student loan debt, Student Loans

What $10,000 in Student Loan Cancellation Would Look Like

Lawmakers have been calling upon President Biden to move forward with an executive order that would cancel up to $50,000 in federally backed student loan debtOther amounts have been considered, the lowest amount being $10,000. How this cancellation would look across the country would vary, however, depending on the state and the borrower.  

According to the Student Loan Hero, $10,000 in student loan forgiveness would cost approximately $315 billion. This amount of loan forgiveness would erase outstanding student loan balances for 34 percent of all student loan borrowers, according to their review of Department of Education data.  

COVID-19, student loan debt

New PPP Loan Rules Make It Easier for Student Loan Borrowers to Obtain Funds

New rules with respect to who can receive financial assistance through the Paycheck Protection Program (PPP) will open the door for struggling student loan borrowers who have previously been unable to qualify for the PPP loan program. These new regulations took effect on March 1, 2021.  

The funds received through the PPP were meant to offer financial assistance to struggling businesses, allowing them to stay in operation during the COVID-19 pandemic. For the most part, these loans are forgiven later. Previously, any business that was owned 20 percent or more by an individual who had defaulted on his or her student loan payments was considered ineligible for PPP loan assistance. This rule clearly shut out a large group of individuals and businesses who arguably could use the governmental assistance.  

The Biden administration has changed this rule, effective March 1, 2021. A default or delinquency on student loan payments will not automatically disqualify a PPP loan applicant. This change comes along with several others, including priority access for businesses employing 20 or fewer individuals.  

Over the past several years, student loan debt has surpassed credit card and auto debt with over 42 million Americans carrying some amount of student loan debt. Of this number, approximately one-third of them are in either delinquency or default on these loans.  

According to a report by the Center for Responsible Lending, a large number of these borrowers are self-employed. Approximately 800,000 self-employed Americans are reportedly behind on their student loan payments. Additionally, 500,000 minorities have also be excluded from PPP assistance due to the status of their student loans.   Student loan reform advocates have praised this change, saying that small business owners have been bearing the brunt of the financial struggles suffered during the COVID pandemic.

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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. 

Debt Relief, student loan debt, Student Loans

White House Considering Executive Action to Cancel Portion of Nation’s Federal Student Loan Debt

The Biden administration is considering issuing an executive order that would effectively cancel some portion of the $1.6 trillion in federal student loan debt held by 43 million Americans. This statement comes as no surprise as student loan forgiveness and student loan reform were consistently topics of discussion during the 2020 Presidential campaign.  

The statement came last Thursday from White House press secretary Jen Psaki. She indicated the administration was looking into whether President Biden had the executive authority to cancel a portion of the nation’s outstanding student loan debt. However, they also indicated that they would welcome any legislation brought forth by Congress to do the same.  

Debt Relief, student loan debt

Freeze on Student Loan Payments Extended Through September 2021

The U.S. Department of Education has placed a pause on student loan payments through September 2021. This is among the 17 executive actions President Biden has signed since taking office. This Order, along with the extension on eviction and foreclosure moratoriums, are an effort to relieve the economic impact caused by the coronavirus pandemic. Prior to the Order, payments were scheduled to resume at the end of January.

Student loan debt continues to be a national crisis, as debt tops more than $1.6 trillion. What was once a looming financial crisis, has now been exacerbated by job losses and pay cuts caused by the pandemic. Approximately 1 in every 5 student loan borrowers are in default, according to the U.S. Department of Education. Many are struggling to pay for basic necessities and provide for their families. With the extension of the forbearance agreement, borrowers will not be forced to decide between paying their student loans and putting food on the table.

student loan debt, Student Loans

Beware of this Student Loan Debt Relief Scam in 2021

Student loan borrowers look for ways to save on their loan payments, including having their loans forgiven. However, for the 10 million student loan borrowers who were part of the recent Navient settlement, they now find themselves at risk of falling prey to a new scam.  

This recent Navient settlement came as part of a student loan forgiveness lawsuit. Navient is one of the country’s largest student loan providers, and while the settlement does not necessarily affect how much each borrower owes, scammers are targeting borrowers, by offering false claims of debt forgiveness.  

Debt Relief, student loan debt, Student Loans

Student Loan Changes on the Horizon in 2021

Changes are on the horizon for student loans in 2021. Student loan reform has been an issue discussed for years, if not decades, but several events that occurred in 2020 have pushed the issue to the forefront. The presidential election, the coronavirus (COVID-19) outbreak, and the current economic climate have all pushed lawmakers to realize that student loan reform is a very real issue, and one that requires immediate action. The following possible changes could be coming in the new year.  

Student Loan Cancellation 

A number of recent legislative proposals have brought up the idea of student loan forgiveness. One proposal was included in the Heroes Act stimulus package proposed by House Democrats. In the legislation, lawmakers proposed to cancel up to $10,000 in student loan debt for borrowers who could demonstrate that they were struggling financially. Unfortunately, even though the legislation moved forward to the Senate, this portion of the original bill was removed. Senators Elizabeth Warren (D-MA) and Chuck Schumer (D-MA) have proposed legislation that would cancel $50,000 in student loan debt for borrowers who earn less than $125,000 in annual income. Lawmakers have pushed on President Elect Joe Biden to make a statement as to whether he supports or does not support student loan cancellation. Biden has stated that he would not likely pursue an executive order to cancel student loans, but rather, he encouraged Congress to consider immediate cancellation of $10,000 of student loans across the board. However, the fate of this proposal hinges on whether Republicans will retain control over the Senate. If they do, it is unlikely that student loan cancellation will move forward. 

student loan debt

Student Loan Bankruptcy: A Solution to the Student Loan Debt Crisis

With an estimated $1.6 trillion owed in student loan debt nationwide, it comes as no surprise that solving the student loan crisis has been at the forefront of most political campaigns in 2020. However, many argue that the solution to the problem is much simpler than just forgiving student loan debt. In fact, the answer to solving the student loan crisis could lie in the United States Bankruptcy Code.  

Traditionally, student loans have been all but impossible to discharge in either a Chapter 7 or Chapter 13 bankruptcy case. Since the creation of the Higher Education Act in 1965, Congress has continued to add rules that make discharging federal student loan debt more and more difficult in bankruptcy. In 2005, private student loans were added to the list of debts that were difficult to discharge in bankruptcy, regardless of how much the filer was struggling financially. 

student loan debt, Student Loans

Former For-Profit College Operator Settles Bankruptcy Case with Department of Education

A settlement was reached between former for-profit college operator, FCC Holdings Inc., and the U.S. Department of EducationThe $8 million settlement is part of the company’s bankruptcy case and signifies the end of years of legal battles 

FCC Holdings formerly operated 41 for-profit colleges under various names. Before filing for bankruptcy, FCC Holdings sold 14 of their for-profit colleges to another company, International Education Corporation (IEC). IEC still operates 11 of these campuses in Florida and Texas under the name of Florida Career Colleges.

student loan debt, Student Loans

Bankruptcy Court Discharges $200,000 in Private Student Loan Debt for Colorado Couple

A major victory was scored for student loan borrowers after a U.S. Court of Appeals for the Tenth Circuit issued a ruling stating that a Colorado couple’s private student loan debt could be discharged in their personal bankruptcy case. The ruling allowed $200,000 of private student loan debt to be wiped out, breaking the long-standing stigma that student loan debt, particularly private student loan debt, is near impossible to discharge in a bankruptcy case.

The Colorado couple had taken out $200,000 in private student loans from Navient, one of the nation’s largest student loan issuers. The ruling comes after a similar bankruptcy case, where the borrower also had their student loan debt discharged. In that case, the loan servicer appealed the ruling.

student loan debt

What Borrowers Should Know About Refinancing Student Loan Debt

If you are facing reduced income as the coronavirus spreads, keeping up with your bills may become increasingly challenging—especially if you are among the more than 43 million people in the US who have student loan debt.

Student loan borrowers regularly receive email advertisements regarding the possibility of saving money on their loans by refinancing their student loan debt. The possibility of saving thousands in student loan interest paid on the debt is tempting, but not every refinancing option is legitimate. However, for borrowers who are paying on loans with rather high interest rates, refinancing through a reputable source can be an excellent way to lower how much interest they pay in the end.