Student loan scams existed before President Biden made his executive order regarding federal student loan forgiveness. However, with the latest announcement of widespread student loan forgiveness, the number of scams has increased, significantly. It is important that borrowers know the warning signs to avoid being scammed.
Tag: Loan Forgiveness
1,500 Former Students Will Receive Student Loan Debt Forgiveness by the Department of Education
At least 1,500 former students from two closed for-profit schools will have their student loan debt forgiven following an investigation from the Congressional committee, as well as a class-action lawsuit.
The schools involved are the Art Institute of Colorado and the Illinois Institute of Art. These two schools followed several other for-profit college chains involved in similar scandals. The fallout began with Corinthian Colleges filing for bankruptcy in 2015 and ITT Educational Services closing one year later. Another for-profit institution, the Education Corporation of America closed in late 2018, leaving students who were attending the institutions with nowhere to go and thousands of dollars in student loan debt.
Government Program Set to Forgive up to $131,000 in Student Loan Debt for Thousands of Doctors
A program called Public Service Loan Forgiveness was initiated to help teachers, public defenders and other modestly paid public service workers alleviate their financial stresses by forgiving a large portion of their student loans. However, the Journal of General Internal Medicine released an article stating that physicians who work for non-profit hospitals or hospitals owned by the government have been enrolling in the program and meet the qualifications to have their loans forgiven. On average, medical school students accrue up to $162,000 in student loans, according to the New America Foundation.
Congress enacted the program in 2007 to boost the economy and to entice college graduates to accept low-paid government and non-profit jobs. The Loan Forgiveness program technically applies to anyone who works for a nonprofit organization, regardless of his or her income. The way it works is that college graduates must make 120 monthly payments toward their student loans and their payments are capped at 10% of the discretionary income of the borrower. Once the payments are made, the remaining student loan debt is forgiven.
Physicians typically earn between $50,000 and $60,000 in the first few years after school. Once they complete anywhere from three to eight years of training, or “residency,” their annual income skyrockets to an average of $180,000. The government and non-profit organizations own three quarters of the hospitals in America, which means the vast majority of the high paid physicians are eligible for student loan forgiveness. Research shows that on average, each physician who applies for forgiveness will be relieved of approximately $131,000 of student loan debt.
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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.
Class Action Lawsuit Filed Against Student Loan Debt Collector
A class action lawsuit has been filed against Balboa Student Loan Trust for harassing former Everest College students for repayment of their student loans. The harassment came as a shock to former students whose debt had been previously forgiven by the U.S. Department of Education after it was determined that the institution was misleading students. Balboa Student Loan Trust, the company that purchased a portion of Everest College debts, has ignored the findings and has reportedly called students up to five times per day to collect on the student loan debts.
Everest College is owned and operated by Corinthian Colleges. The U.S. Department of Education fined Corinthian Colleges $30 million in April of last year for misrepresenting their job replacement rates. Later that month, Corinthian Colleges filed for bankruptcy and has since lost its accreditation. The colleges were also offering loans through a student loan program called Genesis, which was later found to be a scam by the Consumer Financial Protection Bureau when nearly 60 percent of the students defaulted on their loans due to outrageous repayment rates. Balboa Student Loan Trust later purchased these loans and promised to forgive 40 percent of the debt and stop harassing students to repay their loans. However, the consumer class action suit claims the debt collector has violated the terms that were agreed upon with the federal government.
“These private lenders are victimizing these students a second time by continuing to try and collect on debt that was incurred through fraud and deceit,” Anne Richardson said. Richardson is an attorney with Public Counsel, one of the law firms that filed the class action suit.
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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.