Student Loans Archives - Page 10 of 31 - Kingcade Garcia McMaken, P.A. Bankruptcy Attorneys

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

What Student Loan Borrowers Need to Know about the Navient Lawsuits

Posted on October 4, 2018by Admin

Several important legal cases are pending in federal courts, many of them naming student loan service provider, Navient, as a party to the case. In fact, the number of lawsuits made against federal student loan servicers has increased rapidly over the past few years.

Navient, along with federal student loan provider, Nelnet, have been named as parties in these lawsuits. Currently, the state attorneys general for the states of California, Illinois, Washington and Illinois have filed lawsuits against Navient. These lawsuits follow an earlier lawsuit filed by the Consumer Financial Protection Bureau (CFPB) in January 2017, which alleged that Navient had incorrectly processed student loan payments, which, in turn, kept borrowers who were struggling to meet their monthly payments from being able to make lower repayments.

These lawsuits have come at a time when faith is being lost in the current administration and its motivation to protect borrowers from lenders, like Navient, who they say take advantage of borrowers and their inability to make payments. The CFPB created the Office of Students and Young Consumers during the Obama administration as a way to protect the rights of borrowers, but recent moves by the Trump administration have taken this office and moved it into the larger Office of Financial Education. As a result of these controversial changes, the prior CFPB student loan ombudsman, Seth Frotman, resigned in protest. In his resignation letter, he accused the administration of changing the mission of the CFPB and failing to protect borrowers from predatory lending practices.

Now the state attorneys general offices feel that it is their responsibility to protect their constituents if the federal government refuses to do so, which has led to these recent lawsuits. These states have alleged similar grounds as were alleged in the CFPB suit against Navient by saying that the company put borrowers into temporary forbearances on their loans when they should have worked with them on signing them up for income-based repayment plans.

Forbearance suspends borrowers’ monthly payments but keeps the interest accruing in the interim. Even taking off just a few months from making payments on the loan, can add hundreds even thousands of dollars to the balance due to interest. Therefore, once the forbearance period ends, which is meant to be a temporary period of time, the borrower will owe substantially more than he or she did at the start due to the interest rates running during the forbearance.

These states argue that the borrowers would have qualified for income-based repayment plans which would offer a lower monthly payment that they could arguably meet. These plans would have allowed them to stay up on their payments and not fall behind. In addition, making the monthly payments lower would make it easier for these borrowers to eventually be considered for loan discharge.

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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.

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

Public Service Student Loan Forgiveness Program Rejects 99% of Applicants

Posted on September 28, 2018by Admin

A simple promise was made to student loan borrowers by the government: Work in public service for 10 years, make your student loan payments on time for 10 years, and the Dept. of Education will forgive the remaining balance on the loan. Borrowers have complained for years that the program has not worked as advertised, and new data reveals they’re right.

The U.S. Department of Education released the latest statistics for public service loan forgiveness:

As of June 30, 2018, 28,000 student loan borrowers submitted 33,000 applications for public service student loan forgiveness program. Of that total, approximately 29,000 applications have been processed. Of that total, more than 70% of applications have been denied due to student loan borrowers ‘not meeting the program requirements.’ Another 28% of applications for public service loan forgiveness were denied due to missing or incomplete information on the employment certification form.

The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments.

So, who has been approved?

Approximately 300 applications have been approved, but only 96 borrowers have collectively received $5.52 million in public service loan forgiveness.

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Bankruptcy Law, Debt Relief, Student Loans

Trump’s New Budget Puts an End to Student Loan Debt Forgiveness Program

Posted on September 21, 2018by Admin

The President’s new budget proposal seeks to make major cuts to important student loan forgiveness programs and affordable repayment plans. The proposal, officially announced this week, seeks to cut income-based loan repayment programs and eliminate the Public Service Loan Forgiveness Program.

President Trump’s budget will also eliminate subsidized student loans. It is estimated that in the 2016-2017 school year, approximately 5.7 million students have subsidized loans. The budget will also reduce the number of income-based repayment plans offered to students. These plans allow the borrowers to pay back their loans at a rate that is proportionate to their income. The budget sets to drop these student loan assistance programs from four to one. The one program that is left caps students’ monthly payments at 12.5 percent. Under most current income-based repayment programs, student borrowers pay 10 percent of their discretionary income.

Also, under this program, undergraduate student borrowers would end up having their loans forgiven sooner, dropping the timeline down from 20 years to 15 years. They would end up paying more per month under this program, but for a smaller length of time. On the other end of the spectrum, however, graduate students will not have their loans forgiven for 30 years.

The Public Service Loan Forgiveness (PSLF) program was created under the College Cost Reduction and Access Act of 2007 to encourage graduates to work in public service while offering them a benefit of eliminating their federal student loan burden. These public service positions include public school teachers, social workers for the state or health researchers. If the student borrowers work in these positions and continue making payments on-time for 10 years, they can have their loans eliminated. It is estimated that two-thirds of student loan borrowers have expressed an interest in the PSLF program. These students are reported as making less than $50,000 annually. Trump’s budget plans to eliminate this student loan forgiveness program entirely.

If this program is eliminated, many are worried that college graduates will be less likely to apply for and take public service jobs. This elimination will end with fewer public defenders, public school teachers, state social workers, legal aid providers, even law enforcement. With their pay being lower than what it would be in the private sector, these borrowers are not going to be able to meet their monthly obligations, especially if the government makes it more difficult for the student to apply for an income-based payment program.

In addition, the budget cuts funding for approximately 30 other higher education programs, including the Supporting Effective Instruction State Grants, the Federal Supplemental Educational Opportunity Grant, and 21^st Century Community Learning Centers.

These changes would begin for students who borrow after July 1, 2019. The President’s proposal has been submitted to Congress and is subject to their approval. It is predicted that the budget will be modified; however, it remains to be seen what these modifications could entail. Student loan advocates hope that these modifications will restore some of the programs eliminated through this budget proposal. The alternative could mean very tough times ahead for student loan borrowers.

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Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Do Not Fall for These Student Loan Debt Forgiveness Scams

Posted on September 20, 2018by Admin

Student loan debt is a major problem for many Americans. At times, it can seem like the debt will never go away. For many young borrowers who are barely able to make their payments, the thought of having their debts completely forgiven seems too good to be true.

Some borrowers are falling prey to companies who reach out to them via email or telephone, informing them that they have the relief that the borrower so desperately needs. These companies are telling the borrowers that they can work with them on a repayment plan or even offer complete student loan forgiveness. Some of these companies have been so bold as to state that they are associated with the U.S. Department of Education.

One such company, calling themselves the United Students of America, is contacting student loan borrowers and telling them that in exchange for paying them every month, the borrower can stop paying the student loan provider. In exchange, a representative from the company will work with the student loan provider to forgive the entire student loan. Sounds too good to be true, right? That is because it is.

These companies, masking themselves as “loan forgiveness programs” are taking advantage of individuals who are already in a very vulnerable financial state. They know that the borrowers are desperate for any type of relief and will say all of the right words just to get what they want.

The company, the United Students of America, has a disclaimer on their site stating that they do not negotiate, adjust or settle debts. However, unless the borrower were to know to look up this information in advance, he or she would be relying on whatever sales pitch is being given to him or her at the time. All they need is for the other person on the phone to believe them enough to give them their financial information.

It is always recommended that a borrower work directly with the student loan provider for any repayment programs. Always do your research into the company contacting you before making any decisions. Lastly, if a company is calling you directly, stating they have the solution to your student loan problems, chances are they are trying to sell some type of a scam.

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Bankruptcy Law, Student Loans, Timothy Kingcade Posts

Student Loan Debt Puts the American Dream in Jeopardy

Posted on September 17, 2018by Admin

College students graduating and entering the work force are quickly discovering that their dreams of finding the perfect job, purchasing a home and starting a family, are just that – a dream. In fact, that far-off vision of retiring after working a job that they love and living their remaining years in a secured financial status hardly seem like reality. These visions are dashed as soon as they get that first loan statement showing just how much their education has cost them.

Many of these graduates are struggling to even make enough money to make their student loan payments, let alone save for a home or retirement. It is now estimated that 44 million Americans have some type of student loan debt, which is now estimated at $1.5 trillion.

While getting an education is arguably an important goal, the cost of a four-year degree is becoming too much for many students to bear. With the high costs to attend a university, most students have to take some type of financial aid, including public and/or private student loans. The average student now walks away with $35,000 in student loan debt, but many of them have much more than that if they choose to go to a private university or go onto graduate school, law school or medical school. It is not uncommon for a student graduating with an advanced degree to owe over six figures in student loan debt.

Education researchers are now saying that these figures have indicated we are at a time of crisis. After graduating, many student loan borrowers do not get a job with an income high enough to meet basic living expenses and afford to make their monthly student loan payments. This situation only sets them up for the possibility of defaulting on their student loans, a figure which is now estimated to be $560 billion in unpaid student loan debt.

Forbearances and deferment oftentimes only postpone the inevitable, while interest accrues every month and the overall balance balloons, extending the repayment period even further.

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Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Betsy DeVos Loses Student Loan Lawsuit Brought by 19 States – Protections for Student Loan Borrowers Upheld

Posted on September 13, 2018by Admin

A Washington federal court judge ruled this week that U.S. Secretary of Education Betsy DeVos and the department’s postponement of the Borrower Defense Rule was ‘procedurally improper.’ The lawsuit, brought by 19 states and the District of Columbia, accused her department of delaying regulations meant to protect students who took out loans to attend college from predatory lending practices.

The Obama administration created the Borrower Defense Rule following disclosures that some for-profit colleges lured students with promises of an education and diplomas that would allow them to get jobs in their chosen fields. However, in the end the diplomas and degrees were not recognized by employers, leaving student loan borrowers with massive amounts of debt and nothing to show for it.

Federal student loan borrowers who attended a school that misled them about the quality of their education may qualify for loan forgiveness under the borrower defense repayment rule.

The Borrower Defense Rule changed the regulations for forgiving student loans in cases of school misconduct and required “financially risky institutions” to be prepared to cover government losses in those instances, according to U.S. District Judge Randolph Moss’s 57-page ruling.

Moss continued, by postponing the effective date of those regulations, the Education Department deprived students “of several concrete benefits that they would have otherwise accrued. The relief they seek in this action — immediate implementation of the Borrower Defense regulations — would restore those benefits.”

Moss’ decision also included claims by two student loan borrowers in a lawsuit filed on behalf by the consumer advocacy group, Public Citizen.

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Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

What Trump Has Done to Undermine Student Loan Debt Reform

Posted on September 6, 2018by Admin

Student loan debt has skyrocketed since President Trump took office. In fact, the amount of student loan debt has increased by $110 billion in the last 16 months to a total of $1.41 trillion nationwide. It is currently estimated that 45 million Americans have student loan debt and this figure is up two million since Trump’s inauguration.

Not only has the number of student loan borrowers increased rapidly, but actions taken by the Trump administration have raised major red flags with those who have fought for student loan reform for years. The Trump administration has methodically dismantled effective debt relief reforms set by the Obama administration in their efforts to curtail abusive lending practices.

During the Obama administration, the student loan industry was forced to give back approximately $750 million in what was found to be abusive marketing and collection practices targeting student borrowers.

Further, the Department of Education Secretary appointed under Trump, Betsy DeVos, has been moving to eliminate Obama-era rules that penalize lenders who engage in abusive student loan debt collection practices.

One of the major changes made by the Trump administration was through the reorganization of the Consumer Financial Protection Bureau (CFPB) and its student loan office. The administration argued this reorganization was routine and made no major change to the agency.

However, one of the major changes was made to the student loan debt office’s watchdog or ombudsman function. This specific office was created to address payment difficulties student loan borrowers were facing. By the time the borrowers got to the point where they were reaching out to this office, they were fielding numerous phone calls, many of them harassing and threatening, as well as lawsuits and collections cases. Other borrowers accused lenders of misleading them about any eligibility for debt relief programs, assistance that is meant to lower the borrower’s payments or have their loans forgiven.

The student loan office was key in a major lawsuit against Navient, Inc., a major student loan service provider and former division of Sallie Mae. Navient was accused of convincing borrowers to go into expensive repayment plans without telling them of more reasonable and cost-effective options. A trial date has not yet been set, which leads many to question whether one will ever be set.

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Debt Relief, Student Loans, Timothy Kingcade Posts

Women Hold the Majority of Student Loan Debt

Posted on August 30, 2018by Admin

When it comes to who holds the most student loan debt, a recent report issued by the Federal Reserve showed that women carry the highest burden. According to the Federal Reserve data, the total amount of student loan debt is now around $1.52 trillion as of March 2018. Of this amount, women carry $900 billion.

Experts believe that this number is because more women are now attending college than men. According to the American Association of University Women (AAUW), 56 percent of college enrollees in the fall 2016 semester were female. In 2017, it was reported that 57.3 percent of college enrollees were females, which indicates an upward trend.

The data also indicated that women were more likely than men to take on student loan debt. According to the AAUW data for the 2015-2016 school year, 41 percent of all female undergraduate students signed onto a new student loan debt to go to school. Only 35 percent of male undergraduate students did in comparison. Of course, the numbers varied depending on the type of degree being sought, where the student went to school and the degree levels.

Not only were more female students taking out student loan debt, but the loan balances were higher for female students. In fact, the numbers showed that the female student loan balances were 14 percent more than their male counterparts. The female students ended up with around $2,700 more in student loan debt upon graduation than their male colleagues. It could be because the female students were reported as pursuing a graduate degree after undergraduate studies were complete, which only added to their already higher balances.

The problem with these numbers is once women graduate from college, the pay gap that exists between the two genders makes it harder for them to pay off their debts. According to Pew Research, women only make 82 cents for every dollar a man makes in the workforce. Women are also more likely to take time off from their careers to have children and raise a family, only returning to the workforce after the children are grown, which also puts them at a disadvantage for catching up to their male counterparts in income and in paying off their student loan balances.

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Resignation of Student Loan Watchdog Demonstrates Trump Administration’s Unwillingness to Protect Borrowers

Posted on August 28, 2018by Admin

The recent resignation of the government’s chief watchdog of the student loan market has raised serious concern among advocates as to how the government will proceed with enforcement. Seth Frotman, the student loan ombudsman at the Consumer Financial Protection Bureau (CFPB), resigned this week, in a letter that indicated his resignation came as a direct result of the current administration’s lack of protection for student loan borrowers.

Frotman’s letter was delivered to Mick Mulvaney, the acting director of the CFPB. In the letter, Frotman stated that his departure was a direct result of changes at the bureau, including the lack of enforcement for violations and recent protection that bad lenders have received.

The purpose of the ombudsman position is to protect the interests of student loan borrowers, a number which has now been estimated to be approximately 42 million Americans. It is also estimated that the current figure of outstanding student loan debt is $1.4 trillion.

According to the deputy director of higher education policy at New America, Clare McCann, Frotman’s resignation seemed to come from his frustration in his inability to carry out his original mission when coming onboard at the CFPB. In his letter, Frotman stated, “You have used the bureau to serve the wishes of the most powerful financial companies in America.”

The ombudsman is an important position, serving as the voice for 42 million student loan borrowers. Since 2008, the student loan ombudsman office has reimbursed over $750 million to borrowers who were victims of illegal lending practices and servicing failures.

Frotman has been the student loan ombudsman since 2016. He was key component in the current lawsuit against one of the largest student loan providers, Navient. It was the claim of the CFPB that Navient illegally cheated its borrowers from the right to lower their student loan payments.

The Navient lawsuit is still pending, and many are wondering if the company will be held responsible for its practices. If the ruling is lenient on the company, this will only further demonstrate the concerns advocates have for the direction that is being taken when it comes to representing the rights of student loan borrowers.

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More than 1 million student loan borrowers default each year

Posted on August 23, 2018by Admin

Student loans are a problem for many Americans, but recent loan statistics show just how serious the problem is. More than one million student loan borrowers reportedly go into default on their loan obligations every year, surpassing auto loans and credit card debt.

In fact, the amount of student loan debt Americans carry has tripled in size over the last decade and is now over $1.5 trillion.

Default occurs when a borrower has not made a payment on their loans in over a year, thus triggering the debt being sent to a third-party debt collector.

Why are so many borrowers defaulting on their loans? For many of them, continuing to make the payments has become not feasible. Because of this, it is estimated that approximately 40 percent of borrowers are expected to default on their student loan obligations by the year 2023.

According to a report from the Urban Institute, a progressive Washington, D.C., think tank, within four years after graduating or leaving school, approximately one-fourth of all borrowers have defaulted.

Borrowers who end up defaulting on their loan obligations are less likely to carry some type of debt that requires a risk assessment, like a mortgage or credit card, but they are more likely to have medical bills or utility bills that end up being sent to collections. All these additional debt obligations can put added pressure on the borrower, and for this reason, many of the borrowers will put the student loan payments dead last next to other obligations.

Those who defaulted on their student loan obligations were found to live in an area where the median income was $50,000. Those who did not default on their loan obligations typically lived in areas where the average income was around $60,000.

The report further showed that the amount of the loan balance did not seem to matter. Even those who carried a small loan balance still struggled to pay off their debt.

What happens to a borrower’s loan when it goes into default?

As soon as someone’s student loan goes into default, their credit score will take a hit of approximately 60 points, dropping the average defaulter’s score to 550, which is a “poor” score. If the borrower stays current, the average credit score has been in the high 600s.

If the case ends up going into collections, the borrowers find themselves in the danger zone of receiving a judgment against them and wage garnishment. Collections judgments and wage garnishments can be extremely difficult to shake in bankruptcy cases, which can make the situation even worse if the borrower falls into a dire financial situation.

If someone finds himself or herself not able to make student loan payments, the first recommendation is to contact the student loan servicer. Many of these servicers will work with borrowers on payment plans that are capped at a monthly payment based on a percentage of the borrower’s income. The borrower can request the loan be put in forbearance, which temporarily postpones payment of the debt- however, the interest on the loan will continue to accrue. If the loans are in default, contact the loan servicer to see what can be done to get the account in good standing. The worst thing that a borrower can do is to ignore the loan payment requests.

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