseBlitz]

That is a very superficial reading of the new debt collection rules, which puts strict limits on the number of calls and texts. If it were that industry friendly, the current regime at the CFPB (who have been in since February and are consumer friendly bordering on fanaticism) would have delayed its effective date and then rewritten it, as they did/are in the process of doing for other rules. See https://www.consumerfinance.gov/about-us/newsroom/cfpb-delays-mandatory-compliance-date-for-general-qualified-mortgage-final-rule/

 

 

Edited December 1, 2021 by PleaseBlitz

[just654]

The Pause is extended

 

WASHINGTON — The Biden administration announced Wednesday that the moratorium on federal student loan payments would be extended through May 1, as the highly transmissible omicron variant of the coronavirus poses a new threat to the economy.

In a statement, President Joe Biden said that "millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments."

 

https://www.nbcnews.com/politics/white-house/biden-administration-extends-pause-student-loan-payment-pause-until-may-n1286465

[The Evil Genius]

Now let's wipe all of it clean (says this old guy who paid his $50k off already). 

[PleaseBlitz]

End of year update.  I paid the minimum on my loan all year, so it only went down by about $10,000 this year and stands at $35,000.  I could pay it off entirely at any point, but the interest rate is 0.71%, so that doesn't make any sense.  

[PleaseBlitz]

Navient = Rebranded Sallie Mae

 

Navient reaches $1.85 billion settlement over student loan practices

 

https://www.washingtonpost.com/education/2022/01/13/navient-settlement-student-loans/

 

Quote

Navient, one of the nation’s largest student loan companies, has entered into a $1.85 billion settlement with a coalition of state attorneys general to resolve allegations that it steered borrowers into costly repayment plans and predatory loans.

 

The agreement Thursday puts to rest multiple state probes into the company’s loan servicing and lending practices dating back to when it was known as Sallie Mae. The agreement spans 39 states and the District and will deliver $1.7 billion in private student loan cancellation to 66,000 borrowers nationwide, and another $95 million in payouts.

...

About 350,000 federal student loan borrowers who were placed in certain types of long-term forbearances will receive payments of about $260. Eligible borrowers will receive a postcard in the mail this spring from the settlement administrator.

 

The lion’s share of the settlement money will arrive in the form of debt cancellation for tens of thousands of people who borrowed money from Sallie Mae to primarily attend for-profit colleges, including ITT Technical Institute campuses and the chain of Art Institute schools.

 

State prosecutors claim the lender originated private student loans that carried interest rates as high as nearly 16 percent and fees equal to 9 percent of the loan. Those “subprime” loans were provided to students with poor credit and who attended colleges where barely 50 percent of people graduated, prosecutors say — an indicator that borrowers were at risk of not completing their degrees and being unable to repay the debt.