Bankruptcy Law, student loan debt

Betsy DeVos Faces Possible Jail Time for Failing to Forgive Student Loan Debt

Department of Education Secretary, Betsy DeVos, has been under fire for her failure to forgive student loans for more than 150,000 student loan borrowers. These borrowers have filed a lawsuit against both DeVos and the Department of Education, alleging they are being deprived of student loan forgiveness they have earned through the borrower defense.

DeVos has been accused of continuing to pressure former students of one of these institutions, Corinthian Colleges, Inc., to continue to pay their student loan debts. These same students say they were promised that their student loan debts would be forgiven under the borrower defense.

student loan debt

Six-Figure Parent Loans and the True Cost of Parent PLUS Loans

Parents will often do anything they need to when it comes to their children, and for many parents, that means taking on student loans for them, on top of the ones they already have left over from their own college education. These loans are normally taken on in the form of Parent PLUS Loans, and can often end up being a struggle for the parent to pay off in the end.

The Parent PLUS program was introduced in the 1980s as a means of financial support for middle- and upper-income families to help pay for their children’s college expenses. Most of the time, parents in these income classes did not qualify for other financial assistance, but the Parent PLUS program allowed them to obtain financing while keeping their liquid assets. However, since that time, the program has also become more popular among lower-income families who may not be able to pay down the loans once they are taken so easily.

student loan debt, Student Loans

100,000 Borrowers Rejected for Public Service Student Loan Forgiveness

Statistics have come out showing just how many borrowers who have applied for public service loan forgiveness have ended up being denied loan forgiveness.  It is estimated that more than 100,000 applicants have been rejected since the program began, which has many scratching their heads asking why so many borrowers are being rejected?

According to the U.S. Department of Education, as of June 30, 2019, 90,962 student loan borrowers submitted 110,729 applications for public service student loan forgiveness. Of these applications, a total of 102,051 have been processed while 8,677 remain pending. Only 1,216 of the over 102,000 applications submitted have been approved, leaving a total of 100,835 applications being rejected. These numbers mean that less than one percent of all applications have been approved.

Digging deeper into these numbers, only 845 borrowers have received a collective $52 million in public service student loan forgiveness. The average debt discharged is $61,592. Another 726 applications have been approved under the Temporary Expanded Public Service Loan Forgiveness Program, which has given an additional 681 borrowers relief. However, a large number are still left without any recourse or assistance.

The reasons why so many applicants are being rejected vary. Fifty-five percent of them were because the borrowers failed to make all the required qualifying payments while 24 percent of them were due to missing information. Another 15 percent reportedly did not include “eligible” loans. Two percent were rejected due to employment date discrepancies, and another two percent were because the employer listed was not an eligible employer under the program.

If these issues are discovered early on, they can be remedied fairly easily. However, problems arise when the borrower does not discover this fact until years into the program.

The Public Service Loan Forgiveness Program forgives federal student loans for borrowers who are full-time employees, working more than 30 hours per week, in an eligible federal, state, or local public service job or 501(c)(3) nonprofit job. The borrower needs to make 120 eligible on-time payments, as well. Over half of borrowers who were rejected failed to meet this specific requirement.

One of the requirements under the program is the borrower must complete the Employment Certification Form and submit it to the U.S. Department of Education whenever the person begins a job in public service, when he or she switches employers, and annually to ensure that the borrower is on track. Not submitting this certification form can result in the person not remaining on the right track to qualify for the program.

Additionally, borrowers must be enrolled in an income-based federal student loan repayment plan to qualify and must make 120 required payments while enrolled in this federal student loan repayment plan.  As these kinks get worked out, it is possible that the number of applicants who are approved for loan forgiveness will increase. At this time, however, the small amount that are being approved is less than encouraging.

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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. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all 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 McMaken 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 McMaken website at www.miamibankruptcy.com.

 

student loan debt, Student Loans

Be on the Look-Out for These Student Loan Scams

More than 40 million borrowers are carrying an estimated $1.5 trillion in student loan debt. With that many individuals carrying student loan debt, it should come as no surprise that many scams are out there, hoping to take advantage of borrowers who are desperate to get out of debt quickly. Borrowers need to be aware of these debt relief scams in particular, which are now facing investigation by the Federal Trade Commission (FTC).

Student Loan Debt Elimination Scams

Many companies are out there offering the promise of eliminating student loan debt for borrowers who are desperate for a way out. However, if someone is offering a deal that sounds too good to be true, that is usually because it is, in fact, too good to be true. Many companies will promise to wipe away a person’s loans when they have no actual ability to do so. The fact of the matter is no one can promise student loan forgiveness or cancellation. Student loan borrowers can only ever receive forgiveness if they meet very specific conditions, and the fastest any borrower can receive loan forgiveness is five years. Even these forgiveness programs can be very difficult in terms of qualifications.

If the borrower has federal student loans, it should be noted that no student loan debt relief company can negotiate directly with the federal government to obtain lower rates on those loans. If a company promises the ability to negotiate a lower payment, this can normally only be done via an income-drive repayment plan, but most of these can be applied for directly by the borrower, not a third-party entity.

Debt Relief, student loan debt

Seniors Carrying as Much Student Loan Debt as Borrowers in Their 30s

The student loan debt crisis is at an all-time high, but it appears that when it comes to the age of the borrower, this type of debt does not discriminate. According to Experian, a review of student loan balances across different age categories showed that borrowers who were in their 30s and borrowers who were in their 60s carried around the same amount of student loan debt.

According to Experian, the average 30-year-old borrower owes $36,406 in student loan debt while the average 60-year-old borrower owes $35,637.

Bankruptcy Law, student loan debt

How to Handle Zombie Student Loan Debt

Student loan debt has been known to haunt borrowers for years, if not decades, after that first loan is issued. Many borrowers find themselves on payment plans that can least up to 25 years. To them, a student loan is like a mortgage without the benefit of having the house to live in. Once the debt is paid in full, the last thing that person wants to think about again is that loan. However, for many borrowers, that debt never seems to go away and often comes back in the form of zombie debt.

Most forms of debt are limited by a statute of limitations, which governs how long a creditor can sue the borrower for the debt. Federal student loans were once governed by a six-year statute of limitations until 1991 when that statute of limitations was lifted. Now they are technically collectible indefinitely. Private student loans, however, are still limited by statute.

Debt Relief, student loan debt, Student Loans

FTC Takes Legal Action Against Corrupt Student Loan Debt Relief Companies

The case comes as a warning to student loan borrowers struggling with their debt and company’s looking to profit from it. The Federal Trade Commission is cracking down on two student loan debt relief operations and the financing company that assisted them. The complaint is alleging the companies charged illegal upfront fees, led consumers to believe the fees would go towards reducing their loan balances, and falsely promised to permanently lower and even eliminate their balances.

The FTC has also charged the companies with locking its customers into high-interest loans and paying their fees without making required disclosures. This caused their customers to sink further into debt.

Bankruptcy Law, Credit Card Debt, Debt Relief, student loan debt

Good Debt vs. Bad Debt: Do You Know the Difference?

When it comes to debt, not all debt is created equal. If the money being borrowed helps increase the borrower’s net worth or income, that debt is considered “good” debt, while bad debt only worsens a person’s financial situation.

Good Debt

Good debt is any obligation that would increase a person’s net worth or income. While it does involve a financial obligation to repay a debt, it can also be something positive or beneficial to the consumer.  Good debt also tends to come with a lower interest rate on the amount owed. Mortgages are one example of good debt because the person who takes out the loan ends up with an asset that will increase his or her net worth. Car loans are also considered good debt since they are attached to an asset, namely a car. Student loans are another type of debt that are considered good debt, especially when it comes to obtaining a desired degree and furthering job prospects and earning power for the borrower. These loans may not be attached directly to an asset, but they tend to have lower interest rates, especially if the loans are federal student loans.

Credit Card Debt, Debt Relief, student loan debt, Timothy Kingcade Posts

The Effects Student Loan Debt and Credit Card Debt have on U.S. Economic Growth

The fact that many Americans are struggling to pay their student loans and credit card debt is not just effecting the individuals carrying the debt. It is taking a toll on the economy, as well. In fact, these two growing categories of debt are reportedly weighing down U.S. economic growth.

Credit card balances are at an all-time high at $868 billion in the second quarter, which is up from $848 billion reported in the previous three months, according to the Federal Reserve Bank of New York. Consumer debt is also climbing, hitting an all-time high of $13.86 trillion in the second financial quarter. When compared with the previous high of $12.68 trillion just before the 2008 recession, financial experts have expressed concern as to what this could mean for the country’s financial well-being.

Debt Relief, student loan debt, Student Loans, Timothy Kingcade Posts

Student Loan Debt Relief Scams to Watch Out For

Student loan debt is an issue for many Americans, and for a great number of them, the situation has become a desperate one. This fact could be why so many borrowers are falling prey to student loan debt relief scams.

It is estimated that the national total student loan debt is well over $1.5 trillion. The average student loan borrower in 2018 is carrying just shy of $30,000 in loan debt, according to Student Loan Hero. This figure only represents what the average undergraduate student owes. For a graduate or professional degree, the borrower may end up with student loan debt well into six figures. With this much debt, borrowers can be paying on their loans for decades, which is why many of them jump at the opportunity, when presented, to get some sort of relief on their debt.  The problem is these “relief opportunities” end up being more trouble than they are worth.