Articles Posted in Student loans

Ok, I have a bone to pick with Great Lakes.  I formerly considered them one of the better student loan servicers out there.  Not any more.  On their website they offer free help and tell people not to pay a fee for student loan help that is free.  It’s spelled out in a big bright banner.  Well that sounds great, if they’d actually help.

Case in point.  A couple in their early 60s came to see me last week.  They were paying $1,400 for Parent Plus loans the wife took out to help her daughter who has been unable to find a job.  They can barely afford the $1,400 and won’t be able to afford it much longer.  The wife helps out in the husband’s business and does not earn a paycheck.  The husband draws Social Security and owns a small business.  They didn’t know how much they owed, so they called Great Lakes while in my office and found out it was $72,000.  But despite being able to easily reach their student loan servicer, they were not given any advice as to how to lower their payments.  NADA, ZILCH.

I knew immediately exactly how to help them lower their payment to zero.  It took me 15 minutes of listening and asking questions.  I told them how I can drop their payment in 1-2 months.  And we can even get a forbearance for the two months if needed.  For this particular case, we will consolidate their Parent Plus loans to Direct Loans and apply for the Income Contingent Repayment (ICR) plan right AFTER they file their tax return in Oct (they had obtained an extension already) as married filing separately.  And presto, zero payment.  That’s right ZERO.  Did Great Lakes tell them any of this?  NO.

Do you know what it means to rehabilitate federal student loans and why it is necessary?  First, once a federal student loan goes into default, several consequences can occur including:

• Administrative wage garnishment;
• Income tax refund intercepts;

On August 26, 2016, the U.S. Department of Education banned ITT Technical Institute from enrolling new students who use federal financial aid.  This is the result of several investigations into their recruiting, marketing and job placement practices.  The loss of these funds may ultimately be the demise of ITT likely in a matter of weeks.  The Chicago Tribune did a story here with more details.

9/19/16 Update:  Since ITT’s closure on September 7, 2016, we are now taking clients for representation to seek a discharge of their federal student loans (including Parent Plus federal loans taken by a parent for a student).  New federal guidelines created following the closure of Corinthian go into effect on November 1, 2016 to allow for former students to potentially discharge debt due to fraudulent representations by the school in violation of state law.

It is too early to say whether former students of ITT will be able to assert a defense to repayment of their federal student loans.  It’s possible because there are several open investigations into various ITT campuses and if they find evidence of fraud or illegal behavior, you may be eligible for relief.  The DOE is expected to wrap up its final regulations regarding borrower defenses to repayment of federal student loans by the end of this year.  We believe that the new regulations will expand the current environment which mostly only permit an administrative discharge when a school is closed within 120 days of your attendance and your credits are non-transferable.

Are you a slave to your private student loans?  We have client after client coming to see us with huge private student loans that are not going away, despite years of throwing money at them.  In fact, in most cases, the balances are larger, sometimes double what they used to be.  Let us help you get these loan balances and monthly payments to something sustainable, affordable and with an end in sight.

While as an attorney it is difficult to tell your clients that perhaps their best option is not to pay, I just ran across this article titled “Top Ten Reasons You Should Stop Paying Your Private Student Loan” from the Huffington Post which agrees with taking such a strategic default.  I have to say I agree with every one of their top ten reasons.  Please take a moment and review the article.  And we have taken this view for a while now, taking action on behalf of our clients to bring these unaffordable private student loans under control.

As HP points out, yes it will hurt your credit and that of any co-borrower.  Private student loans won’t negotiate with you for the most part when you are current.  They may start calling you demanding payment once you start missing payments.  This is where the consumer laws come into play.  Know your rights.  Review our website for actions you can take now to preserve your claims.  We file lawsuit for FDCPA, FCCPA and TCPA violations all the time.  This can lead to substantial reduction in the amount owed on your private student loans.