Student loan debt in America has been a topic of concern for years and now it appears to have spiraled out of control. The government’s Department of Education is one of the largest money lenders in the country, with a $1.2 trillion portfolio of student debt. This figure rivals the entire loan business of mega-lender, JP Morgan Chase.
With so many Americans taking out student loans to help pay for college and graduate school, some are concerned as to how these loans are being handled. Contractors hired by the government have often mishandled payments or provided incorrect information, causing students to miss out on repayment programs that could have saved them money or protected them from defaulting on their loans
In 2015 alone, over 30,000 borrowers complained to the Consumer Financial Protection Bureau about servicers losing paperwork, giving inconsistent information or neglecting to advise them about their repayment options. A Georgia woman contacted her lender to ask about the Public Service Loan Forgiveness program, since she worked as a full-time professor at Kennesaw State University. She was told that she qualified for the program, yet for months her lender neglected to advise her of additional steps she needed to take in order to receive the aid.
President Obama plans to vastly improve America’s student loan system by allowing the government to lend directly to students, instead of issuing loans through the banks. In 2010, Obama declared that $60 billion was saved by ending the bank-based lending program. The president then channeled over half of these funds into Pell Grants for underprivileged students to attend college.
Americans are also concerned about whether the federal government is making money off student loans. While student loans offer lower interest rates than the typical bank loan, many feel that it is still a money-making business. Some federal loans have interest rates as high as 7% in addition to origination fees. Borrower requirements for obtaining a federal loan are very lenient and applicants may receive up to the full cost of tuition, provided they have not recently defaulted on a loan, declared bankruptcy or have any other severe marks on their credit report within the last two years.
Earlier this year, Obama signed the Student Aid Bill of Rights, which outlined ways to improve the servicing of student loans. The department must create a new website that allows borrowers to file complaints and provide feedback about federal student lenders, servicers and collection agencies. It also must establish a central point of access for those who are repaying their federal student loans, so they may view their accounts and track their payments.
For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.
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