Boston Student Loan Lawyer

Law Office of Adam S. Minsky

7 Student Loan Protections to be Thankful For

| Articles Current Events Default For-Profit Colleges Income-Based Repayment Income-Driven Repayment Loan Forgiveness Pay-As-You-Earn Policy & Reform

It’s been two weeks since the election, and there’s still much uncertainty about what the consequences of the election will be for student loan borrowers. While Hillary Clinton had mapped out a series of student loan reform proposals, Donald Trump has been far less specific about how he plans to deal with the $1.4 trillion in outstanding student debt.

In this time of uncertainty, and in keeping with the upcoming Thanksgiving holiday, I think it’s a good time to take stock of what we have and be grateful. If you follow this blog, you know that I frequently write about problems and deficiencies with the the student loan system. And for good reason – student loans are a mess, with inefficient servicing, damaging debt collection, and the potential for life-altering negative consequences for borrowers. There’s a lot to be angry about, and a lot that should change.

But, there are also good elements of the student loan system – programs and laws that keep people in good standing, allow them to repay their loans fairly, and protect them from abuses. As we press forward into this period of change and uncertainty, we may have to do some hard work to preserve what we have.Read More

What the Election Results Mean for Student Loan Borrowers

| Articles Current Events For-Profit Colleges Income-Based Repayment Income-Driven Repayment Loan Forgiveness Pay-As-You-Earn Policy & Reform

It’s the political upset of the century, and this election is going to be studied by analysts and political scientists for years. But the reality is clear: Donald Trump has been elected the next President of the United States, and both houses of Congress will remain firmly in Republican control for the next two (and likely four) years. This is starkly different than what was expected by the political class just 48 hours ago – a Hillary Clinton win, with the Senate likely flipping to Democratic control.

A lot is being written right now about this election, and what it might mean for the country. I have seen very little, however, on what the election might mean for student loan borrowers. I’ve been quite clear that this election was going to be hugely consequential for student loan borrowers, regardless of who won. This is certainly still true today. And now we have to start thinking about what may be next for people with student loans.

Below are my candid thoughts on what I think student loan borrowers may be looking at over the next four years. I should be clear – while I believe my assessments below are consistent with the rhetoric and with the past actions of our next executive and legislative leaders, absolutely nothing is concrete at this time. There is a lot we just don’t know – and can’t know – at this early juncture. With that caveat, read on. Read More

Final Rules Issued for Student Loan Forgiveness Program

| Articles Current Events For-Profit Colleges Loan Forgiveness Policy & Reform

This week, the U.S. Department of Education released its long-awaited final regulations governing borrower Defense to Repayment.

As you may recall, thousands of borrowers began petitioning the federal government to forgive their federal student loans following the collapse of the for-profit college chain, Corinthian Colleges. Students argued that they should not be held responsible for student loans issued by a predatory company that took advantage of people and actively misled them. The students requested student loan relief and forgiveness under a little-known contractual and regulatory clause called “Defense to Repayment.” Since then, ITT Technical Institute has also collapsed, and many ITT graduates are requesting similar forms of relief.

The Dept. of Education had no formalized procedure for addressing Defense to Repayment, and so it began a long bureaucratic process to implement new rules and standards so that officials can determine who may be entitled to relief. After months of work, the Dept. of Education finally issued its new rules. Here are the highlights:Read More

Changes Are Coming to Income-Driven Repayment

| Articles Current Events Income-Based Repayment Income-Driven Repayment Pay-As-You-Earn Policy & Reform

Income-Driven Repayment (IDR) plans are a true lifeboat for millions of federal student loan borrowers struggling to repay their student loans. The programs provide uniquely-tailored monthly payments for borrowers based on income and family size, with a loan forgiveness safety net at the conclusion of the repayment term (20 or 25 years, depending on the specific plan). For many student loan borrowers, an IDR plan is the only thing standing between them and default.

The problem, though, is that the IDR system is a mess. For one thing, we have a confusing menu of individual IDR plans – there’s Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). Each plan has its own formula, unique eligibility criteria, and strange programmatic quirks. Figuring out what plan is right for you – and whether you should switch – can be a daunting task.

The complexities of IDR programs don’t make the struggling student loan servicing system any better, either. The CFPB recently released a report slamming student loan servicers for IDR-related processing delays and mistakes. Borrowers are frequently getting bumped off of IDR plans through no fault of their own, leading to serious negative consequences.

I think the current system is just not sustainable on a long term basis, even as more borrowers rely on these IDR programs to stay afloat. Things must change. Well, I think we’re starting to see the beginnings of reform.Read More

Don’t Worry, the CFPB is Not Unconstitutional

| Articles Current Events

The Consumer Financial Protection Bureau (“CFPB”) is a relatively new federal agency tasked with overseeing financial markets and regulating their impacts on everyday consumers. The CFPB “protects consumers from unfair, deceptive, or abusive practices” and it “takes action against companies that break the law.”

The CFPB made the news recently for hitting Wells Fargo with a massive financial penalty; Wells Fargo defrauded its customers by setting up thousands of bogus bank accounts and lines of credit. The CFPB has also come down hard on student loan servicers and debt collectors, most recently slamming the federal student loan income-driven repayment system in a comprehensive report just a few months ago.

This week, however, the media has been reporting on a federal appeals court case involving the CFPB. Some media outlets erroneously declared that the court found that the CFPB was “unconstitutional.” Hysteria quickly followed. Does this mean the CFPB has been gutted? Will consumers and student loan borrowers no longer be protected? Is this a big win for big business over the little guy?Read More

ITT Shuts Down: What Student Loan Borrowers Need to Know

| Articles Current Events For-Profit Colleges

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

Major For-Profit College Chain May Collapse

| Articles Current Events For-Profit Colleges Loan Forgiveness

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.

CFPB Releases Scathing Report on Student Loan Servicing

| Articles Current Events Income-Based Repayment Income-Driven Repayment Pay-As-You-Earn Policy & Reform Private Student Loans

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

7 Reasons Why This Election Matters for Student Loan Borrowers

| Articles Current Events Default For-Profit Colleges Income-Based Repayment Income-Driven Repayment Loan Forgiveness Pay-As-You-Earn Policy & Reform Private Student Loans Taxes

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

July Student Loan News Roundup

| Articles Current Events For-Profit Colleges Policy & Reform

There’s been a lot going on in the world of student loans during the past couple of weeks. Here’s a summary:

  • This week, the Massachusetts State Senate passed a bill limiting the use of credit checks in hiring. This could provide some much-needed relief to consumers who have a negative credit history (such as a prior student loan default), which can cause ongoing problems in securing employment and housing. The bill now goes to the House.
  • The Massachusetts State Senate also passed a landmark bill providing substantial new protections from debt collectors. This has the potential to be a game-changer here in terms of student loan collections, especially for private student loans. The bill will be sent to the House, where we hope it will pass.
  • The U.S. Justice Department has launched a probe into whether Bridegepoint Education, the owner of Ashford University and the University of the Rockies, is violating a law that prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding. This is just the latest for-profit college chain to come under legal scrutiny.
  • Non-profit and for-profit colleges are having a bit of a panic attack as the U.S. Dept. of Education moves forward with new rules allowing for student loan forgiveness for borrowers whose schools engaged in fraud and misrepresentations. The rules still have to be finalized and will not be implemented until sometime in 2017.

It’s rarely a slow news day in student loan law. Expect more robust articles on these stories as they develop.