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

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.

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

FedLoan Servicing is Literally The Worst

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

I’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

BREAKING: Proposed Student Loan Forgiveness Rules for Defrauded Students

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

I’ve been periodically writing about the U.S. Dept. of Education’s attempts to create a process for addressing borrowers who were defrauded by predatory for-profit institutions and who are seeking relief through Defense to Repayment. As I have previously written, while thousands of borrowers have applied for relief (and the administration has granted some relief to borrowers already), there is no regulatory structure in place to guide the government in deciding who should be eligible for relief, and how to make those determinations. As a result, the vast majority of Defense to Repayment applications submitted by student loan borrowers have been sitting in limbo.

When I last checked in with you all, the U.S. Dept. of Education was involved in what’s called “negotiated rulemaking,” whereby various stakeholders are invited to hash out the details about what a regulatory regime for student debt relief would look like.

Earlier this week, the Department issued proposed regulations for borrowers asserting Defense to Repayment. Here are the details:Read More

Will Borrowers Be Denied Student Loan Forgiveness?

| Articles Current Events Loan Forgiveness

FedLoan Servicing, one of the U.S. Dept. of Education’s federal student loan servicers, has been in the news lately due to its messy rollout of the Revised-Pay-As-You-Earn (REPAYE) plan. Administrative and bureaucratic issues led to delays, processing errors, and other problems for thousands of federal student loan borrowers applying for, or switching to, the REPAYE plan.

Now FedLoan Servicing is in the news again for problems related to the Public Service Loan Forgiveness (PSLF) program. PSLF allows borrowers to get their Direct federal student loans canceled after making 120 monthly payments under an income-driven repayment plan while working full-time for a qualifying public service organization. FedLoan Servicing is the agency that the U.S. Dept. of Education has tapped to handle borrowers on track for PSLF. FedLoan Servicing allows borrowers to submit a PSLF Employment Certification Form, which it uses to make an initial determination of an employer’s PSLF eligibility and track a borrower’s qualifying payments.

As you can probably imagine, it’s not going well.Read More

New York Student Loan Forgiveness Program

| Articles Current Events Loan Forgiveness Policy & Reform

New York recently created a new student loan forgiveness program designed to help recent graduates repay their loans. The new program, called the “Get On Your Feet Loan Forgiveness Program,” was created by Governor Cuomo.

Although it’s called a “loan forgiveness” program, “Get On Your Feet” is technically a repayment assistance program whereby the state of New York will cover your federal student loan payments for up to two years – if you meet certain criteria:

  • Income cap. Borrowers cannot earn more than $50,000 per year.
  • In-state residence. If you don’t reside in the state of New York, you don’t qualify.
  • In-state schooling. You must have graduated from a New York state high school, as well as a college or university located in New York.
  • Graduation date restrictions. Borrowers must have graduated after December 2014, and they must apply within two years of receiving their degree.
  • Undergraduates only. Borrowers with a degree higher than a Bachelor’s cannot apply.
  • Income-Driven Repayment. Borrowers must be enrolled in an income-driven repayment plan such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), or the new Revised Pay As You Earn (REPAYE) plan.
  • Good standing. Borrowers cannot be in delinquency or default on their federal student loans or their New York State student loans.

Note that there might be tax consequences to participating in the program.

Private student loans are unfortunately ineligible for the program – which certainly does little to help borrowers struggling under the weight of private student loan payments. Furthermore, under income-driven repayment plans like IBR and PAYE, monthly payments will generally be quite low for borrowers making under the $50,000 annual income cap. For example, a single borrower making $25,000 per year would pay approximately $60/month under the PAYE and REPAYE plans. A borrower making $40,000 per year would pay approximately $190/month under the same plans.

Nevertheless, despite the program’s restrictions and limitations, this represents a major step by one of the largest states in the country to provide much needed relief to new borrowers struggling to find a steady job. It is encouraging to see states like New York take action while the federal government is largely gridlocked and student loan reform remains stalled.

To learn more about New York’s “Get On Your Feet” student loan forgiveness program, check out the New York State Higher Education Services Corporation’s informational website.

Obama Administration Fast-Tracks Loan Forgiveness for Over 500,000 People

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

In two recent moves, the federal government is fast-tracking federal student loan forgiveness for hundreds of thousands of borrowers who need it most.

First, the U.S. Dept. of Education has announced that it is streamlining and fast-tracking loan forgiveness requests for student loan borrowers who attended the now-defunct Corinthian Colleges chain. Thousands of students have submitted requests for debt relief under the poorly-defined “Defense to Repayment” clause, and the Department has been slow to respond since there is no formal application or defined process for review. However, the government just announced the creation of a simple online form that former Corinthian students can complete to request forgiveness under Defense to Repayment. Former students of 91 campuses in 20 states will be granted automatic federal student loan forgiveness after submitting this form. This has the potential to benefit nearly 100,000 students who were defrauded by Corinthian. If the Department expands loan forgiveness eligibility to graduates of all Corinthian campuses (it is unclear if this will actually happen), approximately 350,000 former students may benefit.

This week, the Obama administration also announced the fast-tracking of federal student loan discharges for borrowers who are totally and permanently disabled. A disability discharge has existed for federal student loan borrowers for quite some time, but few people know that this program even exists. Furthermore, the disability discharge application process has historically been a long, complicated and heavily bureaucratic experience, effectively locking out many borrowers who would clearly be eligible. The federal government intends to address these problems by proactively reaching out to federal student loan borrowers who would, under federal law, be automatically eligible for a disability discharge due to their disability designation by the Social Security Administration.  This has never happened before, and nearly 400,000 disabled borrowers may benefit from these outreach efforts.

All in all, this is excellent news for student loan borrowers who are struggling with debt that they will never be able to repay – either because of a disabling impairment that prevents them from working, or because of a predatory educational institution that engaged in fraud and other illegal conduct. This is part of a larger effort by the Obama administration to more strongly address the student debt crisis – it’s certainly not enough to address the systemwide problems, but it’s something, and more may be on the way. Stay tuned.