federal student loan debt Archives - Page 3 of 6

Debt Relief, student loan debt, Student Loans, Uncategorized

$5.3 Million in Student Loan Debt Canceled as Part of the ITT Tech National Lawsuit Settlement

Posted on June 19, 2019by Admin

Hundreds of Pennsylvania students who attended the now-bankrupt ITT Technical Institute will receive $5.3 million in student loan debt relief as part of a national settlement. Pennsylvania Attorney General Josh Shaprio said 570 former ITT students will have their student loan debt canceled as part of a multi-state settlement.

“With the private student loan program that ITT and CUSO established, ITT Tech was able to take advantage of thousands of hardworking students who were simply trying to complete their education,” Shapiro said in a statement.

The national settlement provides $168 million for more than 18,000 students harmed by abusive lending practices. ITT Tech targeted “low income” students who could not afford to pay tuition out of pocket and relied on federal loans to pay for school, according the settlement. A coalition of 44 states reached a settlement with Student CU Connect CUSO LLC, which was managing the loans for ITT.

ITT Tech had more than 136 campuses in 38 states when it shut down in September 2016. This $600 million settlement cancels all the student loan debt owed to the school.

The agreement specifically deals with student borrowers who attended ITT Tech between the years 2006 and 2016. The settlement also returns $3 million to students who made payments on their loan to the school after the school’s parent company, ITT Educational declared bankruptcy in 2016.

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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, Debt Relief, student loan debt, Student Loans

Possible Solutions to the Student Loan Debt Crisis

Posted on June 5, 2019by Admin

With more than $1.5 trillion in student loan debt owed nationwide, it can be safe to say that the student loan crisis has reached a breaking point. For lawmakers, one solution to bring change to this problem is allowing student loan debt to be discharged in bankruptcy court.

Another measure that has received a great deal of public support is Senator Elizabeth Warren’s proposal to completely wipe out the majority of America’s student loan debt through a loan forgiveness program. Her proposal has received support from other presidential hopefuls, including Senators Bernie Sanders, Kamala Harris, and Amy Klobuchar, as well as Representative Eric Swallwell, all of whom are co-sponsoring it.

Recently, the American Bankruptcy Institute’s recommendations to allow student loan debt to be discharged in bankruptcy were published.

The average college student graduates with about $30,000 in student loans. This number does not include those students who pursue a master’s or post-graduate degree. Many of those students end up owing six figures in student loan debt.

The burden these loans present to young graduates is intense and can even follow them into retirement. Outstanding student loan debt can affect a person’s job in 13 states. To keep up with loan payments, many borrowers have accumulated credit card debt, just to be able to afford basic living expenses.

Student loans, while not impossible to discharge in bankruptcy, are extremely difficult to eliminate in a Chapter 7 or Chapter 13 bankruptcy case. Other obligations may be eliminated at the end of the case, but the student loan ones will stay with the borrower even after other obligations are discharged.

Bankruptcy courts use the “undue hardship” test to determine whether a filer should have his or her student loan debt discharged, but no set standard has ever been made on what qualifies as an undue hardship, making it very difficult to ever receive relief. New bi-partisan legislation has been introduced and proposes regulations that ensure student loan debt is treated like other forms of consumer debt in bankruptcy, meaning it can be easier to discharge.

Without the ability to discharge the largest amount of debt many bankruptcy filers are carrying; these individuals will never be able to receive the fresh start bankruptcy is meant to give them. While this change may not completely solve the student loan crisis, many financial experts are hopeful it can be a catalyst for change.

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Bankruptcy Law, student loan debt, Student Loans

Senior Student Loan Debt a Growing Trend

Posted on May 24, 2019by Admin

We are all aware of the effects student loan debt has on the Millennial generation, but many are unaware of the effects it has had on the senior population. According to a recent CBS News Report, seniors account for a growing number of student loan borrowers. For seniors who fall behind on their student loan payments, the government can garnish their social security.

According to Forbes data, senior student loan debt has increased 71.5% in the last five years. To date, seniors ages 60 to 69 owe a total of $85.4 billion in student debt. The reasons behind the increase in debt:

Seniors who have taken out loans to go back to school to increase their job prospects;
Seniors who have taken out loans for their children or grandchildren to go to college or graduate school. Parent PLUS loans come with a fixed interest rate of 7.6%

Seniors can see their Social Security benefits garnished at a rate of 15% to pay off student loans in default, according to recent report from AARP. It also notes that in 2015 alone, almost 114,000 student debtors ages 50 and older had some of their Social Security benefits seized to repay overdue federal student loans, which are subject to garnishment. Many of these funds were seized from disability benefits, not Social Security benefits paid out beyond the age of 62.

Some options to consider for anyone struggling with student loan debt (including seniors) include: Income driven repayment plans, graduated payment plans, extended repayment plans or refinancing your student loan debt.

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For Florida seniors 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 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, Debt Relief, Student Loans

Another Broken Promise to Student Loan Borrowers: Public Service Loan Forgiveness

Posted on May 8, 2019by Admin

Public Service Loan Forgiveness Program Proves Unforgiving for Borrowers

A program that was once promoted as a way for student loan borrowers to receive forgiveness for their student loans is now coming under fire after it has been discovered that 99 percent of its applicants have been rejected.

The Public Service Loan Forgiveness Program was created in 2007 and promised to cancel any remaining student debt for those who work government jobs or for non-profit organizations and have been making continuous payments on their student loans for 10 years. Many teachers, public defenders, Peace Corps workers, and law enforcement officers have applied for the student loan forgiveness offered by the program.

It is estimated that over 73,000 borrowers have applied for debt forgiveness as of March 31, 2019, according to data from the U.S. Department of Education. However, only 864 of these borrowers have had their loans forgiven. In fact, only one percent of all Public Service Loan Forgiveness (PSLF) applications submitted were approved for loan forgiveness. This rate of approval leaves borrowers frustrated and confused as to why they worked so hard to qualify for a program that is now failing them.

Consumer advocates claim that the legislation was poorly written while others claim that mismanagement by loan servicers has led to the issues these borrowers are now facing.

According to the breakdown from the U.S. Department of Education, 16 percent of the denials were due to the borrower having the wrong type of loan while 25 percent were due to information missing in the applications. In addition, 53 percent of applications were denied due to the borrower not making enough payments.

One of the major issues that borrowers are discovering is that while their loans are federally-guaranteed, they are actually privately owned. Many law schools have been accused of offering only private student loans in their financial-aid packages but not clarifying this fact to the borrower. Congress has fixed this issue by eliminating federally-guaranteed private loans as of 2010, but if you are a borrower who took out one of those loans before that time, this fact may hurt your chances of qualifying for the loan forgiveness.

Government officials have also been accused of not properly educating borrowers on the requirements of the program or publishing clear guidelines on which employers qualify as a public-service organization and which do not, another issue that has resulted in denials for many borrowers.

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Student Loans, Timothy Kingcade Posts

Student Loan Debt and College Costs Set to Increase with Trump’s New Budget Proposal

Posted on April 3, 2019by Admin

President Trump’s proposed budget could have some serious consequences for individuals carrying student loan debt. In fact, student loan debt seems to be a major part of the President’s proposed fiscal year 2020 federal budget, which was sent to Congress on Monday.

The proposed fiscal year 2020 budget includes various cuts and changes to federal student loan programs. In addition, the budget includes a 10 percent total decrease in Department of Education Funding. The total cuts end up being $62 billion, which is $7.1 billion less than what the DOE had allotted in funds for the 2019 fiscal year.

Many financial experts worry what these changes could mean for student loan costs, as well as college expenses. Not only would the budget proposal raise costs for attending college, it could also result in a significant increase when it comes to student loan debt.

An estimated $1.5 trillion in student loan debt is owed nationwide. However, it is estimated that this new budget could force borrowers to pay an additional $207 billion more on their student loan debt on top of this already astronomical amount.

One part of the proposed budget eliminates the subsidized student loan program. Students who are enrolled in school could discover that they are accruing interest on their loans even though they are still enrolled in school. Currently, if a student is enrolled in school, they do not accrue interest on their loans, which means these students could be in for a rude awakening if the proposals go through. Adding interest while students are attending college could increase the cost of attending college or even graduate school for these students.

President Trump’s budget proposal also eliminates the public service loan forgiveness program, which has been law since the President George W. Bush era. Many graduates utilize this program as a means of eliminating their student loan debt by entering the public sector and taking jobs as prosecutors, public defenders, legal aid attorneys, police officers, firefighters and civil servants. Taking a lower paying job with the end goal of eliminating tens of thousands in student loan debt pales in comparison to the alternative of being stuck with student loan debt for decades. However, this option may no longer be available for these borrowers if the budget is approved.

The proposed budget does call for quicker loan forgiveness with respect to undergraduate student loans. The budget proposal includes the possibility of student loan debt being forgiven after 15 years instead of the current 20-year term.

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Debt Relief, Student Loans, Timothy Kingcade Posts

How Student Loan Debt is Different From Other Debt

Posted on January 4, 2019by Admin

Debt plagues so many Americans today, but the type of debt varies from person to person. When it comes to debt collections or even bankruptcy, how the debt is treated depends on the type of debt. Student loan debt is one category that is treated differently than other common debt categories involved in bankruptcy.

Student loan debt has doubled since the most recent recession, which presents a major problem for many borrowers who are struggling to repay their loans, so it is extremely important to understand how student loan debt is treated in bankruptcy and collection matters.

Debts normally fall into two different categories: secured and unsecured. Secured debt is “secured” by either another person or an asset purchased, meaning if the consumer defaults on the debt, the lender has recourse to seize the asset.

Unsecured debt is not connected to another person or asset and commonly includes credit cards, personal loans, and medical debt. Student loan debt is also another form of unsecured debt, although it is not treated the same way as other unsecured debt. One major difference is the fact that student loan debt does not go away so easily.

If the borrower fails to pay on a student loan, the lender will likely initiate a collection action, which will result in a judgment against the consumer and likely a garnishment of that person’s wages. The same situation occurs with any other unsecured debt, but the difference is student loan debt is not easily discharged through bankruptcy.

It is possible, but the legal standard that needs to be met for this to be done is quite strict. The borrower will need to prove to the court that a good faith effort has been made to repay the loan, as well as proving undue hardship that is likely to continue if the debt is not discharged. It is not an easy burden of proof, and if the court does not discharge the debt, it will remain with the individual once the bankruptcy is over.

Student loans include both federal and private loans. Those loans that are federal are backed by the federal government and are disbursed by the U.S. Department of Education. On the other hand, private loans are backed by private lending institutions. The difference is critical in that federal student loans are not restricted by a statute of limitation when it comes to collecting on the debt.

In addition, federal loans have certain protections that private loans do not and offer different types of repayment plans in the event the borrower’s life circumstances change. For the most part, federal loan repayment terms are around ten years, but they can be extended or graduated or even income-based in terms of repayment. Additionally, some federal loans offer forgiveness programs.

Private student loans are oftentimes a last resort when it comes to financing education. However, many students max out their federal lending and have no choice but to supplement with private options given the cost of education.

It is currently estimated that somewhere around 40 percent of all student loan borrowers will default at some point on their student loans. Many different mistakes can be made when it comes to student loan repayment. If you believe you qualify for student loan debt relief, speak with an experienced bankruptcy attorney about your options.

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Debt Relief, Student Loans, Timothy Kingcade Posts

Student Loan Debt Doubles Since the Great Recession

Posted on December 20, 2018by Admin

Student loan debt is at a record high, according to a recent Bloomberg study. It is reported that U.S. student loan debt is at a total $1.465 trillion, and financial analysts believe that this debt figure is so high that it is now raising significant fiscal risks.

Student loan debt was at $675 billion in June 2009 at the end of the recession, which means the total has doubled since that time. One problem that economists are pointing to involves the fact that more than 90 percent of all student loans are guaranteed by the U.S. Department of Education. In the event another recession hits, resulting in mass unemployment as well as defaults on student loans, the government budget could face a major loss.

Interestingly enough, Bloomberg’s study reported that student loans that were issued to students embarking on college in 2012 have defaulted on their student loans at a faster rate than any other group since the last recession. According to Bloomberg’s analysis, these loans have the highest cumulative loss percentage when compared to other loans, which means that these particular students have had a harder time keeping up with their monthly payments with their current incomes. This group of students could arguably be hit harder than others in the event another financial crisis occurs.

The individuals in this group are between the ages of 24 and 33 and are at a point in their lives when they are just starting out and beginning to establish their careers. They may have struggled with finding a job since unemployment was twice as high when they graduated as it is today. According to Bureau of Labor numbers, graduates in this group took three times longer than graduates today in finding a job following graduation.

Another cause for concern is the rising student loan interest rates. Currently, the interest rate for a direct student loan that was issued on or about July 1, 2018 and before July 1, 2019, has a basis point that is higher than those that were issued before 2012. Average federal student loan interest rates were: 4.81% for undergraduates. 6.38% for graduate students. 7.44% for parents and graduate students taking out PLUS loans.

Student loan debt is a widespread problem in the U.S. More than 2.7 million student loan borrowers have debt amounts in the six figures. Approximately 700,000 borrowers owe more than $200,000. Within this group, borrowers who were between the ages of 25 and 34 owed $489 billion as of the third quarter reported, while those who were between the ages of 35 and 49 years old owed $530 billion total.

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Uncategorized

Avoid these Student Loan Repayment Mistakes

Posted on November 12, 2018by Admin

Repaying student loan debt can be a daunting process. It can seem like the end is never in sight. Student loan borrowers and those who co-signed these loans are not alone in the struggle. The amount of student loan debt has increased by $110 billion in the last 16 months to a total of $1.41 trillion nationwide. With the higher balances’ students are graduating with every year, that feeling of discouragement is understandable. Here are some of the biggest student loan repayment mistakes to avoid.

Know how much you owe.

It is important that you know what this amount is so that you can plan repayment accordingly. You should know what the interest rate is, as well as how much the monthly payment will be so that you can prepare a budget to keep up with payments. It is also equally as important to keep an eye on that balance as you pay it off.

Structure your repayment plan upon graduation, if not before.

Once you know how much you owe, the next step is to develop a strategy to repay the loans. Financial experts even recommend students work on a repayment strategy while they are still in school. It can be tempting to avoid the inevitable, especially with the grace period most student borrowers get after they graduate. However, the best plan of action is to get ready for the payment plan and make sure your budget accounts for these monthly payments. This way when the borrower begins payments upon the expiration of the grace period, he or she is ready.

Know all your repayment options.

It is also important to know what repayment options are available. One mistake many borrowers make is to not properly research their options for paying back their loans. If you have federal student loans, several different repayment plans may be available for you, and you can pick which plan works best for your life situation.

Change the due date to accommodate YOU.

Many borrowers are unaware of the fact that they can adjust a payment due date if it does not work with their income flow. For instance, if you only get paid once a month at the end of every month, it may be wise to change the payment date to mid-month to allow for income to come in to make the payment on time.

Keep all balance and payment information up to date.

One common mistake that many borrowers also make is to not keep their contact information updated with the lender. This information includes your email address, telephone number and mailing address. Most lenders send bills electronically, but even if the lender sends the bill in paper form to the borrower’s home, it is up to the borrower to make sure the lender has his or her current information. Not receiving the bill is not a valid excuse for missing a payment, as it is the borrower’s responsibility to update his or her information with the lender if anything changes.

Do not be fooled by student loan forbearance.

Another mistake many borrowers make is utilizing the forbearance option too frequently during repayment. It is oftentimes something student loan lenders push, as it can add thousands of dollars to the loan balance, due to the interest continuing to accrue. Forbearance allows the borrower to temporarily suspend their payments during times of financial difficulty. While the option can be helpful if the borrower loses his or her job, it is only meant to be a short-term solution and should only be used if absolutely necessary.

Beware of student loan debt relief scams.

Unfortunately, many borrowers fall prey to scams that are out there, preying on individuals who are looking for the quick fix to help them with their student loan debt. These fraudulent offers often come in the form of an unsolicited phone call, email or letter, where a company tries to offer student loan forgiveness or a way to reduce the borrower’s total debt. Do your research and do not take an offer at face value. These companies are not out to help you. If something sounds too good to be true, it likely is.

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Bankruptcy Law

Financial Options for Students to Discharge Private Student Loans in Bankruptcy

Posted on October 22, 2018by Admin

Many students take out a combination of federal and private student loans to cover the costs of a higher education. Discharging federal student loan debt has been difficult for borrowers struggling to make payments- but there are ways to file for bankruptcy with student loan debt. Private student loans are not handled in the same manner as federal loans when it comes to bankruptcy.

Student borrowers who were not able to repay their loans or did not qualify for public service loan forgiveness or flexible student loan repayment plans, often considered bankruptcy as a back-up plan. After July 1, 2019, this concern will be even more pressing as Congress is hoping to end certain repayment programs, including public service loan forgiveness. For these students, the good news is they will be able to have their private student loans forgiven in bankruptcy, unlike their federal loans.

If the loan is a federal loan, it will only be discharged in the event the borrower is able to claim undue hardship, meaning he or she will need to file a petition for determination of undue hardship with the bankruptcy court. This hurdle can be a tough one for the borrower to clear and often results in the borrower not being able to clear the debt through discharge.

Additionally, if you have private loans that were for a school that is not accredited, the loans can likely be discharged in a bankruptcy. For these loans to be protected and not discharged, the school must be considered an “eligible educational institution” or the private loans must be for a “qualified higher education expense.” To qualify as a private student loan, an accredited school must have also offered Title IV federal loans.

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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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