Student loan servicers might give you the wrong information

Our team was alarmed to learn that recently, the Consumer Financial Protection Bureau found that many loan servicers actually give student loan borrowers incorrect or insufficient information about public-service loan forgiveness. There are currently several money-saving options for many student loan borrowers. However, if borrowers are unaware of these options, these programs become useless, and the borrower is left missing out on potentially, significant savings on their monthly student loan payments.

In another alarming moment, in the student loan industry, the U.S. Consumer Financial Protection Bureau and the Illinois and Washington attorneys general sued Navient Corp, the nation’s largest student loan servicer, in January. They lawsuits are alleging that it harmed student loan borrowers throughout the repayment process.

Among other things, the CFPB alleges that since at least January 2010, Navient misallocated payments, steered struggling borrowers toward multiple forbearances instead of income-driven repayment plans, and provided unclear information about how to re-enroll in income-driven repayment plans and how to qualify for a co-signer release. The CFPB is asking Navient to compensate the borrowers the agency says were harmed.

The Illinois and Washington suits make similar claims to the CFPB’s allegations and also allege that Navient, when it was part of Sallie Mae, made subprime loans to students, particularly those attending for-profit schools. Navient broke off from Sallie Mae Bank, one of the largest private student loan lenders, in 2014.

Navient has filed motions to dismiss all three cases and says the suits are based on new servicing standards that are being applied retroactively, according to a March 2017 fact sheet.

The lawsuits could potentially take years to play out “because of the sheer amount of evidence” that the CFPB, Illinois, and Washington have gathered during their investigations, says Suzanne Martindale, a staff attorney at Consumers Union, the policy, and action arm of Consumer Reports.

Regardless of the outcomes, it’s a good idea for borrow’s to regularly check their student loan accounts and make sure their student loans are being serviced correctly. Luckily there are a lot of tools and services that can help borrowers get an overview of current loan balances and repayment options. For more information

 

 

 

 

 

 

Keeping Those Part-Time College Jobs In Perspective

Many many young adults are starting college this month. For most of them, this also means, starting their first jobs. One common struggle for new college students is managing school, work, and their new found income. This tends to be a great lesson in prioritization and time management. It can be tempting for young college students to focus on making money in their part-time jobs, but their priority should be on studying and finishing that college degree.

For those that have scholarships, they may lose thousands of dollars in scholarship money if grades don’t meet a high average. No part-time minimum wage job in the world could make up for this type of loss. For others, college tends to get paid primarily through student loans and school-based grants. In this case, these loans and grants also depend on the student’s ability to stay in school and maintain a passing GPA.

Income from a part-time job can quickly become a distraction for college students. This supplemental income can start to provide students with spending power that they’ve never had before. However, it’s important to remember that the bulk of college and living expenses are coming from scholarships, loans, and grants, and all these can depend on the student maintaining high grades and or graduating.

In the case of student loans, if the student doesn’t maintain good grades and remain in school full-time, they can be required to start paying back their loans immediately. These loan payments would more than likely put the student in a position where their part-time job would no longer provide the income they need to live.

The point here is if you or your child is starting college it’s important that they keep those part-time college jobs in perspective. Remember that good grades and staying in school are a much higher priority than a part-time job income. Especially if you are using scholarships, student loans or grants to pay for college and living expenses.

Betsy DeVos Rolls back Obama-Era Student Loan Guidance

Education Secretary Betsy DeVos on Tuesday 4/11/2017 rolled back two Obama-Era memos intended to help protect student loan borrowers.

Student loan contracts aren’t serviced in-house by the Federal Student Aid Office. Instead, they are managed by third-party companies, which are awarded contracts by the government. Before the Obama memos, those contracts went to the companies that were best at collecting the debts.

Rather than rewarding the companies that cashed in on debts, the now-rescinded Obama guidance incentivized a good track record and sought to award contracts to companies with a history of helping borrowers.

While the Obama memos sought to give borrowers more options, transparency and better services as a means to prevent them from defaulting on loans, DeVos said that withdrawing the memos is intended to limit “the cost to taxpayers” and “increase customer service and accountability.”

Devos’ withdrawal memo cited “a lack of consistent objectives” as the reason for rescinding the previous administration’s guidance.

The Department of Education did not immediately respond to NBC News’ request for comment.

So what does DeVos’ mean for those who have loans?

Attorney Adam Minsky, who has dedicated his practice to helping those with student loans, said the withdrawal only creates more frustration for borrowers.

“[The Obama memo] alerted servicers that how they deal with borrowers – the outcomes would be a factor in if they’re awarded a contract,” Minsky told NBC News. “[The memo said,] ‘We’re going to consider that.’ And the idea there was to incentivize the servicers to work harder to help borrowers.”

Now, borrowers are going to have to work much harder to figure out the best way to repay their loan and research programs that might benefit them, he said.

Student loan expert Heather Jarvis said the changes Obama made where long overdue, and walking them back sends a message to borrowers that the government values the businesses over those loans.

“Borrowers don’t get to decide who their servicers are and [the servicers] can make your life miserable if they’re not,” Jarvis told NBC News. “For years, the government was content to award contracts based on the collection success of servicers. But Obama became aware of the problems students and families face and decided we want you to do better.”

Jarvis said because the contracts are lucrative, companies will be responsive to the signals the government is sending.

Another issue Jarvis and Minsky took with the DeVos memo is the justification for the withdrawal.

Minsky said DeVos’ logic doesn’t make sense, as taxpayers aren’t affected by the provisions in the Obama memos, but are affected by borrowers defaulting on loans.

“I don’t understand her reasoning,” Minsky said. “I don’t understand how it’s costly to taxpayers – it costs taxpayer money when borrowers default on loans and don’t pay their loans. She certainly hasn’t, I think, made an effective argument to justify saving money.”

Jarvis called the withdrawal “ridiculous,” adding that student loan borrowers are American taxpayers.

Jarvis and Minsky offered the following advice to those who currently have student loans and could be impacted by DeVos’ withdrawal of the Obama guidance:

Do homework to find out what plans you are eligible for, don’t rely on your servicer to provide you with the correct information
Don’t take advice from your debt collector
Keep meticulous records on your loan
Ask to speak with a member of your servicer’s management, rather than the customer service representative who answers your call
If you have a dispute, try to send it to your servicer in writing
Contact the student loan ombudsmen group at the Department of Education – it’s their job to resolve conflict between borrowers and servicers
Contact your local representative and make them aware of existing problems with your servicer

In a statement, the Consumer Financial Protection Bureau, a government agency charged with protecting consumers from unfair, deceptive, or abusive practices in the financial sector, said borrowers deserve the best possible service from those issuing their loans.

“Borrowers deserve to be treated fairly and should be able to repay their debt without having to deal with illegal loan servicing practices. The CFPB will continue to find ways, working with all of our partners, to support and protect the 44 million Americans with student debt,” a CFPB spokesperson said in an email to NBC News.

Jarvis agreed, saying to treat the borrowers fairly isn’t asking for much.

“[Obama’s memo] was the latest they could do, and it was hardly anything,” Jarvis said. “It wasn’t a requirement, and I think pulling that back – it’s a signal to big businesses that [the government is] on your side. You’re more important to us than student loan borrowers.”

All You Need to Know About Student Loan Forgiveness

Student loans are sticky and they often end with long years of debt trailing behind. While these loans are unavoidable, the recent buzz around student loan forgiveness, gives colleg students all over America a way out of student debt. Loan forgiveness programs are much sought after. However, there is a lot more to it than debt-free years. 
Here are a few things you should know about student loan forgiveness-IBR, public Student loan forgiveness and Teacher Student loan forgiveness are the commonly opted for programs by eligible students. The most common mistake most of us make is assuming loan forgiveness is an easy way out of paying student debts. Weighing the pros and cons of these programs is crucial. 
Call (888) 266-4335 for a personal synopsis of your eligibility.
Public Service Student Loan Forgiveness- Under this program, you get your loan forgiven after repayment for 10 consecutive years which is 120 installments. To gain eligibility, you will have to work in the public service sector and issue documents to the loan servicer. A major drawback of this program is that failure to pass on the paperwork in time may lead to disqualification.
Teacher Student Loan Forgiveness- This program has a bigger con. Eligibility for Teacher Student loan forgiveness relies on the borrower maintaining a teacher’s position for over five years at a Title 1 or a school with at least 30% Title 1 students. Also, if you work at a qualified school but on behalf of Americorps, you won’t qualify for loan forgiveness. Adding to the disadvantage, the program only forgives $17,500 of the loan amount. 
IBR and PAYE- Income-based repayment is popular among students who choose to work through college. Buy, this repayment plan scheme is a lot more complicated than the rest of repayment options. It comes with the major downfall of taxes. The loan debt which is forgive turns into tax bills that can be unaffordable. 
Revised Pay as You Earn- Obama’s student loan plan opened their program to a million American students. RPAYE helps you repay loans by capping your earnings to 10% of the income and on 20 years of repayment, the loan is forgive. Your loan gets forgiven if your payments lapse into a period over 20 years. The Obama student loan relief is a boom to students for times when they are earning low incomes. However, on the other hand, when your income increases, you will end up paying more. 
Debt forgiveness seems like a good way out of student loan repayment, but before enrolling you will have a lot of disadvantages to consider. Consult with your loan servicer for more information on loan repayments schemes. 
 
Call (888) 266-4335 NOW TO SEE IF YOU QUALIFY. OUR REPRESENTATIVES ARE STANDING BY.
Click here to learn more about the Student Loan Forgiveness Programs

Student Debt – Lives On Hold

Millions of Americans who went to college seeking a better future now face crushing debt from student loans—while the industry makes a handsome profit. How a broken system landed so many in this mess…
 
Almost every American knows an adult burdened by a student loan. Fewer know that growing alongside 42 million indebted students is a formidable private industry that has been enriched by those very loans.
A generation ago, the federal government opened its student loan bank to profit-making corporations. Private-equity companies and Wall Street banks seized on the flow of federal loan dollars, peddling loans students sometimes could not afford and then collecting fees from the government to hound students when they defaulted.
Step by step, one law after another has been enacted by Congress to make student debt the worst kind of debt for Americans—and the best kind for banks and debt collectors.Today, just about everyone involved in the student loan industry makes money off of the students—the banks, private investors, even the federal government.

This is a condensed version of a story by Reveal from The Center for Investigative Reporting.
To read the full investigation from James B. Steele and Lance Williams, visit www.revealnews.org/studentdebt.
 
Click here to find out more information on the student loan forgiveness programs