Boston Student Loan Lawyer

Law Office of Adam S. Minsky

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

Donald TrumpIt’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

Changes Are Coming to Income-Driven Repayment

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

14626100953_1303b175d4_bIncome-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

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

Report ImageThe 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

DT and HCThe 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

FedLoan Servicing is Literally The Worst

| Articles Current Events Income-Driven Repayment Loan Forgiveness Policy & Reform

FrustratedI’m just going to come out and say it. FedLoan Servicing is literally the worst federal student loan servicer.

In many ways, all of the major student loan servicing companies have their problems, and it’s no wonder that the student loan servicing system as a whole has been repeatedly characterized as a dismal failure. But there is no servicer that is as consistently and embarrassingly awful as FedLoan Servicing.

The U.S. Dept. of Education’s major contracted loan servicing companies are the face of the federal student loan system. Servicers are the entities that borrowers must interact with on a regular basis. The servicing companies must be able to perform many critical operations for student loan borrowers – like processing payments, handling consolidation applications, approving people for repayment plans and properly calculating their monthly payments, and reviewing requests for emergency deferments and forbearances. Loan servicers are required to perform these operations under their contracts with the U.S. Dept. of Education. And borrowers have no choice but to work with their designated servicer – they do not have the ability to switch to a different student loan servicing company if they are unhappy.

Having worked with hundreds of student loan borrowers over the course of the past several years, I can say without any hesitation, without any reservation, that FedLoan Servicing (which is an arm of the Pennsylvania Higher Education Assistance Association, or PHEAA) is by far the worst of all of them. Based on a review of my docket just for the year 2016 thus far, a full 64% of my clients who have loans with FedLoan Servicing have experienced at least one serious problem during the past six months that was entirely caused by FedLoan Servicing. That’s nearly two out of three borrowers.

This is unacceptable.

FedLoan Servicing’s failures are as broad in type as they are deep in volume, and they span nearly every fundamental task that the agency is supposed to be performing. Here are some specific examples of FedLoan Servicing’s incompetence that I repeatedly encounter in my practice:Read More

The Australian Student Loan System: A Model For Reform?

| Articles Current Events Default Income-Driven Repayment Policy & Reform

Reliefmap_of_AustraliaIf you’re a regular reader of my blog, then I might sound like a bit of a broken record when I say that student loan reform is going to happen. Well, it is.

First of all, there is widespread, bipartisan agreement that our current system is flawed and unsustainable. Furthermore, the U.S. Dept. of Education will soon be selecting (or renewing) contracts for federal student loan servicing and debt collection, two areas that need some major industry-wide changes. Moreover, even now, the U.S. Dept. of Education is in the process of creating new regulations governing loan forgiveness and for-profit schools. And finally, the Higher Education Act (HEA), which is the statute that governs much of the federal student loan system, is up for reauthorization; the process of reauthorizing the HEA has historically been a vehicle for making big changes to the overall federal aid system.

Reform is happening. But what is that reform ultimately going to look like?

There are a lot of proposals out there from presidential candidates, lawmakers, think tanks, advocacy and policy organizations, and many other stakeholders. There are proposals for free public postsecondary education. There are calls to allow borrowers to refinance their student loans at lower interest rates. There are proposals to streamline income-driven repayment plans by combining several confusing plans into one and creating a system of automatic payments through payroll deductions or the IRS tax filing system. There are ideas to better “target” safety net programs like loan forgiveness and discharges (which could mean a variety of things).

If only there was an existing blueprint of a student loan system that generally works, or at least works better than what we have now…Read More

Student Loan Borrowers Experiencing Severe Delays in Income-Driven Repayment Plan Processing

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

With the introduction of the new Revised Pay As You Earn (REPAYE) plan in December, and the subsequent release of a mind-bogglingly complicated new application for all income-driven repayment plans, I have been seeing significant processing delays and backlogs across the federal student loan servicing system. These problems are affecting borrowers who are applying for income-driven repayment plans for the first time, borrowers who are re-certifying their income to remain in their current income-driven plans, and borrowers who are requesting to switch to a different income-driven plan, such as REPAYE.

By way of background, income-driven repayment applications are supposed to be processed within about 10 business days. Servicers rarely have been able to have such a “rapid” turnaround in my experience, but they typically process applications within one billing cycle.

Since January, however, federal student loan servicers across the board seem to be taking 30-60 days or longer to process applications for income-driven repayment, pushing many borrowers into temporary forbearances if they cannot afford their normal monthly payments. This isn’t just for the new REPAYE plan, but also for borrowers on Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). Agents for the following federal student loan servicing companies have all told me that they are experiencing significant backlogs and delays:

  • FedLoan Servicing
  • American Education Services (AES)
  • Great Lakes Higher Education
  • Navient

If you have submitted an application or re-certification request for income-driven repayment, or you anticipate doing so soon, you should expect delays. Be sure to routinely follow up with your loan servicer to check on the status of your application, and stay on top of things to make sure your application gets processed.

7 Student Loan Tips for Tax Season

| Articles Income-Driven Repayment Loan Forgiveness Taxes

The holidays are over, and we’re already tired of winter. You know what that means: It’s tax season!

As your W-2’s, 1099’s, and other tax forms start arriving in the mail this month, it’s a good time to discuss how your student loans can affect your taxes, and how your taxes can affect your student loans.Read More

Student Loan Law Outlook for 2016

| Articles Current Events For-Profit Colleges Income-Driven Repayment Policy & Reform

Happy New Year, and welcome to 2016!

2015 was a big year in student loan law. We saw the collapse of major for-profit colleges and the abrupt downfall of a major student loan assistance company. In what may come to be viewed as historically significant acts of civil disobedience, a sizeable contingent of student loan borrowers began a debt strike to protest the collusion of the federal student loan system and predatory for-profit colleges; protesters are demanding that their federal student loan debts be canceled. Meanwhile, consumer advocates became increasingly vocal in their criticisms of the U.S. Dept. of Education’s servicing and debt collection practices, sending waves through the industry. The year ended with the rollout of REPAYE, a new income-driven repayment plan for federal student loans.

What a year. Here’s what to expect (and what not to expect) during 2016:Read More

The New Income-Driven Repayment Form is Here – And It’s a Mess

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

Federal student loan servicers are in the process of releasing a new application form for all income-driven repayment plans, including ICR, IBR, PAYE, and the “Revised Pay As You Earn” (REPAYE) plan, which is the latest income-driven repayment option available to borrowers. Not all servicers have released the application yet; it is being phased in this month as REPAYE is being rolled out. Some servicers are ahead of others.

Note: REPAYE is not yet formally available – servicers are saying REPAYE will be available to borrowers by the third or fourth week of December.

The good news? The new form provides an option for borrowers to select REPAYE.

The bad news? Everything else, basically.Read More