Boston Student Loan Lawyer

Law Office of Adam S. Minsky

Defective Loan Consolidation

| Articles

So you might know at this point that direct loan consolidation is a great option for federal student loan borrowers. It can simplify the repayment process if you have many federal loans, can lead to lower interest rates and lower payments, and may be a tool for getting out of default and repairing your credit. Loan consolidation is great…

…In theory, at least. The problem is that the U.S. Department of Education is a massive bureaucracy. The loan consolidation application is a confusing mess. There are many different types of federal student loans; some can be consolidated, some cannot be consolidated, and some can only be consolidated under certain circumstances. Customer service representatives have been known to be unhelpful and rude, and in some situations, they have been providing misinformation. Department employees also make frequent mistakes. For example, they sometimes leave certain loans out of the consolidation that should have been included (this actually happened to me), which means you have to be vigilant about tracking which loans are included and which loans, if any, were accidentally left out; you’ll then have to fill out another application to get those forgotten loans added back to the consolidation loan later. Mistakes like these can cost you, since you still have to make your payments while the loans are being consolidated– even if the Department messes up.

The loan consolidation process is tedious and confusing at best, and at its worst it can be so defective that it actually impacts you financially. This is why it can be very beneficial to seek out a professional who is familiar with the consolidation process and the Department’s bureaucracy. To read more about defective loan consolidation (and some rather nightmarish stories), click here: http://www.huffingtonpost.com/.

Heather Jarvis: Student Loan Expert

| Articles

Heather Jarvis is an excellent advocate for student loan borrowers and is doing some great work. For years, she has dedicated herself to helping students and graduates make informed decisions about their student loans. As Senior Program Manager for Advocacy and Outreach at Equal Justice Works, Heather played a role in the passage of the College Cost Reduction and Access Act, which made IBR and Public Service Loan Forgivenessa reality.

Heather maintains a very informative website. She provides very popular free webinars, and offers free tools and information for student loan borrowers. Check out her site here: www.askheatherjarvis.com

Debt Ceiling Deal Avoids Default, But Shoves Student Borrowers Under the Bus

| Current Events Default

So our federal government has come up with a plan that avoids a national default on its financial obligations. Some people are cheering. If you’re a student loan borrower, though, not so much. In the name of deficit reduction, Congress has decided to eliminate subsidized federal loans for graduate students. While in school, the federal government has traditionally paid the interest for federal loans, providing an incentive to stay in school while keeping the actual cost of these student loans relatively low while you’re earning your degree. With interest subsidies eliminated, student borrowers will either have to pay the interest while they are full-time students, or have the interest added back to the loan principle. Either way, this drastically increases the cost of borrowing. Congress also eliminated a special credit for student borrowers who pay their bills on time.

All in all, the changes that are being rushed through Congress to the President’s desk will shift over $18 billion in borrowing costs to students over the next decade. Read more here: http://money.cnn.com/

3 Ways a National Default May Impact Your Student Loans

| Default

If you’ve been following the news over the past few weeks, you know that Congress and the President have been locked in a bitter debate about the nation’s debt ceiling. The debate boils down to this: the U.S. government spends more money that it receives in revenue, and has been doing so since the country had a surplus in the late 1990’s (government spending particularly skyrocketed following the beginning of the wars in Afghanistan and Iraq in the early 2000’s). We’re about to hit the upper limit of what the U.S. government can borrow under Congressional authorization; in other words, we’re about to “max out” the country’s credit card. If the debt limit isn’t raised by August 2, 2011, and we max out this national credit card, the government will not be able to meet all of its financial obligations. Economists warn this could have a serious impact on the national and global economy. A divided Congress and the President have been negotiating for weeks, trying to reach a deal to avoid a national default. Both sides propose massive spending cuts, but there has been impasse over how high to raise the debt limit, and whether there should also be a corresponding revenue increase by raising taxes on the wealthy. As of today, there are few signs that a deal is near.

So what happens if our government cannot come up with a solution by August 2? Everyone is talking about dire economic consequences, but few are talking about specifics. Here are some potential consequences for student loan borrowers:
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U.S. Dept. of Justice Joins 11 States in Lawsuit Against For-Profit College Chain

| Current Events

I recently posted an article about investigations into the practices of for-profit schools. The U.S. Dept. of Education recently passed new regulations designed to protect students from some of the abusive practices of these schools. While all of this has been going on, the U.S. Department of Justice has joined 11 states in a lawsuit against Educational Management Corp., one of the largest for-profit college chains in the country.

The lawsuit alleges that the company, which receives up to 90% of its revenues from student loans, illegally paid school recruiters based on the number of students that they enrolled. The suit further claims that the company operates almost entirely to recruit students, often rewarding recruiters with lavish gifts and trips to exotic places, without devoting adequate resources to provide students with academic and vocational skills to help them find a career. Not surprisingly, student loan default rates at these types of schools are astonishingly high.

Read more about the suit here…

Why A Low-Paying Public-Interest Job Can Really Pay Off

| Income-Based Repayment Loan Forgiveness

For some people, money buys happiness. I don’t mean that in a judgmental way. I mean truly, for some people, the accumulation of wealth is the key to their satisfaction in life. These particular individuals will try to attain the highest-paying jobs in business, law, or medicine to pay down their student loans (if they have any) as quickly as possible so that they can buy that nice house, get that nice car, and live the dream. If that’s you, and that model works for you, that’s great. Go for it.

For many others, however, life is a little more complicated. We all want to be financially secure, but many of us want to be doing work that not only brings us some level of challenge and excitement and happiness, but also makes some sort of positive difference in the world. Unfortunately, this occupational idealism can be at odds with the realities of market forces and the American higher education system. In other words, a good education here is astronomically expensive, and many jobs that serve the public interest just don’t pay well.

The traditional ways of dealing with this reality was either sacrificing your ideals and “selling out” in order to get that high-paying job that you hate so you can pay down those loans and switch careers later, or alternatively, being the idealistic martyr by obtaining your dream job in government or at a non-profit, but living in a cardboard box with Ramen for dinner every night so you can pay your monthly student loan bills. Well, it really doesn’t have to be that way.

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U.S. Senators Dick Durban, Sheldon Whitehouse, and Al Franken Introduce Legislation to Make Private Student Loans Dischargeable in Bankruptcy

| Policy & Reform

If you’ve read my previous posts about bankruptcy and private student loans, you’ll remember that one of the most significant problems with private student loans is that with rare exception, they cannot be discharged in bankruptcy. While many other types of debt (such as credit card debt) can be eliminated through bankruptcy if you are ultimately unable to pay, you will probably still be obligated to pay back your private student loans even if you successfully declare bankruptcy. These loans can thus haunt student borrowers for their entire lives (or even beyond, but that’s another story).

This wasn’t always the case. Before 2005, it was easier for student loan borrowers to include private student loans in bankruptcy discharges. Bankruptcy reform legislation, however, passed by Congress in 2005 and signed by President George W. Bush, drastically changed bankruptcy law’s treatment of private student loans. Suddenly, student loans became one of the most secure forms of debt for commercial lenders. U.S. Senators Dick Durban (D-IL), Sheldon Whitehouse (D-RI) and Al Franken (D-MN) have recently introduced legislation to restore bankruptcy protections for private student loan borrowers.

The bill is supported by other members of Congress as well as over 35 groups and organizations including the American Council on Education and the National Consumer Law Center. But given today’s political climate and our divided government, does this bill have any chance of passing? Read more here:http://durbin.senate.gov/public/index.cfm/pressreleases?ID=f7c84e6c-f2ac-4ee5-b466-f461b0f0de8a

10 Ways Student Loan Lenders and Collections Agencies Violate the Law

| Articles

When student borrowers fail to pay their student loan bills for any reason, lenders will try to get them to pay. The longer the borrower doesn’t pay, the harder the lender will try. Sometimes, the lender will hire a collections agency to pursue a student borrower who is in delinquency or default, and often these agencies will use aggressive, intimidating, deceptive, or irritating tactics.

The federal Fair Debt Collection Practices Act (“FDCPA”) and many state consumer rights laws provide substantial protection to consumers who are the subject of debt collection actions, including student loan borrowers. Unfortunately, collections agencies routinely violate the FDCPA because many student loan borrowers are unaware of the laws that protect them. Here are some common ways that they violate the FDCPA:

  • Calling you at unreasonable hours (i.e., in the middle of the night)
  • Calling you at work after you’ve told them not to
  • Threatening to take criminal action against you (i.e., arresting you)
  • Contacting you if they know you are represented by an attorney
  • Engaging in obscene or abusive conduct (i.e., calling you names, using profanity)
  • Repeatedly or continuously calling you with the intent to annoy, abuse, or harass you
  • Making false, deceptive, or misleading representations
  • Misrepresenting your rights with respect to federal student loans
  • Contacting family members, friends, or co-workers about your debt
  • Using deceptive means to collect information about a consumer

Borrowers who have been the subject of FDCPA violations can bring suit against the collections agency in federal court and collect damages. Often, these suits will settle before trial. If you are being aggressively pursued by a collections agency, you should keep careful, detailed records of all communications.

The Problem With Private Student Loans

| Private Student Loans

If you’ve been following this blog, you’ve probably seen at least some relatively good news about federal student loans. You can consolidate. You can get a payment plan that caps your payments at a percentage of your income. You can get some of your loans forgiven or cancelled if you work in certain professions. You can postpone your payments if you become unemployed or have difficulty paying your bills.

Unfortunately, private student loans are a whole different ballgame.

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New Regulations Protect Student Borrowers from For-Profit Colleges

| Policy & Reform

The U.S. Department of Education released new regulations last week that increase federal oversight of for-profit colleges (e.g., University of Phoenix, DeVry University, ITT Tech) and seek to protect student loan borrowers. This follows increasing scrutiny from lawmakers about the practices of for-profit colleges.

For-profit colleges spent about $8 million in federal lobbying last year, and they fought hard to stop these regulations. The regulations, in part, provide that for-profit colleges must pass a three-part test in order to be eligible to receive federal student loans and grants. Student debt advocates applauded these regulations, but many think they do not go nearly far enough to protect student borrowers. What do you think?

Read more here: http://www.politico.com/news/stories/0611/56077.html