Student loans

Published on: July 21, 2022

Should defaulted borrowers do the fast-tracked rehab or wait for “fresh start”?

By Christie D. Arkovich, P.A.

I expect many of you are wondering: Should defaulted borrowers do the fast-tracked rehab or wait for “fresh start”?

Here is what we are hearing:

The Fresh Start process is intended to be easier and more accessible than the rehab process, and hopefully will be, so many borrowers/advocates will reasonably wait for that. Additionally, at least some aspects of default removal will be automatic, though temporary, such as the recent removal of all defaults from CAIVRS for mortgage underwriting, so borrowers should get some temporary relief from default consequences without doing anything.

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Published on: July 21, 2022

BDTR Confusion on Hearing Date for Final Approval of Class Settlement

By Christie D. Arkovich, P.A.

We are hearing from folks that they believe there is a 7/28 deadline to file a BDTR application for auto approval.

The case Preliminary Settlement Approval hearing in Sweet v Cardona is 7/28/22. It is NOT a deadline, but we should know more after that hearing. Hopefully, they will set FINAL Settlement Approval hearing date for this fall sometime.

However, any new applications submitted after June 22, 2022 will be evaluated on their merits — not the same as auto approval. If you ran into the same sorts of issues that have been investigated in the past for a particular school, I believe that ED has telegraphed its intention to include that within its guidelines for approval. The timeframe for forgiveness may not be all that different either as it will take up to a year for the auto approvals and any new application will have to be reviewed within 36 months. It’s highly unlikely that the Biden administration will leave any undecided strays after the 2024 election – so you’re likely looking at up to 2.5 yrs of waiting during which the payments would remain on forbearance. It’s likely most of the new applications would be reviewed within 18 months to allow adequate time for the actual forgiveness to occur before the 2024 election. All this is a guess of course.

Published on: July 20, 2022

We’re Approaching the Payment Restart Date — and Buy a House while you Wait.

By Christie D. Arkovich, P.A.

We’re 40 some days away from the 8/31/22 federal student loan re-start date. We’re all waiting for the details of the Fresh Start announcement for borrowers in default to reenter payment in good standing when the pause expires. This would theoretically eliminate the need for a rehab or consolidation to cure a default. We have learned from ED that if a borrower rehabs now, ED is waiving the nine months of payments and automatically restoring borrowers to good standing once the Rehab Agreement has been signed and returned.

The National Consumer Law Center is still trying to get information from ED about the timeline and details of Fresh Start to help everyone with advising borrowers/clients and to ensure it works they way it should.

One student loan attorney, Stanley Tate, out of Kansas City MO spoke with Default Resolution Group this week, and learned that as of last Monday, all ED borrowers have been cleared from CAIVRS.

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Published on: July 19, 2022

Questions about the Navient/AG Settlement and Whether Your Private Loans are Discharged?

By Christie D. Arkovich, P.A.

Are you unsure whether your private student loans are covered by the Navient/AG settlement?

Navient has sent or is still sending out correspondence to all qualifying private loans under the Navient/AG settlement – give that until the end of July per the settlement – if your address is current with your loan servicer, you will receive information if your loans are eligible. There are many factors that preclude someone from qualifying unfortunately including credit scores for some provisions. There is no court mechanism for us to bring up a borrower’s loan that we think should be eligible. I don’t believe the class action attorneys themselves have any remedy for that in their case.

The most we’ve been able to do is force a bankruptcy stay based upon likely inclusion in the AG settlement.

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Published on: July 17, 2022

PSLF Waiver Fixes Lesser Known Issues as well: Deadline to Apply is October 31, 2022.

By Christie D. Arkovich, P.A.

Normally, a teacher who qualifies for Teacher forgiveness after five years of service at a low income Title I school, cannot also obtain Public Service Loan Forgiveness using that time. That won’t matter for someone who has less than $17,000 of federal student loan debt which is the cap for the Teacher forgiveness, but most borrowers that we talk to, have much more debt than that. To be an educator, often one or even two masters degrees, are encouraged. That comes at a pretty steep cost.

I’ve just learned that the PSLF Waiver now allows this time to count for PSLF as well as Teacher Forgiveness. Under the normal rules, it does not.

If you got Teacher Loan Forgiveness, the period of service that led to your eligibility can count toward PSLF if you certify PSLF employment for that period

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Published on: July 15, 2022

Our Very First Disability Student Loan Discharge Case

By Christie D. Arkovich, P.A.

I fondly recall our very first Total and Permanent (“TPD”) case a few years back. An older borrower, as I remember, who was probably in her late 60s, reached out to us after she basically gave up trying to get her federal student loans forgiven even though she had qualified for Social Security Disability. She had sent her SSD approval letter to the Department of Education and its debt collector, but apparently both letters had been lost.

As a result, her Social Security continued to be offset and she received frequent and rude calls from debt collectors who persisted despite her telling them that she was disabled. No one cared. She was fairly distraught and at the end of her rope, with no one to turn to. Her servicer wasn’t helping. The SSA and the Department of Education weren’t able to help her. The debt collectors were even calling a friend of hers who had nothing to do with the loans. These calls persisted even after she had sent in a TPD application, and after she retained our services.

Once she retained our services, we filed a consumer collections case under Florida and Federal law for these violations. We also sent in a TPD application for her and obtained full forgiveness of her federal loans. Rather than her paying us for obtaining this result, we were able to put money in her pocket from the wrongful debt collection that had occurred, plus we were finally able to put her student loan debt to bed. The other side ending up paying our fees due to the collection violation case.

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Published on: July 14, 2022

Joint Spousal Consolidation Loans — President Biden is Expected to Sign a New Act Any Day Now

By Christie D. Arkovich, P.A.

The Senate passed a bill a few weeks ago, the Joint Consolidation Loan Separation Act, to unravel the Joint Spousal Consolidation Loan program which has trapped many older borrowers who were encouraged to consolidate their loans with their spouses upon graduation. While that may have sounded like a good idea back in the 1990s to an uninformed borrower, folks were trapped in the program when it was discontinued in 2006, and therefore were not eligible for the lowest income driven plans, nor even public service because they did not have the correct loan types and could not change them through a consolidation.

Twenty years later, borrowers are still shackled with these spousal consolidation loans even in cases of divorce, or the death of one spouse. If passed, the Act would allow the loans to be severed, and would enable borrowers to access loan relief programs that they were previously ineligible for, such as PSLF, Income-Driven Plans, etc.

Waiting…

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Published on: July 13, 2022

Student Loan Updates Available in the Cramdown

By Christie D. Arkovich, P.A.

It just occurred to me that our quarterly column, the “Student Loan Sidebar,” which appears in our local newsletter called the Cramdown which is sent to fellow bar members and our judiciary for the Middle District of Florida, Tampa Division, is something that everyone may want to see. These are linked on our home page with no pay wall here. This version is a little easier to read as it is exactly as it shows in the printed copy. The Spring version is up now, and the Summer copy will drop any day now. The full copy of the Cramdown by the Tampa Bay Bankruptcy Bar Association can be found on its website here.

These are regular student debt updates that I have been writing for a few years. They are directed to our local bar association and include the recent happenings and what attorneys need to know about student loans (for themselves, or their clients). They are only 1-2 pages in length, have practice pointers and are designed to raise awareness of what the Department of Education has been up to, or recent cases that are likely to impact local folks. They are easy reads. Lawyers who don’t practice in the student loan field, don’t know a lot about student loans. You don’t have to know a lot about your loans to read these, nor do you have to be an attorney.

Published on: July 8, 2022

PSLF – New Certification Form for MOHELA Transfer from FedLoan

By Christie D. Arkovich, P.A.

I just wanted to flag that as of 7/1/ 2022, PSLF Certification & Application Forms must be submitted to MOHELA. Section 7 of the form has been updated to reflect the new submission instructions if it is accessed using this link. However, if you generate the form using the PSLF Help Tool or access it from the FSA Forms Library, the instructions still say to send everything to FedLoan.

Hopefully, FSA will change this soon, but until they do, this could cause confusion.

We can still use the old form despite the changes in the document, but we would now submit it to Mohela.

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Published on: June 27, 2022

One client’s story: “Goodbye student loans”.

By Christie D. Arkovich, P.A.

I know the Borrower Defense to Repayment Program has undergone so many changes, and been impacted by political and practical concerns that sometimes none of us knew which way was up, however, the recent Sweet settlement gives hope! And some much needed finality. (Remember the settlement is not yet final and could change) Here’s a Facebook note posted by Nic Brown who has been a very vocal advocate in helping others obtain student debt relief. His actions to encourage others to speak out, be a class member for various class actions and file claims where warranted, kept the pressure on. I’m sure many who followed in his footsteps will finally be debt free!

Nic’s story:

In 2008 I graduated from a “college” that promised me a lot in the beginning and ended up being nothing more than a fraud at the end.

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