Student Loans Archives - Page 25 of 31

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

Vermont House Asks Congress to Allow Students to Discharge Student Loan Debt in Bankruptcy

Posted on May 3, 2016by Admin

With national student loan debt increasing to more than $1 trillion and Vermont’s graduates stuck with the highest debt-to-earnings ratio, state lawmakers are urging Congress to let students file for bankruptcy to discharge their student loan debt.

This week, members of the Vermont House gave preliminary approval to J.R.H. 27, a resolution that calls for “federal action to alleviate the national student loan debt crisis.” Federal bankruptcy code prohibits student loan debt from being discharged in bankruptcy, except in cases of “undue hardship.”

“The General Assembly requests Congress to amend the federal bankruptcy code to eliminate the prohibition on relief from federal or private student loan debt through the federal bankruptcy system,” the resolution states.

J.R.H. 27 illustrates the scope of the problem. Student loan debt tripled between 2005 and 2015, increasing to $1.19 trillion, according to the Federal Reserve Bank of New York’s Consumer Credit Panel. Nationwide, almost 7 million student loan borrowers, or 17 percent, are in default as of summer 2015. This is up 400,000 defaults, or 6 percent, compared to 2014.

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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. 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, 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.

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

Murphy Bill will Stop Garnishment of Social Security Benefits to Pay Student Loans

Posted on April 27, 2016by Admin

A bill has been introduced by U.S. Representative Patrick Murphy that will prevent social security benefits from being garnished to repay student loan debt. Murphy says it is a problem that needs to be addressed and believes expanding higher education opportunities and protecting Social Security benefits are key to bolstering the middle class.

In the fiscal year that ended in October, 860,000 individuals had their Social Security benefits reduced to pay for federal debts, with the federal government collecting $382 million, according to the Senate Finance Committee. This number included attempts to collect other debts besides student loans.

According to the General Accountability Office, the number of people whose Social Security benefits were reduced specifically to pay off student loan debt increased from 31,000 in 2002 to 155,000 in 2013. The numbers for those older than age 65 increased from 6,000 to 36,000 in the same period. Some of those were paying down debts incurred to educate their children through co-signing or Parent PLUS loans. In fact, people older than 65 owe $18.2 billion on student loans.

The Murphy Bill is a step in the right direction, but still falls short by failing to alleviate the debt for seniors. Consumer advocates believe the real solution is a change in the law to permit unsustainable student loan debts to be discharged in bankruptcy.

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

Judge’s Ruling on Law School Grad’s Debt Could Trigger ‘Seismic’ Shift in Loan Practices

Posted on April 18, 2016by Admin

A judge’s recent ruling to discharge a portion of a law school grad’s student loan debt could have major implications for those struggling with insurmountable student loan debt. The law student applied for the loan while she was studying for the bar exam as a student at Pace University Law School in 2009. She received a “bar loan” of $15,000 from Citibank, according to the bankruptcy court documents, and she made payments on the loan until June 2012. But in November 2014, after having failed the bar exam, she filed for Chapter 7 bankruptcy.

She wanted the $15,000 loan to be discharged arguing that it was not an “educational benefit” under the U.S. bankruptcy code. Citibank disagreed, arguing that the loan was an “educational benefit” in the fact that the eligibility for the bar loan was dependent on her being a law student.

But Judge Carla Craig of U.S. Bankruptcy Court in Brooklyn wrote in her decision, “However, this argument could be advanced by the myriad private lenders who provide funds to borrowers who are taking educational or training courses. The fact that [Citibank’s] underwriting standards required [Campbell] to be a law student does not turn an arm’s length consumer credit transaction into a ‘benefit’ within the meaning of [the bankruptcy code],” Craig wrote in her opinion.

Although there have been cases involving student loans where judges have ruled the opposite of Judge Craig, this recent decision may have an effect on future cases. This opinion is a confirmation that these loans should be dischargeable in bankruptcy.

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

Obama Plans to Forgive $7.7 Billion in Student Loan Debt for the Permanently Disabled

Posted on April 14, 2016by Admin

The Obama administration plans to forgive $7.7 billion in federal student loan debt for nearly 400,000 permanently disabled Americans. The law states that anyone with a severe disability is eligible to have their federal student loan debt discharged.

Four years ago, the administration took steps to make the process easier by allowing people who are totally and permanently disabled use their Social Security designation to apply for a discharge, but few took advantage of the opportunity. The Department of Education is now taking it upon itself to identify eligible borrowers and guide them through the process to discharge their student loan debt.

Working with the Social Security Administration, the department has been able to identify 387,000 matches in its first review. Approximately 179,000 of those people are currently in default on their loans, putting them at risk of losing their tax refunds and having their Social Security benefits garnished.

Those Americans with disabilities have the right to student loan debt relief. This week’s announcement further extends President Obama’s Student Aid Bill of Rights, which directs federal agencies to overhaul the way Americans repay student loan debt.

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

April 13, 2016: “Million Student March” for Debt Reduction Rally

Posted on April 12, 2016by Admin

Students are literally “taking it to the streets” this week to further promote a wave of activism against crushing student loan debt. The students represent a massive force promoting the idea that higher education should be an investment we make as a society and warns that the $1.3 trillion in student debt is not only burdening debtors, it’s having a serious effect on the nation’s economy.

Last November, the demonstrations took over 125 campuses, as the “Million Student March” stunned the news media with an impressive, nationwide show of force.

This Wednesday, April 13, the next round of protests will command the attention of Americans engrossed in the 2016 presidential election debate about the future of our country.

The demonstrations will have four demands:

Tuition-free public college education;
Cancellation of all student debt;
$15 minimum wage for all campus workers;
Divestment of university endowments from private prisons corporations.

However, many of the 41 million people struggling to pay their student loans are the not-so-young people-currently in the workforce or looking for work- who had to take out loans to get their education and are now struggling to make their monthly loan payments while supporting their families.

Many are middle-aged parents who are struggling to pay their children’s college loans because they co-signed the loans. There are 706,000 people on Social Security still paying off student loan debt, with 191,000 having their retirement benefits garnished to pay their student loans, according to GAO reports.

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

More than 40% of Student Loan Borrowers Not Making Payments

Posted on April 11, 2016by Admin

This shocking statistic raises concern that the $200 billion owed might never get repaid. The new figures represent the after effects of a borrowing boom that has spanned over a decade, with a record number of students enrolling in trade schools, universities and graduate schools.

While most of these borrowers have now entered the workforce, 43% of the roughly 22 million Americans with federal student loans were not making payments as of January 1, according to the Education Department’s $1.2 trillion student-loan portfolio.

Approximately 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had not made a single payment in more than a year; Three million more were at least a month behind, owing roughly $66 billion. Another three million owing nearly $110 billion were in “forbearance” or “deferment,” meaning they had received permission to temporarily halt payments due to a financial emergency, such as unemployment.

Some borrowers are not even repaying their student loans when they can, according to research from Navient Corp. The study showed that borrowers prioritized other bills—such as car loans, mortgages and heating bills—over student loan debt. A borrower who defaults on an auto loan might have their car repossessed; with student loans, the penalty is not as immediate or severe.

Advocacy groups, some members of Congress and the federal Consumer Financial Protection Bureau blame the loan servicers for not doing enough to reach out to struggling borrowers to offer manageable payment options.

The Obama administration has stepped up efforts to reach borrowers and offer the income-based repayment plans. In certain cases, the government is garnishing wages and tax refunds of borrowers who refuse to pay. Private debt-collection agencies hired by the Dept. of Education garnished $176 million in Americans’ wages in the final three months of last year for student debt, according to federal data.

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

The Truth about Millennials and Student Loan Debt

Posted on April 8, 2016by Admin

According to a survey from Citizens Bank, 47 percent of millennials (those in the 18-35 age group), who are college graduates, would be willing to limit their online food delivery in return for reducing their student loans. Concerts, vacations, sporting events and lattes were also priorities.

Limiting any of these luxuries got a “no thanks” from the majority of millennials who were asked if they would consider cutting back to lower their student loan payments. More than half (57 percent) said they regret taking out as many student loans as they did, and about a third of them said they would not have even gone to college if they knew who much it was going to cost them in the end.

Part of the problem has to deal with numbers and denial. The same survey found that nearly half of millennials (45 percent) with student loans do not even know how much of their annual salary they spend on student loan debt. It is 18 percent on average. On the upside, the vast majority of millennials at least know what they owe- more than $40,000 for most.

Here are some suggestions for getting that number down:

Know what you owe.
Millennials who have graduated and have jobs often qualify for better rates than when they had little to no income at the start of school.
Get help at work. A number of companies, including Fidelity and PwC, are offering employees help with paying down their student loan debt.
Seek forgiveness. Certain professions, such as public service jobs, offer student loan forgiveness. Others include public defenders, law enforcement officers, doctors, nurses and some teachers. For example, teachers who work in low-income school districts and teach certain subjects may qualify for complete cancellation of their student loans.

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

Parents the New Target of Student Loans

Posted on March 31, 2016by Admin

Private student lenders and banks are beginning to target their student loan offerings at one demographic who might be able to afford the rising tuition rates: parents. Lenders like Sallie Mae are coming up with “parent loans” that give borrowers funds to pay for their college-bound children’s education.

These parent loans are becoming available at a time when student loan debt is rising at a steady rate. Total student loan debt is estimated to be around $1.3 trillion- and grows by about $2,726 every second! Increasingly, that debt is being passed on to students’ dads and moms. Parents cosign approximately 90% of private undergraduate student loan debt, according to data from MeasureOne.

With these new loans, creditworthy parents will get lower interest rates. In addition, they will not have to pay origination fees, which is an additional cost attached to the processing of a loan. However, these new financing options may still not be enough to combat the rising cost of college tuition.

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

Bankruptcy Judge Rules that Law School Grads can Cancel Bar Exam Loan Debt

Posted on March 28, 2016by Admin

Judge Carla Craig of the U.S. Bankruptcy Court in Brooklyn, N.Y. ruled that bar-exam loan debt is a “product of an arm’s length agreement on commercial terms” and does not fall into the category of a student loan that stays with a borrower who files for bankruptcy.

This means law school graduates who file for bankruptcy protection can cancel debt they have accrued preparing for the bar exam. This decision is the most recent ruling on the matter, which strongly contradicts the widely accepted notion that student loan-related debt can only be canceled in bankruptcy under rare cases of undue hardship.

The case involves a 36-year-old Pace University School of Law graduate, who sought to cancel the unpaid portion of a $15,000 loan she took out from Citibank to study for the bar exam. She graduated in 2009, failed the bar exam after graduating and took a secretarial job at a hotel-management company with a $49,000 annual salary, she said. She filed for bankruptcy in 2014.

The loan was only a small portion of the nearly $300,000 in student loan debt. But the ruling comes as consumer advocacy groups and some federal lawmakers are pushing for student loan debt relief through bankruptcy.

Recently, the U.S. Supreme Court declined to hear a case that would have made it easier to discharge student loan debt in bankruptcy, but the White House has said it would examine whether it should be easier for student loans to be wiped out in bankruptcy. This ruling is just one step closer to student loan debt being discharged in bankruptcy.

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

Federal agency warns student loan companies about automatic defaults

Posted on March 14, 2016by Admin

The Consumer Financial Protection Bureau (CFPB) is giving student loan companies a strict warning when it comes to collecting from borrowers in default when the co-signer of their loan dies or files for bankruptcy. These “auto defaults” leave borrowers with no choice but to repay the loan in full or ruin their credit, making it difficult to purchase a home or car.

This practice often occurs in the private student loan market, where banks and other lenders provide educational financing with loan contracts that give them the right to trigger a default even if the loan is being paid on time. Now the student loan companies are at risk of breaking the law, if they continue with this practice.

When parents or grandparents take on the legal responsibility of a loan, students can get lower interest rates because the co-signers are obligated to repay the debt if the borrower does not.

Lenders often require a co-signer to make the debt more attractive to investors. They will typically release a co-signer from the loan agreement if the borrower has made consistent on-time payments. However, some lenders and loan servicers make this process difficult by having the borrower jump through hoops to get such a release, according the CFPB. They often request proof of graduation, transcripts, employment or salary, and even conduct credit checks.

The bureau first brought attention to auto defaults two years ago after receiving complaints from consumers whose loans were placed in default because of the death or bankruptcy of a co-signer.

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