Articles Posted in Student loans

One key difference in the foreclosure crisis versus the student loan bubble is that many believe there is no possibility of relief.  That is something that we seek to change every day for our clients via affirmative lawsuits for discharge of what is really consumer debt as it was debt issued beyond the true cost of education, settlements for pennies on the dollar for private student loans owned by NCSLT or other investment trusts, lawsuits for consumer law violations such as the FCRA, FCCPA, FDCPA and the TCPA, and making sure our clients obtain all forgiveness possible.

But for many others who are not aware of these options, it is a common mis-perception that there is no way out.  In examining “What a Student Loan Bubble Bursting Might Look Like,” Allie Conti quoted Persis Yu, a staff attorney at the National Consumer Law Center, in arguing that short of fleeing abroad, or going underground, you can’t ever walk away from student debt.

Studies show that nearly 40 percent of borrowers are expected to default on their student loan payments by 2023.  For those who do not believe that we are in a bubble, I ask how do you explain such a high default rate?  The cost of education is simply creating an absurdly high student loan balance for many.  Student loan servicers push forbearance like a drug – which continues to increase the balance.  Interest is capitalizing at every turn  – whenever someone comes off forbearance or is late in renewing an income driven plan.  Whether we are in a bubble or not, it’s clear that the current system cannot continue unchecked — trapping a generation of students in servitude, straining taxpayers and the solvency of our own government.

This week, Adam Walser of ABC Action News reports on the problem where licensed health care workers who are in default on their federal student loans are at risk of losing that license here in the State of Florida “Florida Board of Health Suspends Health Care Licenses Over Student Loan Defaults”.  We were interviewed by Adam:

“We’re not saying that people shouldn’t repay their loan,” said Arkovich. “We’re just saying that getting them fired probably isn’t the best way to go about that.”

By suspending healthcare workers’ licenses, which by the way only Florida has chosen to pursue this draconian measure, economists fear that many will be put out of work.  At a time when we are told there is a shortage of health care workers.  And in the State of Florida which likely has a greater than average number of health care workers caring for our elderly in nursing homes, assisted living facilities and rehabilitation centers.

You still need to pay your student loans when you are furloughed or else you risk a default.

But if you are a federal employee, take this opportunity to ask your servicer to recalculate your IDR plan while you’ve got zero income!!  Even if the shutdown ends next week, your zero payment would continue for the remainder of your 12 month plan.

Since last week’s announcement that the Department of Education was forgiving $150 million in federal student loans, many people have reached out to us to see if they may benefit.

Those who will receive forgiveness under the $150 million announcement are limited to only those borrowers who:

• were enrolled when the school closed; or

Today, a CNBC reporter Annie Nova,  reports and gives an update on our Public Service Loan Forgiveness cases in Florida against Great Lakes and Navient for misrepresentations about the program.  Both of these cases are seeking or will seek class action status.

https://www.cnbc.com/2018/12/18/borrowers-denied-public-service-loan-forgiveness-file-lawsuits.html

• The number of people who’ve been financially derailed by the public service loan forgiveness program is piling up, and so are the borrowers interested in bringing their servicers to court to seek damages.

In several stunning revelations, Betsy DeVos announced on November 27, 2018 in a press release that the federal government has 1.5 trillion dollars of federal student loan debt (more than credit card debt and auto loans combined).  It took 42 years from 1965-2007 for the federal student loan balance to grow to 500 billion dollars and in the last ten years that 500 billion has tripled.  However, that wasn’t the surprising part.

Only 24% of federal student loan borrowers are currently paying down both principal and interest.  Nearly 20% of all loans are delinquent or in default.  Those are very high numbers.

To compare, that’s seven times the rate of delinquency on credit card debt.