Attorney Adam S. Minsky has been selected as a Massachusetts Super Lawyer “Rising Star” for the second consecutive year, in recognition of his groundbreaking work helping student loan borrowers. This distinction is only awarded to the top 2.5% of attorneys in the state, and reflects Attorney Minsky’s expertise and commitment. His name will be published in Super Lawyers magazine and Boston magazine in November.
This month, I’m wrapping up two cases that involved major federal student loan consolidation errors by the U.S. Dept. of Education and an assortment of student loan guaranty agencies, servicers, and debt collectors. These errors were massive, complex, and entirely not the borrower’s fault. They also took months of effort and coordination to resolve. I am ecstatic that we obtained good outcomes for my clients and got the errors fixed, but unfortunately these problems are not exactly uncommon. It really shouldn’t be this difficult for student loan borrowers, but sometimes, it is.
If you’re thinking about consolidating your federal student loans through the federal Direct consolidation program, there are potentially many benefits: streamlined repayment (one combined loan, one servicer, one monthly bill); simplified interest (if you are converting variable-rate loans to the fixed, weighted-average interest rate provided by the Direct consolidation program); default resolution if you are including defaulted federal student loans in the consolidation; and conversion to the Direct loan program through which you can access some additional student loan forgiveness and repayment programs.
But when things go wrong – especially due to mistakes outside of your control – it can be a mess to untangle. Here are some things to watch out for.Read More
There’s about $1.3 trillion in outstanding student loan debt in the United States. Most of that consists of federal student loans, but there are several hundred billion dollars in private student loans, as well.
Both federal student loan lenders and private student loan lenders charge interest – a percentage of the loan principal balance that acts as the cost of borrowing and a way of reducing risk to the lender. But borrowers have no real control over their interest rate and are largely stuck with it – federal student loan interest rates are set by Congress, and private student loan interest rates are set by the terms of the underlying loan contract. Given these limitations, the only option available to borrowers to lower their rates is to refinance their loans through a private lender (there is no federal student loan refinancing program that results in a lower interest rate). This is a major undertaking, and borrowers who are considering student loan refinancing should be aware of the potential risks and rewards.Read More
It unfortunately is not uncommon for my clients to confess to me that their student loans have made them feel pretty bad about themselves. People regret going to school, and they sometimes feel that trying to better themselves by getting an education was a terrible mistake. People feel trapped, hopeless, and despondent. And it’s not just because being in debt can make you feel that way. It’s because the student loan system in particular – with its broken loan servicing system, its draconian debt collection methods, and the comparative lack of consumer protections – can be so emotionally taxing to navigate, so utterly exhausting and soul-sucking to deal with, that some people feel like they just cannot handle it anymore.
I get it. I’ve lived it. And I continue to live it every day through my clients and their experiences.
Things can get really bad, though, when people begin to believe what they hear from the debt collectors.Read More
Well, that was fast.
Just two weeks after the U.S. Dept. of Education announced that it would cut off access to federal financial aid for ITT Technical Institute – one of the largest for-profit college chains in the country that has been repeatedly accused of improper conduct – the company has announced that it is closing all of its campuses. This is major news, and will have widespread implications not only for the 40,000 students currently enrolled in ITT, but also the tens of thousands of students who have already graduated. ITT’s collapse may also have ripple effects across the entire for-profit industry, as well.
Here’s what student loan borrowers need to know about the ITT closure.Read More
ITT Technical Institute, one of the largest for-profit college chains in the country with nearly 45,000 students, may be on the brink of collapse.
The U.S. Dept. of Education just announced that ITT will no longer be eligible to access federal financial aid. In other words, students attending ITT can no longer finance their education through the federal student loan and grant system. This is in response to growing federal and state scrutiny of ITT over the past several years. ITT has very high tuition (anywhere from $45,000 to $85,000) and has been accused of engaging in high-pressure sales tactics, misrepresenting the quality of its educational programs, and failing to secure adequate career outcomes for its graduates. According to a July 2014 Senate Health, Education, Labor, and Pensions (HELP) committee report, 57% of ITT programs would fail the Department of Education’s proposed Gainful Employment rule. ITT also reportedly has one of the highest student loan default rates in the country.
As part of the federal aid announcement, the U.S. Dept. of Education also announced that it is requiring ITT to substantially increase its access to credit. This requirement is an indication that the federal government views ITT as a potentially significant risk to the taxpayer, should the U.S. Dept. of Education determine that ITT students and graduates are entitled to student loan forgiveness as a result of the school’s conduct.
In response to the announcement, ITT’s stock price has collapsed, and the school has stopped enrolling new students. With ITT’s main source of revenue (federal student aid) cut off, and with potentially crippling new financial requirements, it is very possible that ITT may completely collapse, leaving tens of thousands of students with an incomplete or useless degree – and lots of student debt. It is unclear at this early juncture whether these students would be entitled to student loan forgiveness under the new Defense to Repayment regulations (which are still being finalized) – but this would be the exact type of scenario that those new regulations are designed for.
Federal student loan borrowers currently enrolled in ITT campuses should be aware that if their school closes, and that closure prevents them from completing their educational program, they may be able to apply for a discharge of their applicable federal student loans. This student loan forgiveness program is distinct from Defense to Repayment.
This is an active, evolving story – so stay tuned for updates.
The Consumer Financial Protection Bureau (CFPB) has released a scathing new report on the student loan servicing system, with a particular focus on borrowers having difficulty accessing income-driven repayment plan programs like Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).
Based on complaints submitted by consumers, the CFPB is confirming what many of us already know: that student loan servicing problems impede the ability of student loan borrowers to access programs to repay their loans, and widespread bureaucratic delays and errors lead to negative consequences for people. The CFPB’s report echoes my recent article highlighting the widespread problems with one of the biggest federal student loan servicers, FedLoan Servicing/PHEAA.
Here are some of the highlights from the report: Read More
I’m excited to announce several upcoming events where I’ll be presenting on student loan law topics. Check it out:
- September 15, 2016, “Student Loans: Debt and Forgiveness 101,” Association for Behavioral Healthcare, Natick, MA.
- September 18, 2016, “Student Loan Intensive: A full-day workshop for financial advisors,” 2016 Conference, XY Planning Network, San Diego, CA.
- October 5, 2016, Student Loan Management for Attorneys and Law Students webinar, North Carolina Bar Association Center for Practice Management.
- October 6, 2016, Student Loan Management for AmeriCorps Members webinar, AmeriCorps Legal Advocates of Massachusetts.
- October 7, 2016, Student Loan Management for Financial Planners, Financial Planning Association of Massachusetts, Quincy, MA.
- October 21, 2016, “Developing a Student Loan Practice,” Consumer Rights Litigation Conference, National Consumer Law Center and National Association of Consumer Advocates, Anaheim, CA.
If you’re a recent graduate from college or graduate school, you probably have a lot on your mind – employment, housing, bills, maybe even professional licensing examinations (I’m still traumatized from the bar exam). If you took out student loan debt to finance your education, you should be thinking about your student loans, too, even if you don’t want to.
A lot of people have advice and suggestions for what recent graduates should do with their student loans immediately after graduating. However, I have the unfortunate position of seeing what happens when borrowers don’t do the right thing – they may make a seemingly innocuous error or oversight, which can come back to bite them later in a very big and damaging way. The system shouldn’t be so tricky to navigate and so riddled with land mines, but unfortunately, that’s the student loan landscape that we currently have to work with.
Here’s what you should be doing and thinking about as a recent graduate with student loans:Read More
The presidential party conventions are over, and what seems like the “election that never ends” will actually be over in less than 100 days.
A lot is being said about this election – that it’s the most important in a generation; that it could fundamentally change the United States and its place in the world; that our core national values are at stake. All of this may be true, and there’s plenty of analysis out there about how big and important it is.
But as a student loan attorney, I can tell you without hesitation that this presidential election is going to have a real, tangible impact on millions of student loan borrowers. It’s going to have significant, lasting consequences. What these impacts and consequences look like, however, will depend primarily on who wins this November. If you have student loans, you should be paying attention. Here’s why:Read More