Thursday
January 10, 2008
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News, Views and Careers for All of Higher Education
Jan. 3
What’s Ahead on Student Loans in 2008
After a year in which it dominated the headlines, the student loan “scandal” has lost its head of steam. New York Attorney General Andrew Cuomo has largely moved on to other areas of interest. And the U.S. Senate and House of Representatives, which have each passed different Sarbanes-Oxley-like versions of legislation to address the issue, have also taken up other matters for now.
Related stories
- A Reminder From New York, Dec. 12
- The Education Department’s Activist Agenda, Nov. 1
- What’s a Financial Aid Director to Do?, Oct. 3
- Permissible Preferred Lender Lists, Sept. 4
- Drexel to Cuomo: Um, Never Mind, May 16
But that doesn’t mean that colleges and lenders are out of the woods, as the U.S. Department of Education is just getting started with administrative investigations and enforcement actions that will make the department ground zero on this issue in 2008.
In response to criticism from Cuomo, the Congress, and the General Accountability Office, the department increased its oversight of colleges and lenders during the latter half of 2007. In July, the Federal Student Aid office (FSA) sent letters to 921 colleges whose student-loan volume was almost entirely, if not entirely, with one lender. The letters were intended to remind the colleges of the requirement to provide borrowers a choice of lender. Then, on October 24, FSA sent letters to 55 of those colleges, as well as 23 lenders that held loans with one or more of the originally identified 921 colleges, requesting information and documents that could indicate the existence of improper inducements, in violation of the Higher Education Act of 1965, as amended (HEA), and its regulations.
Those 78 colleges and lenders (and perhaps many others) should be prepared for the possibility of an administrative investigation and enforcement action by the department in 2008. Here are four things they can expect:
1. More Adversarial Program Reviews
Based on my personal knowledge of the department’s prior practice, and its current organizational structure, two different divisions that report to the Federal Student Aid Program Compliance office are currently reviewing the responses of the colleges and lenders: (1) the School Eligibility Channel is examining college compliance, and (2) Financial Partners Eligibility & Oversight is examining lender compliance. Although FSA, and not the department’s Office of the Inspector General (OIG), is conducting the oversight, I expect OIG to be working behind the scenes with FSA to ensure that colleges and lenders are held accountable for regulatory violations.
An examination of colleges by FSA’s School Eligibility Channel typically takes the form of a program review, which is FSA-speak for “investigation.” A program review entails an on-site visit by FSA that generally involves the collection of financial-aid documents and interviews with financial-aid administrators. Colleges receive notice that a program review will be initiated and are provided the opportunity to respond to a preliminary program review report before FSA issues a “final program review determination” letter. Colleges can expect the School Eligibility Channel to be reluctant to accept their explanations for business arrangements with lenders. There will be findings of regulatory non-compliance in the program review letters.
Lenders have historically had a much more cooperative relationship with Financial Partners Eligibility & Oversight than colleges have had with the School Eligibility Channel. Financial Partners once boasted that, as its name suggests, it works in partnership with lenders to promote best practices and to provide technical assistance. However, that collaborative approach was criticized in September 2006 by the OIG as one that “emphasized partnership over compliance.” As a result, lenders should expect a more adversarial relationship with Financial Partners, which, like the School Eligibility Channel, will conduct program reviews and make findings of regulatory non-compliance.
2. Application of an Uncertain Legal Standard
What types of agreements between colleges and lenders transgress the current prohibition against inducements? Only FSA knows. It is very difficult to discern the legal standard that FSA will apply.
The department’s longstanding interpretation of the anti-inducement provisions is that a violation requires there to have been a quid pro quo, i.e., something given for something taken. In other words, there must be a payment or other inducement provided in exchange for FFEL loan applications. That interpretation finds support within the department as far back as 18 years ago and remained the department’s position through this past summer.
In a February 1989 Dear Colleague Letter, the department described several types of business-development activities between colleges and lenders that would be deemed permissible so long as they were intended as a form of advertising or as a creation of good will, “rather than as a quid pro quo for loan referrals.” Secretary Margaret Spellings actually attached that guidance to her August 9, 2007 letter to the higher-education community urging colleges and lenders to act in the best interests of students and parents. Indeed, three months earlier, in May, the Secretary testified to a congressional committee that a payment can only constitute an improper inducement where there is a quid pro quo.
The department, however, published new regulations on November 1, 2007 that changed its interpretation of the HEA’s anti-inducement provisions. The regulations, which become effective on July 1, 2008, eliminate the requirement of a quid pro quo and replace it with a standard that will prohibit virtually all business-development activities between colleges and lenders, including efforts to create good will. The department made this change of interpretation by giving itself the authority to limit, suspend or terminate a lender from the FFEL Program if the lender is unable to present sufficient evidence that payments or services provided to a college were provided “for a reason unrelated to securing applications for FFEL loans or securing FFEL loan volume.”
In the preamble to the regulations, the department signaled that the new regulatory language is intended to prohibit virtually any payment that is provided merely for the purpose of securing FFEL loans. This would prohibit virtually all payments because FFEL lenders are, after all, in the business of securing FFEL loans. With the quid pro quo requirement eliminated, nearly all business-development and good-will activities will now be prohibited.
FSA should, of course, wait until the effective date of the new regulations before it applies this new interpretation of the anti-inducement provisions. And, even then, FSA should apply the new interpretation only to payments offered on or after that date or else risk holding colleges and lenders liable for activities that were not illegal at the time they were conducted. But FSA’s intentions are unclear, considering that it seems to already be looking to the new regulations to support its probe of agreements between lenders and affiliates of colleges.
3. Probes Into Lender Agreements With College Affiliates
Based on FSA’s letters, lenders can expect FSA to examine not only agreements between lenders and colleges, but also those between lenders and affiliates of colleges. By “affiliates of colleges,” FSA undoubtedly means entities such as alumni organizations. In July 2007, as part of a highly-publicized settlement agreement with Cuomo, Nelnet agreed to stop paying alumni associations for exclusive referrals of their consolidated loans. However, agreements with alumni organizations and other college affiliates are not yet covered by the federal anti-inducement statutes and regulations.
The HEA’s anti-inducement provisions prohibit lenders from making payments “to institutions of higher education or individuals.” Although the current regulations use the slightly different phrase “to any school or other party” to describe the scope of covered recipients, once that phrase is read in the context of the HEA language (as it must be so read), the term “other party” in the regulations can only mean “individuals.” It cannot be construed to mean or to include college affiliates because such entities are neither “institutions of higher education” nor “individuals.” So FSA seems to be probing lender agreements with some entities that are not currently covered by the regulations.
The new regulations will, however, add “school-affiliated organizations” as an additional class of covered recipients and, therefore, in a matter of six months, give FSA authority in this area. The term “school-affiliated organization,” which was defined broadly by the Department, covers any organization that is directly or indirectly related to a college, regardless of whether it is within the college’s structure and control. It includes alumni organizations, foundations, athletic organizations, and social, academic, and professional organizations. But because the HEA’s anti-inducement provisions for lenders only cover payments to “institutions of higher education or individuals,” the new regulatory prohibition against payments to “school-affiliated organizations” appears to go beyond the HEA.
4. More Limitation, Suspension and Termination Proceedings
Colleges that are found in regulatory non-compliance generally receive an FPRD letter that assesses a liability against the college, or they receive a notice imposing an administrative fine. In the past, FSA initiated limitation, suspension, or termination proceedings against colleges only in the most egregious cases. FSA has never terminated a large, well-respected college from the Federal Family Education Loan (FFEL) Program, and no one thinks they will do so over this. But FSA might place limitations upon them. Smaller colleges — particularly for-profit, career colleges — may not be so lucky.
And while limitation, suspension and termination proceedings for lenders were extremely rare in the past, FSA will now choose to initiate them. This is so because FSA can require “corrective action,” which includes a monetary payment, only as part of a limitation or termination proceeding. As a result, lenders can expect such proceedings.
That is what colleges and lenders can expect from the department in 2008 in terms of administrative enforcement. Here is what they (indeed, every American) should demand of the department: Responsible and principled leadership.
The Department Should Enforce the Law Responsibly and in a Principled Manner
Increased accountability in the FFEL Program should be greatly welcomed by all. Every taxpayer should demand that colleges and lenders, like any other recipient of our hard-earned tax dollars, play by the rules. And colleges and lenders, themselves, should insist on accountability in the FFEL Program. Where true violations of the statutory and regulatory anti-inducement provisions are discovered, FSA should put an immediate stop to it. And where those violations are flagrant or committed with a fraudulent intent, FSA should impose the most serious administrative sanctions.
But internal pressure from the OIG and external pressure from Cuomo, the Congress or the news media to severely punish violators should not be perceived by senior department officials as “cover” for FSA to impose unnecessarily harsh penalties. Getting a “pound of flesh” by reflexively imposing large administrative fines against our nation’s colleges or by unreasonably limiting, suspending or terminating the very lenders that help put our college students through school would be counterproductive.
Instead, FSA should carefully exercise its inherent administrative enforcement discretion by thoroughly reviewing each violation on a case-by-case basis to determine whether a sanction is even needed. For example, regulations allow for informal compliance procedures to permit a lender to show that the violation has been corrected or to at least present a plan for correcting the violation and preventing its recurrence. However, if a sanction is needed, then FSA should fashion a penalty that is sufficient, but not greater than necessary, to achieve the purposes of the FFEL Program and to ensure its continued viability and integrity. Among the factors FSA should consider are the nature and circumstances of the violation and the violator’s history of regulatory non-compliance.
***
The coming year of administrative enforcement will make some people within the FFEL Program very anxious, but it will serve an important purpose. Colleges and lenders must be held to account for conduct that denied borrowers a true choice of lender as a result of improper payoffs. And the department, acting in the best interests of those same borrowers, should strictly enforce the laws on the books and exercise sound discretion in doing so. Administrative enforcement is not a one-size-fits-all process.
Comments
Read Between Alan’s Lines
Mr. Vogel does a wonderful job of putting down four very meaningful ways to improve the student loan/college relationship to ensure that students know exactly what they are getting themselves into. I applaude this type of responsible action which allows all who sign for a loan to be in the know about the exact terms they are taking on. Groups like student loan justice want one thing and one thing only, an opportunity to back out of agreements they willingly entered into with no accountability. Mr. Collinge likes to term this “standard consumer protections” but we all know that he just wants to file bankruptcy and move on. What really needs to be done is that students need to begin to “value” the education they get for free for their entire lives and understand that the choice to continue your education comes at a price. It doesn’t have to be an Ivy League pricetag either. There are plenty of cheaper alternatives. As a nation, we have lost the value of a dollar and nobody more than college aged kids. What better time to allow them to start to take on responsibility? College should be a time when students are not only getting a degree, but beginning to understand that getting three jobs, moving to Alaska to cook for minimum wage, and blowing off your responsibilities is not an option. Reforming the student loan industry doesn’t mean making it possible for everyone to declare bankruptcy, it means making sure that any relationships that exist between schools and loan companies are on the level and that the students are getting the best rates possible.
GradGirl, at 10:05 am EST on January 3, 2008
Wow
You said “Imagine: of 2002 borrowers, fully 10% had defaulted on their loans by 2007. Combine this with the fact that the Department projects that not only will it recover every dollar of principle on these loans, but also an additional 20% in interest and fees"...
What’s wrong with the federal government collecting penalties from those who default on loans? Shouldn’t they pay a penalty? If not, what’s the incentive to ever repay? The collection of all federal loans provides the required financial solvency to execute the broader set of loan programs.
The ‘mean’ federal government is lending money to students who primarily have no or limited credit history. Shame on them for collecting it back. I guess death and taxes should be optional too.
Pam, at 10:15 am EST on January 3, 2008
Victims of predatory schools
Glad to hear that Dept of Ed is finally starting to do something about the current situation. However its not doing enough. Ed is not addressing the issues concerning people who are victims of the student loan farming practices of predatory schools that existed before 1990 when the nations highest default rates happened as a result from the student loan farming practices of Predatory schools. The actions and results of these schools are in the congressional record from various testimonies, and yet nothing has been done about the victims of those predatory schools practices of student loan farming. Not only that, but the actual lending information and disclosure practices are still not up to the standards of any other kind of loan. I know this to be true because in the last month I and 3 others have tried to get student loans at various schools, to try and find out what these schools are telling prospective students and they are NOT making it clear to the students all the terms, liabilities, rights and responsibilities associated with the loan contract.Some people need help with their loans that are now 3-6 times bigger than their original size. Many are suffering financial hardship to due the economic conditions due to NAFTA and so called Free trade where their jobs have moved overseas. People in Michigan for example, whose state is in a one state recession (thank you Jennifer Granholm) are finding it hard to pay their living expenses let alone student loans.
And some of these people who have defaulted loans now have interest earning interest on interest.
I agree some kind of repayment must be made, and an attempt to do so, should be made. However, when you can’t even cover the payment that pays off this months interest, and the loan cannot stop growing, then wheres the sense in even trying to pay it off? Its kind of like trying to stop a runaway horse, all you are going to accomplish is getting trampled. There has to be a better solution and right now US Dept of Ed and the congress are not addressing that issue.The idea of using administrative garnishment is not the answer. Such only further destroys an other wise contributing member of society. Not to mention that its a direct violation of the 7th amendment to the US Constitution.
And finally, the comments of “oh they are just trying to get out of their obligations” or comments like those, are the nothing more than the denial of people who are trying to run away from the fact, or who will not admit to the fact, that there are serious problems with the student loan industry and the student loan system that need to be addressed. And some of these issues should have been addressed by congress long long ago. That is why some congress representatives want to abolish the Higher Education law entirely. After 30 years of failure, maybe thats not a bad idea.
Chase Wildstar, at 11:40 am EST on January 3, 2008
Collinge is right
As a financially-secure professional, and not someone under the crushing weight of loans, Collinge is right. The incentive to pay of the loans is one’s credit rating, sense of integrity, civil legal recourse lenders and collection agencies hold, lending contract terms — JUST LIKE MOST ANY OTHER CONSUMER LOAN. Default penalties are out of proportion to the “offense” committed, particularly when the lender is repaid by the government. The only people discharging their obligations summarily and moving on with great unscrupulousness are the lenders. It’s been proven. Yet we’re still interested in providing entitlement programs to make student lending one of the most profitable industries in America. This is about profits and shareholders, not the survival of student lending. And failing to fix the issues of the high cost of education only leaves borrowers at the whim of an industry repeatedly investigated and convicted of abuse. And for some reason, student borrowers have been unable to refinance their loans at lower rates, just like any other consumer loan. Pick your battles. This is one worth fighting.
Ken, at 12:50 pm EST on January 3, 2008
Re: “Default penalties are out of proportion to the ‘offense’ committed, particularly when the lender is repaid by the government.
... Just a point of clarification. Those “out of proportion” fees are not going to loan providers, although if you follow Alan’s rants that’s what you would think.
Lenders are reimbursed through guaranty agencies at less than 100 percent of the outstanding principle and interest (less after the CCRAA). The loans are ultimately backed by the government — i.e. us, the taxpayers. There are no other consumer loans that offer as many protections for borrowers as federal student loans.
Those default fees go towards real collection costs sustained by nonprofit guaranty agencies and the government attempting to collect on taxpayer loans.
Student loan default is a horrible position to be in and there are strides to be made to allow defaulted borrowers to pull themselves out. But it’s difficult to have a sensible conversation about it when all we hear from the other side is total forgiveness.
Sensible Advocate, at 2:15 pm EST on January 3, 2008
ED and student loans
Alan Collinge isn’t “ranting". He’s talking about some of the predatory lending practices and bad law and he deserves to be heard. I have very little sympathy for commercial lenders who castigate the financial aid community for about seven schools out of over 6,000 nationally who have been cited by the state of NY and/or the Department of Ed for illegal acts or for financial improprieties that may or may not have been legal. I have even less sympathy for companies who make stupid business decisions and then float billion dollar stock options to sucker the American public into paying for their stupidity.
We all know the companies I am talking about. You point and I’ll whistle....
feudi pandola, at 4:30 pm EST on January 3, 2008
@ Alan Collinge/ StudentLoanJustice et al
Enforcing your obligation to repay money that my tax dollars guaranteed is not a “racket"; allowing people like you to shirk their obligation, passing the bill to taxpayers like me would be the real “racket".
I certainly agree that defaulted student loans have caused “harms to the citizenry"; Direct Loans pays the US Treasury more interest per year on taxpayer money it’s borrowed then what it collects in interest per year from it’s borrowers. Who do you think will pay for that difference?
“Standard consumer protection” would have allowed my girlfriend to bankrupt her $50,000 in federal student loans right after she graduated (since she had no assets and no income at that time). Instead, she got help from her lender with deferred or reduced payments until she got a good job, and has been making her payments and watching her balance go down ever since.
Borrowers who have consolidated all of their student loans can certainly refinance- through private consumer banking. They can also consolidate with the Direct Loans if they are in default or in danger of default.
What you want is for borrowers to be able to re-consolidate again and again, at the lenders and government’s expense. I’m fine with that... as long as the borrower pays both the lenders origination/guarantee fees, and the governments administrative cost each and every time they re-consolidate.
Statute of limitation, eh? Now let me take a wild guess...it should start when they took out their first loan, right? 7 years? Heck, Alan could go to grad school and have SOL over before he even has a payment due.
“Standard Consumer Protection” really means “give Collinge and company a way to renege on their promissory notes". Enough said.
Candid Insider, Free Thinker at Planet Earth, at 4:35 pm EST on January 3, 2008
Bad argument
The arguments here against bankruptcy protections could be made for any type of debt. Credit cards, payday loans. etc. Why don’t we just abolish bankruptcy rights altogether? According to the lender’s logic in this discussion thread, that would make sense.
No one wants to file for bankruptcy. Its a demeaning, demoralizing, desperate act. Not having that protection, however causes predatory behavior by the loan holders who use that power to extort far and away more money from the borrowers than was ever lent.
And further, bankruptcy is not a “walk away” situation for the vast majority of borrowers. Most will end up repaying what they originally borrowed, and interest under current law.
It is amusing to see the lenders get puffed up as they preach about looking out for the taxpayers money. What a sick, perverse joke that is.
Holding up the principle of personal responsibility as a cover for irresponsible lending, horrible administration, and predatory collection tactics is no longer viable. People can see right through it these days.
Alan Collinge, Founder at StudentLoanJustice.Org, at 7:50 pm EST on January 3, 2008
“Standard Consumer Protections” means students are protected just like any borrower. This means, like any other debt, student loan bankruptcy discharges are a last resort and do come with consequences. Some people fail to recognize than bankruptcy is hardly some kind of prize—it destroys your credit for at least seven years! People who choose bankruptcy do so at great personal cost. The sad part it, that great personal cost is still less than what these lenders and our laws are demanding. Right now, too many of us are in a lifetime prison of debt from which there is NO escape, no matter how hard working or well intentioned the borrower.
No one is looking for a freebie, people. What we are looking for is justice and a chance to reduce debt. This is not an unreasonable request.
kgotthardt, at 9:00 pm EST on January 3, 2008
ROFL
OK Alan, you’re right.
Lets let everyone discharged their student loans through BK.
Lets also let people that don’t want to support deadbeats like you opt out of paying the portion of federal taxes appropriated to student aid, and bankrupt any applicable tax debts.
Lets also make criminal restitution, child support, and other public debts dischargable. Everyone that refuses or fails to honor their obligation to society should have “standard consumer protection” after all.
Candid Insider, Free Thinker at Planet Earth, at 5:35 am EST on January 4, 2008
Victims of misrepresentation
I really HATE using the word victim. But there is no other word that so clearly describes what has happened to thousands of people across the USA by these predatory trade schools. Prior to the 1990 Higher education reform act of 1990, many schools were openly lieing to students to get them to apply for government backed student loans. Many of these schools failed to make full and complete disclosure of the loan contract. In my case, I paid an insurance fee, and was told that if I defaulted, the insurance paid off the loan. I was not told that the government would haunt me until the day I died, or that congress could change the rules (and thus the considerations) of the loan at their will. Nor was I informed of other critical factors. This practice still continues to this day (not fully informing students about their loan contract obligations).In my case, my wife and I were forced into filing bankruptcy in 1994. It was the last thing I wanted to do. And since then I have not taken out one loan of ANY kind. I save up money to buy things now. And that is very difficult in the economy here. I was out of work for all of 2002 and I will finally be out of the finanical hole that created, some time around the end of April 2007.
Now I though my loans were discharged in 1994. After no contact by government in over 10 years they now claim that the loans were not discharged And that I have to prove they were. No sir. They are the ones making the claim. They sent me 180 pages of documents of which most are unreadable. You can see some of them by accessing my blog and clicking on the link in the message that tells about them. (personal information was cleared). Many documents are unreadable, incomplete, and just plain blank. yet they are the best “copies” available. WHAT?! Doesn’t ED have the originals?
My original lender is out of business — bankrupt too. The school I went to closed down, has moved 4 times, and has been bought out by other companies 3 times since then.
Now with nearly 20 years of interest and penalties, my original loans of 8 thousand, has brown to somewhere between 27 and 35 thousand dollars. Last I heard my minimum payment might be somewhere around 800 a month — thats my housing costs and represents 3/4ths of my monthly take home pay. So you see I do not have it. And the loans keep growing and growing — IF the Dept of Ed’s claim is valid. I’m not even sure if it is. I contacted US dept of Ed Obudsman and so far have waited 5 weeks without a response.
In the mean time, my credit that I had re-established is now shot to heck again, and I am now postive I have been refused good jobs because of the student loan report that appeared on my credit history late last year (2007).
Even if I participate in the new “income based repayment” plan that becomes available in 2009, 25 years later I will be 75. And only then will I be able to start saving for retirement. (wait, won’t already be retired?) Well, I guess I will have to depend on social security (which probbably won’t be there then)for my retirement, if not I will become a burden on society. WOW.. What a future I have to look forward to eh?
All this, which is nothing less than the continuing victimization of the original act of misrepresentation by the predatory trade schools who were actively involved in student loan farming back in the 1980’s. How long to I have to remain a victim before congress does something about those schools and gives us victims so relief and some JUSTICE for the crimes committed by those schools?!
VOPS, at 5:35 am EST on January 4, 2008
CHANGING THE RULES
Here’s the real rub — student loan companies got their republican cohorts to change the rules in the middle of the game.
Sallie Mae and its ilk were not set up originally to be massive profit machines for executives. We are talking about education here. These loans are not for toasters or microwaves or new suits or dresses. For people without means, student loans are the ONLY way to gain an education, to try to improve oneself, find a good job and contribute to society.
Without the loans, poor students are priced out of a lot of higher ed opportunities.
How is it moral or right for private companies to be in the business of making money from this situation? If ever there was a role for government it is providing student loan money. You can get a credit card with lower interest rates than some student loans. How moral is that?
But republicans in the 90s changed the rules. They gave away everything to the student loan companies who realized the could become rich on the backs of poor students if they took away all of the laws. Heck, people with credit card debt. have more options if they lose their jobs than people with student loans.
Bankruptcy laws are not the be-all, end all. But they keep all the players on even ground. If loan companies know the debt can be reduced, they will play by the rules. With the current situation, they are arrogant, ruthless and simply do not listen or help. Bankruptcy was originally passed to enable people who run into life’s troubles to have a clean start. Because sometimes the system crushes folks that make mistakes.
Citizens in trouble with student loans are not criminals. Most took out the loans to better themselves. But now they are in a vise, with no way out. How is that good for anyone.
Student loans should be the most nimble and favorable loans the US offers — interest rates should be very low, refinance and other options should be available without penalty. Kinda like mortgages. Student loans should not be the source of millionaire-like payments to Al Lord and his ilk.
Just like health care, this should have never become a for-profit industry.
No one is asking for a freebie. But we should not have to spend the rest of our lives in economic jail, either.
BA, Washington DC, at 7:25 am EST on January 4, 2008
Not a customer
Those who feel that student loan borrowers are merely attempting to shirk their duties are missing a crucial point: In any other type of loan agreement, the borrower is a customer, and is treated as such. This is not the case for student loan borrowers.
How so? A customer would have the right to ask for—and receive—answers to questions about the loan.The Department of Education recently calculated my Income Contingent payments on an adjusted gross income that is $10,854 higher than my actual adjusted gross income. Since this caused me to wonder how the Department of Education could have arrived at such a figure, I contacted the IRS. You see, the information that I had printed from http://loanconsolidation.ed.gov/borrower/bfaq.shtml states the following:
“Income is obtained from the Internal Revenue Service (IRS) or from an Alternative Documentation of Income Form…”
The IRS agent I spoke with examined my account, and confirmed that the IRS has my correct adjusted gross income on record. The agent then sent me a printout of my IRS account information, which I forwarded to the Department of Education.
Along with the IRS account information, I posed several questions to the Department of Education:
Was my loan payment amount based on someone else’s income? What was the cause of the error, and how did it occur? When will the error be corrected? What assurance do I have that this or any other sort of discrepancy will not occur in the future?Why was the burden of correcting this error placed on me?
The result?I received no answers to my questions.
Instead, I received a form letter informing me that “Tax forms and W2s are not acceptable supporting documentation. Please provide copies of most recent pay stubs or a signed and dated written statement of gross income.”
So, I ask now, how many times and from how many sources must I provide the same information? Where are my rights as a borrower and a customer?
Where is the accountability for the Department of Education? As far as I can tell, I there doesn’t seem to be any.
KB, at 8:10 am EST on January 4, 2008
Let’s All Get Real About This
There does need to be changes made to the current system. I do agree with Alan on some key points. There does need to be protection for the consumer. I think all would agree with that. I do want to ask those who would want to deter those who have taken student loans from declairing bankrupcy, that are in drastic situations, what would be a viable solution for them? What would be acceptable in the way of a frest start for those people? If someone TRULY is on their last leg and is sinking below the water line, what would you suggest for them? Would you throw them a line and help them keep their heads above water, or would you place your foot on their heads and hold them under?
I think this is the question that is being asked here by many. All must agree that it be a student loan, or a private loan with no “backing” or “guarantee” by the federal government a loan is a loan. It is a promise to repay a debt be it public or private. There are things that do happen in peoples lives that are devasitating at times and may take years to get over. We live in America people, not what was referred to as the USSR. This is the land of the free. Home of the brave. We are to take care of our own and if it means those who have more give more that is the way it is in this country. Look at our tax system as an example.
I’m sorry if Sallie Mae may loose out on a great deal of income from those who are less fortunate as others, byt taking someones Social Security money to repay a loan is a bit much for me. Informing someone who is disabled and in a wheel chair that they still have to pay is a bit much for me. As far as I’m concenred disabled is just that, disabled. Impoising this type of will upon a individual is unconchable.
I think we as a society are placing what is truly important below what “we” want. Simply because we can do something doesn’t mean that is what we should do.
Jim Bryant, at 8:10 am EST on January 4, 2008
1. Student loans are contracts. These contracts have been broken by the lenders, the federal government, and their related entities. Yet borrowers have no recourse.
2. If you want to get mad about bankruptcies, get mad about these pathetic excuses for schools that screw over students and faculty by jumping ship when the going gets rough. What do these schools do? They claim bankruptcy and go on to open more schools. Then they do the same thing. I suppose some of you would rather support THEM with your tax dollars than students, huh? Why do you suppose students get into these problems in the first place?
3. Too many colleges in too many sectors (for-profit and non-profit) play the accreditation game. They play by the rules long enough to get accredited, which qualifies them to offer Title IV, government backed loans and aid. They get accredited for YEARS at a time, and over those years, they openly break every rule in the book. Students get academically and financially maimed at these schools, and if they complain, the school claims students are “academically inept” or just “bad students.” They drop these students or they consider to sucker them for YEARS. NO ONE intervenes for these students—not the accreditors, not the Ed. Department, and certainly, not the fraudulent schools who milk the system. Who is left holding the bill? We ALL are, people, not just students.
I could go on and on and on and on about this because I’ve lived it over and over. The game is the same, but the school names change. Until state and federal agencies get serious about compliance with schools, accreditors and lenders, we ALL will suffer, and that includes those of you who whine about supporting students in dire straits.
Ironically, some of you are students yourselves. Perhaps you all need a better view of the bigger picture. Try living in OUR world for ahile.
kgotthardt, at 10:25 am EST on January 4, 2008
Excellent Discussion
Wow, what a treat to read all of these opinions on the subject of student loans this morning. It is nice to see both sides represented here. As usual, the folks over at studentloanjustice are one-tracked on the “let me out of my obligation” argument. It is a sad one, but I understand the desperation. I am desperate too, but yet every month I write a check for about 1/3 of my wages to cover my undergraduate and graduate loans. I do not have a job in the field of either but have managed to get by and truly hope I find a job in the field of my degree sometime soon. I suppose I should support Alan and try and get rid of these pesky loans, then I could do so many more fun things with my life....and I need a new big screen TV too. Nah, I think I will just repay my loans like a responsible adult and keep working toward the american dream. Just an update for all those out there who think student loan companies are raking in the dough. Sallie Mae (SLM) $18.16 down from 52 week high of $58 First Marblehead Corp. (FMD) $13.66 down from 52 week high of $57So before you go talking about the ridiculous profits and success of the so-called Loan Sharks, perhaps you should ask share holders or executives how easy life is over there. It would seem to me that perhaps you should stop worrying about what other people are making, and start making a little money for yourself to pay off your loans.
GradGirl, at 11:25 am EST on January 4, 2008
To Gradgirl and Insider
To Insider:
Thanks for putting people with student loans in the same class as criminals. This clearly illustrates your feelings towards you “customers".
Can you name for me one other type of loan, federally guaranteed, even, for which bankruptcy protection has been taken away?
To Gradgirl: The stock price of the lenders has absolutely nothing to do with the harmful activities they engage in. Do not attempt to “cry poor” on behalf of the industry that is taking so much from the borrowers, and ruining their lives.
Alan Collinge, Founder at StudentLoanJustice.Org, at 1:00 pm EST on January 4, 2008
Gradgirl, how nice that you can get by and pay your loans. You may want to spend a little bit of your discretionary income on bubble wrap, however, because if you do face a serious medical situation — car accident, long term illness — that prevents you from working, your ability to get by will gone, along, I suspect with your smugness. And, even though you are unable to repay your loans due to the fact that you are unable to earn income, revel in the knowledge that your amount due will balloon when you go into default. Should you be lucky enough to be restored to health, forget about recovering financially. And if you shouldn’t be lucky enough to be restored to health, make sure you are on good terms with friends and family because you will need them to survive. Count on disability or social security being garnished. Want to fight it on the grounds of undue hardship? Forget about it. I haven’t encountered a single person who was successful though any reasonable person can see that living on government aid and losing a portion of that pittance would certainly result in undue (unfair) hardship.
We once prided ourselves in this country as having safety nets to protect citizens. Your idea of embracing laws that punish those who default smacks of insider talk. And I’ve noticed that you do appear to defend the industry in various conversations. That’s a lot of time to spend following an issue that doesn’t seem to personally affect you. Makes a person wonder how much income and what position you are fighting to protect. No one fighting for justice on this issue is arguing anyone should be able to bankrupt loans merely to escape them — though this seems to be the point, oddly, you counter aruge — and as far as I’ve encountered, those fighting for restoration of basic consumer protections fully believe in repaying a fair and reasonable amount loaned to them. What is not fair and reasonable are the inflated penalties and fees that amount to usury. But oh, doesn’t it provide a nice revenue stream for loan companies when money can be extracted for life from so many people, regardless of circumstance. Let’s be clear. What people are arguing for is basic consumer protection, the sort that would protect you, too, if need be. May you never need it.
Couldn’tGradGirl, at 4:30 pm EST on January 4, 2008
GradGirl, why the heck would you be okay paying 1/3 of your income on student loans when the budgeting criteria for buying a HOME is only 1/4 of your income? Methinks you have been beaten down by some kind of acceptance-bent monster.
I don’t want a big-screen television or a Lexus or a trip to the moon. I want to live a decent life. I want to buy my kids medicine and dental work. I don’t want to panic every time I buy used clothing off of eBay that I have busted the budget. I suspect most of us are in this category. YOU are an anomaly, my dear.
kgotthardt, at 4:30 pm EST on January 4, 2008
Hey, GradGirl, Got A Minute
I have read your two comments concerning this article. I was just wondering how much you earn for a living. I know it’s none of my business and I’m really not concerned but that is one thing you may want to consider when making statments concerning someone paying back their student loans. There are those in the world that have been smiled upon following graduation from college and there are those who are far less fortunate. I have struggled, and I do mean struggled to simply keep my head above water for so long. If I were to start paying my loans off now it would take literally more than two thirds of my bring home income to make a payment.
I did not get to go to college right out of high school like so many others do. I did not have the means to do that or I would have. I insted went into the military to support my family and also to gain credit via the G.I. Bill to cover my education expenses.
Sometime following my during my first enlistement Congress changed the G.I. Bill to the VEAP program. The Veterans Education Assistance Program. This “program” was a contribution type of education funding. For every dollar the service member put in, the service member was given three in return for college. Sounds like a good program doesn’t it. Well, I was a E-2 earning $500.00 per month base pay. I was also given a housing allowance and VHA which is Variable Housing Allowance. All in all I may have been bringing home around $550.00 every two weeks.
One thing that some may not know is, when you live on the community in or around military towns, the people that really live there know and I do mean know exactly what you are earning from the military and they expect to get every dollor that you get for housing. So, it may sound good when you go in, but when you really do get here its not so hot.
To make a long story short, I was attempting to take care of my family on what I was making and there was nothing left to put back for VEAP. In order to get VEAP started I had to “contribute” $100.00 per month and back then that was a great deal of money when you didn’t earn that much. Besides that, I can recall when Congress did not give the military a cost of living raises, but they did give themselves one. Talk about people being upset. WOW.
So, after nearly 10 years on active service, and following my involvement with Desert Shield/Storm I was done. I had to come back from the little Southwestern Asian Vaction to learn that my wife was not intersted in being a wife or mother any long and I back a single parent. I was also informed that I had less than 10 days to get my things in order because they were going to boot me out. Talk about adding insult to injury. I infomred them I did not want to get out and I needed time to see if I could work things out. I was given 6 months.
So, here I was, a single parent, no civilian job skills, not much call for a rifleman on the outside, and the economy wasn’t the best thing going either. So, what could I do? I had to go back to school and be educated in a field that would afford me and my two children a decent living. So, I set my sights on law school. I have always been the type to want to help people and I thought I could do some good there. I wanted to be a childrens advocate.
Lets make this a short story here. I did make it to law school. I also beveloped a very bad case of hypertention in the process. My doctor informed me that I HAD to loose the stress in my life or I WAS going to have a stroke. Needless to say I did not want to orphan my children. So, I quite, gave it up.
So, where did that put me. Not put call for a liberal arts major. I had to do something and I do mean fast. I go a job doing what I had been doing during school. It didn’t pay much but it did put food on the table and a roof over our heads. All the while I did not get any government benefits for my military service. NONE. I had to go to school on PELL Grants and Student Loans. Needless to say the student loans were a major chunck of my education payments.
And here I am some time later worried about making payments on my loans. I can’t help but feel as if I have fallen through the cracks on someones wonderful program. Someones brain child to save the government money. I wonder if they were thinking about that when they sent me over to the Middle East to defend Americas cost on crude oil? Oh, did I mention that they did tell us right before we got on the plain to go over here that we were going t ofight for the oil. “We as American can not afford $10.00 per gallon for gas. Our economy can not sustain that.” “We can not allow one man to have control over more than one third of the worlds oil reserves". These are the two things I will never forget.
I wonder if there are others out there in a situation such as mine that have been forgotten also?
I’m not attemptng to rant or rave. I am not looking for simpathy either. I simply want what Ive always wanted and expected, a fare shake, something a bit more desireable and respectable.
I do hope you do respond and give me your thoughts on what I have attempted to explain to you.
Jim Bryant, at 4:30 pm EST on January 4, 2008
Insider
Quit attacking me personally. That’s cheap.
I want to repay a fair amount on my loans. Not be saddled with triple what I originally borrowed plus interest when the original amount was alot in the first place. If my loans had been deferred in the first place when I requested that, that would probably have been manageable.
Without bankruptcy rights, there is no negotiation, I have found.
Alot of people have been hurt badly, I have also found.
I asked you earlier to name for me one loan that is exempt from bankruptcy protections, and you couldn’t.
Alan Collinge, Founder at Studentloanjustice.org, at 5:50 pm EST on January 4, 2008
Red Queen Effect
No one here has yet mentioned the insidious driver that is flattening students against the wall — credential inflation (see link below).
The paradox is that the harder students try to “get ahead” — relying heavily on student loans as they go to school — the result is the overall devaluation of the very credentials they seek — the Red Queen effect.
Only in our present hyper-competitive struggle for credentials does law school suddenly become a necessity — when a generation ago, the BS or BA was enough, and a generation before that the high school certificate really meant something (now equivalent to an advanced graduate degree).
No wonder tuition and college costs significantly outpace inflation, especially at schools worth going to. They can charge what they want because market demand is inelastic, and growing.
No wonder students aren’t starting families they can no longer afford, if at all. No wonder they feel victimized by the whole thing!
What would it be like without this current undercutting student achievement, flattening students against credential wall?
Glen S. McGhee, Dir., at FHEAP, at 6:20 pm EST on January 4, 2008
Reply to Alan
I will respond to the rest of the comments about me on Monday, but i wanted to get to Alan’s point about his loans. What would be a fair amount for you to payback after having let your loans sit unpaid and unattended to for just over 6 years now. In a post you made on http://americandust.wordpress.com/ you clearly state that you applied for a hardship deferment with Sallie Mae on December 12th, 2001. That means you have not paid a dime on a loan for a really really long time. Should they just wait around until you are able to find a job that you deem meaningful and worth your time? Should they sit by and let you travel the world, go to Alaska, disappear for a bit, and then waltz back in to pay the original amount of your loan? I’m sorry, but no matter how you phrase it, it just isn’t right and is definitely not owning up to your responsibility. You have 3 engineering degrees. I have zero sympathy for you and your cause. I have all the sympathy in the world for people who get sick or have out of the ordinary experiences that leave them unable to pay, but you do not have that argument. Your choices were made by you, not the cosmos. Your absolute inability to grasp that fact and own up to it is what truly sickens me and keeps me commenting every single comment I can find of yours. So get used to it and while I fully support those of you out there who have really had a horrible string of bad luck or bad circumstances, I wish you the best and hope that congress can come up with something that gives you the relief you deserve, but I will never support anyone who makes poor choices and tries to back out and stick everyone else with the bill.
GradGirl24, at 10:15 am EST on January 5, 2008
GRADGIRL:
Gradgirl,
I applied for a forbearance on December 12th. Instead of granting me the forbearance, Sallie Mae refused, and instead put my loan into default the very next day...A more lucrative choice for them to be sure. There was (and is) no appeals process for defaulted loans, btw...
wihtin 14 months, my loans had exploded to more than double what I originally borrowed
Sallie Mae and others have paid millions of dollars in settlements for false claims. It should not surprise anyone that they are quick to default students with near impugnity.
While you state that my going to Alaska to cook was a vacation, it wasn’t. I worked 14 hard hours per day, every day, seven days a week, for four months with not even one day off. For my efforts, I made far less than $5 per hour. It was not a vacation- it was the only job I could find in 2002.
I’m not going to waste space here trying to prove to you that since that time I have made every diligent effort I could think of to negotiate a fair and resonable settlement of the debt. I did. The news organizations that have vetted my paperwork concur that I did, and this includes some highly reputable folks. Nonetheless, I have had zero success, because of the fact that student loans are uniquely lacking in the most basic, standard consumer protections. This makes you and your ilk a lot of money, I suspect, but it hurts alot of people in the country. This is not nickel and dime stuff, gradgirl. This is financial ruin for millions of Americans.
You are engaged in a deliberate attempt to discredit this movement by attacking me personally, yet you never bother even identifying yourself truthfully for the group to assess who you are and what you do- and most importantly, where you get your paycheck from.
Dont say you wish me well, gradgirl. You don’t. And anyone following your postings over the years knows what you’re all about.
While this may be some sort of sick game for you, for those of us who are being stolen from it is not. It is real life that we wake up to every day.
So for the 5th time, Gradgirl: Why don’t you identify for the group your true identity and who you work for? If you feel so strongly about your opinions, why not stand behind them instead of hiding behind them?
Alan Collinge, Founder at Studentloanjustice.org, at 5:15 pm EST on January 5, 2008
Student loan borrower
So Gradgirl you know so much! I borrowed money in the early 80’s and they were guaranteed student loans. That means my loans are subsidized as long as I am in school part time. Everything was fine until I was contacted by Sallie Mae in 1994. I consolidated my loans (guaranteed student loans)with Sallie Mae with the guarantee that when I went back to school, which I knew I had to, my loans would be subsidized. Now, all I have ever wanted to do was pay back my loans. I am not even going to blame Sallie Mae for it taking me 4 years to enter my field. I expected to accrue interest. In fact, I filed bankruptcy on some huge debt accrued by my x-husband. At the time I was offered to include my student loans and I said NO!!! I am grateful for my education and want to pay this back. Ok so far you get it?? I am not blaming anyone and I do not want to file bankruptcy. When I returned to school in two years I was assured my loans were deferred and interest would be paid by the government. To keep my job I have to go back to school. I get letters from Sallie Mae showing that I am accruing interest. I make phone calls and write letters. Nothing!!! They would not talk to me. I sent letters certified mail and they had the nerve to tell me they didn’t receive any letters. When I verified they were sent certified they claimed they responded to the letters but I ignored them. I sent 5 letters to them. I wanted to know what happened to my loan and it took me four years of calling to get little bits of info to piece together what happened to my loan. Sure I was deferred with interest accruing. All I got was too bad, pay your loan, get a job, what is your problem, and this loan is non of your business. Well, every step I have taken to honor my loan to be a contributing person in society is being stepped all over. They are accountable to no one. If nothing else bring back consumer protection so big company’s like Sallie Mae can’t do what they have done to me. They have lied and turned my loan into a situation where I will never be able to pay. I went from 37,000 dollars to 125,000 dollars. Just because they told me they can! Now I have been paying the original amount of my loan of 300 dollars every month. My payment is 975 dollars. I refuse to pay that interest that accrued. So, you keep talking your crap. Somewhere down the line you will eat your words. I just can’t believe the ignores of educated people. OH! Are you educated, Gradgirl?? Who paid for your student Loan??
Student loan borrower
Julie Ahrens, at 5:15 pm EST on January 5, 2008
Student Loans
Gradgirl,
I’ve monitored your comments on this site and they are blatantly disrespectful to anyone who disagrees with you. This forum is supposed to be for individuals interested in discussing student loan issues. We are all welcome. Can you present your ideas without the snippy attitude?
I feel you are being very unfair. No borrower WANTS to declare bankruptcy. I have a bachelor’s, a master’s and a law degree and it has NOT been easy repaying loans after 2 near-death illnesses, a divorce and loss of employment due to health issues.
Things happen in life. The problem with the current system is that it fails to recognize students are human, have difficulties and experience setbacks. In addition, it is unfair to allow everyone to write off debt EXCEPT honest borrowers who fall on hard times.
I do not believe bankruptcy protections should have been eliminated. I believe the protections should be allowed — just closely scrutinize cases which come through for bankruptcy. For example, if you have a borrower who has taken out $100K in loans and never made a payment, I would NOT grant bankruptcy in that case. If you have a borrower who has a solid history of trying to make payments, get deferments and yet due to serious illnesses, job loss, etc the borrower still falls behind, perhaps bankruptcy is the best alternative.
Reinstating bankruptcy protection for student loans helps the entire nation. Do you realize their are members of the military or college graduates who cannot work in their profession because they have no money to pay or clear up delinquent student loans? Why not allow bankruptcy, a clean slate and allow that individual to move forward — still using his or her skills to benefit the United States (instead of forcing us to go off the grid).
Just my two cents.
Denise, Lobbyist, at 6:25 pm EST on January 5, 2008
Educate
I would tend to come in somewhere in between the folks at SLJ and GradGirl/Insider. It seems ridiculous and perhaps a little short-sighted to put an end to the companies who are actually loaning people money and making it possible for them to get a degree and for most, a much higher paying job. Having said that, I also happen to think that certain sectors of the industry have abused their relationship with schools and taken advantage of students with the help of financial aid offices. The A.G. did a good job of exposing them, but as so often happens, I believe he took things a little too far. I think that the folks at SLJ suffer from the same problem. Student Loan companies should be held to a high standard and consumers should be protected, but this doesn’t mean that they should be forced out of business. There SHOULD be consumer rights when it comes to collections, but this doesn’t mean that anyone who graduates should be allowed to dismiss the debt they created by filing bankruptcy. What really needs to happen, in my opinion, is that there needs to be a concerted effort by everyone including student loan companies, financial aid officers, and most importantly parents and students to educate those taking out loans on the risk/reward of taking on debt. College is still an incredibly important and meaningful experience that has been proven to increase lifetime earnings far beyond the cost of the degree. So perhaps student loan companies can coexist with lobbying groups and students and parents can make some better choices which limit the risk associated with taking out loans. Just my opinion.
StudentLoanWatcher, at 11:05 am EST on January 7, 2008
I concur with StudentLoanWatcher. People should not be able to graduate, and then turn around and skate on their debt. The Most recent bankruptcy legislation of 2005 goes pretty far to ensure that fraud and abuse don’t happen.
Remember also, historically, even when Bankruptcy was the same for student loans, college graduates filed less often than the population in general (I am quite sure of this, although I need to source this to be 100%), so the bogey man that the lending industry would have us believe is out there (i.e. mass filings) is probably not.
But when it gets to the point where decent citizens are being strongarmed, or where the average debt is simply too high, then something has to give.
Collinge, at 6:15 pm EST on January 7, 2008
Student Loans
Studentloanwatcher,
I do not know of one student who desires to go to school and simply declare bankruptcy immediately after graduating. The fact of the matter is this: there are abusers of EVERY type of law.
As a nation, we cannot make laws to apply to one segment of the population and not another. Where is the justice and fairness? If I take out student loans, fall on hard times because I’ve had 2 life-threatening illnesses, a divorce and unstable employment (although I have tried everything within my power to pay off the loans and I’m still falling behind because the interest is accruing each month at a higher rate than what I’m paying) shouldn’t I have the opportunity to discharge part of my loan or all of my loan in order to get a clean slate? Isn’t that the purpose of bankruptcy — a fresh start?
I’m not a deadbeat. I’ve tried everything in my power to work through the situation and yet someone in my situation (with 2 near-death experiences) hasn’t been granted a discharge.
THIS IS INHUMANE!
Denise, Lobbyist, at 8:00 pm EST on January 7, 2008
Come On Now
Man, I think we can all determine who is on what side around here. We have those that would maintain the status quo and see the lenders continue with business as usual. We also have those that would prefer a more equal playing field where lender and borrower are equal when it comes to being able to negosiate. I would like to see a lender and borrow be able to sit down and be able to justify, in their own eyes, their indipendant reasoning for what they would like to see in the future concerning their own interest.
I’m sure the lenders are interested in making a profit. I’m also sure the borrower would like to see far less pressure being applied to him. I think the borrower would also like to know, for a fact, that if, and I do mean if there were some horrific reason they could not make their payments they would have a safety net below them.
I think the good life has been lived by the lenders long enough. I am almost sure that if the right person were elected at the right time things would turn south for the lenders. I think the changes in the government that are going on right now are a sigh of those changes.
Novemeber really isn’t that far away, especially if you are a lender that wants to keep things jsut as they are. Governments change. Our government changes everytime we have a election and change up the ones who represent us. I know for a fact that if the right person were in office some time ago when Sallie Mae was wanting to change the laws that pertain to student loans more than likely they would have been told to go to hell and to take that horse they road in on with them.
This country is governed by the people for the people, or at least that is what I was taugh in school. Seems we have lost that along the way some place and need to get it back. Those that would prefer to use the tax payers dollars to help subsidise golf courses and $128 million dollar salories should find themselves a new line of work.
Jim, at 2:40 pm EST on January 8, 2008
Speaking of the Law
I’m sure there are those out there that are savy to how laws are made. One point that I would like to bring up is that Congress will not make a law that they themselves can not live with. For an example lets look at the state DUI Laws. You notice there are limits on the amount of blood alcohol one can have. If they made a strick liability law that says if you have ANY in your system then you are off to jail, but they don’t. They have a limit one can have in their system. The reason for that is if they themselves were pulled over and had it in their systems they to would be subject to the law.
When it comes to the issue of discharging student loans, I be not one of them has a family member that would be subject to a student loan or be in a position one day they would be faced with what some here have been. They may have the resources to cover it, unlike some here.
So, here we are, Congress has sold some of their authority to the highest bidder and left those in need holding the bag.
Jim, at 8:15 am EST on January 9, 2008
Some of you are really smug. What about someone who is disabled and didn’t know they would be disabled when they got the loans? What about people who end up on welfare and their monthly $136 is less than their student loan payments, and they send Sallie Mae their $136 and they are still in default and BROKE, so broke they can’t take a subway or buy a cup of coffee, or they are 55 years old and no one will hire them? Or they made their payments for years and can’t now because of job loss or medical problems?
And what about the fact that gamblers and shopaholics get to write off their frivolous debts in bankruptcy?
And do you think it’s right to force the disable to have their piddly Social Security checks garnished? Disabled is disabled.
Some of you deserve a real comeuppance in life. Hope you are always healthy and employed, or woe is you, TOO!!!!!
Nanette Rayman, Writer, at 12:00 pm EST on January 9, 2008
Hey Nanette Rayman, I’m on Your Side
I am all about what you are saying. Disabled is just that, disabled. By any definision I believe those who have been declaired by a doctor or otherwise are just that. Those who would prefer to earn from the misfortune of others are less than humain in my book.
Jim, at 3:35 pm EST on January 9, 2008
DISABILITY LOAN OPTIONS
This is just for the disabled. Did you know you are eligible to have your loan forgiven under total disability forgiveness? Please go to a financial aid office and ask them about disability loan forgiveness. Or contact the lender holding your loan and tell them you are totally disabled and not able to work. They will send you paper work to give to your doctor. Once that is determined that you are disabled and unable to work, you should be eligible to no longer have to pay your loan. However, if you do have a miracle and you decide to go back to school, you will not be able to apply for another loan unless you agree to pick up the old loan. For most of you however, I am sure that isn’t the case. Also, if you have a miracle and can go back to work someday, YOU DO NOT HAVE TO PICK UP THE LOAN, It only has to go back into repayment if you decide to go back to school and want to apply for a student loan again. Therefore, if you are disabled, you need to let your lender know asap. Also, if you need to apply for a hardship deferment or forebarence, it is important to do that in a timely manor. You cannot wait to do it one day before your loan is going into default due to non payment. Work with your lender for options. No lender wants you to go into default. Also, just an FYI, the fees etc a person has because of a defaulted loan does not go to the lender. This goes to the federal government for collection of that loan. They pay the lender only a certain percentage of the unpaid balance of the loan and that is all the lender gets for a default. Therefore, it is very important to the lenders for you to pay your loan and NOT go into default. The number of days you are allowed to go without making a loan payment prior to being put into default is set by the federal government; not the lender. A lot of these issues need to be addressed with our federal government and they rules the have set in place.
DJ, at 6:30 pm EST on January 9, 2008
Thanks Jim
Jim,
Thank you for your comments. You know, even if someone is not permanently disabled, even disabled for a year would put someone into default and big balloon-ing of the loan. Plus, did you know that private loans can not be written off even when you are permanently disabled?
Another thing: fighting the Social Security administration is not that easy. A physical disease is harder for them to accept than depression, even though anyone can just say they are depressed.
It is not that easy, is what I mean to prove to SS that you are disabled. It takes a year at least, I know. In that time your loans go into default.
The thing that is most egregious, is people who pay for years and years, and then lose their job and might only have a few thousand left to pay, and BHAM, they are in default with the interest and penalties wiping out all those years of paying.
Congress has been bought by Alan Lord and one of those Congressmen is Ted Kennedy.
Nanette Rayman, writer, at 10:30 am EST on January 10, 2008
To Gradgirl
You have to be THE most smug “girl” ever. If some of us could pay, we would. Guess what, life happens. Disease happens. Can’t find a job because of age discrimination and other factors — happens. And guess what, Gradgirl — Sallie Mae lobbies Congress and PAYS OFF Congress to remove all the basic consumer protections.
Let’s hope you are employed EVERY WEEK of your silly life, or you,too, Gradgirl, will be running for your life.
Nanette Rayman, writer, at 11:20 am EST on January 10, 2008
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No, there is still much to do.
This essayist seems to think that the band aid reforms that have been put in place to this point will put an end to all of the problems with the student loan industry, but I beg to differ. There are far larger injustices at work in the student loan industry that have yet to be dealt with- injustices that the Department of Education gladly particpates in.
The racket of defaulted loans has caused massive harms to the citizenry that the Department of Education has failed to even acknowledge.
There are still millions of citizens whose defaulted student loans are being used as a tool to extort sums from them far and away larger than what they originally borrowed. Far and away larger.
The Department of Education, who has the audacity to farm out its collection activities to companies with shark tanks in their lobbies, is literally holding the financial livelihoods of these citizens hostage due to the astonishing lack of standard consumer protections and orwellian collection tools at its disposal for collecting these inflated sums of money.
And this predatory, money making backwater that the Department to this point has failed to acknowledge in a meaningful way is far larger than advertised. Imagine: of 2002 borrowers, fully 10% had defaulted on their loans by 2007. Combine this with the fact that the Department projects that not only will it recover every dollar of principle on these loans, but also an additional 20% in interest and fees, and one can see why the Department likes this arrangement- screw the borrowers...its all about the money, isn’t it?
The republicans talk a good talk when they espouse smaller government, but when it comes to the Department of Education it’s all about bigger, meaner government.
Until standard consumer protections are returned to student loans, including standard bankruptcy protections, refinancing rights (after consolidation), and statutes of limitations, there will be a much larger scandal in the offing.
To the borrowers caught in the Department of Education’s predatory jaws, the sentiment that slapping a few more audits on colleges and lenders will make everything better is more than insulting. More than insulting.
Alan Collinge, Founder at StudentLoanJustice.Org, at 5:20 am EST on January 3, 2008