Happy summer, everyone. With all the big national news going on lately, there’s a lot of developments in student loan law and policy that are flying a bit under the radar. Let’s bring everyone up to speed.
Credit Report Changes Will Help Student Loan Borrowers Who’ve Been Sued
Starting July 1, the three major credit bureaus (Equifax, Experian, and TransUnion) will no longer report civil judgments on people’s credit reports. There have been ongoing concerns about credit reporting errors for judgments, since a judgment is often not linked to a person’s social security number. This is a significant change that will have a direct, positive impact on borrowers who have been sued by their student loan lenders.
U.S. Dept. of Education Installs New Head of Federal Student Aid (FSA)
The former head of FSA (which oversees much of the federal student loan system), James Runcie, abruptly resigned last month following management conflicts with Betsy DeVos, the Secretary of Education under President Trump. Just last week, Devos announced she intends to replace Runcie with Dr. A. Wayne Johnson. Dr. Johnson is the CEO of a private student loan company called Reunion Financial Services. While Runcie was certainly a controversial figure, questions are already swirling as to the significance of a private student loan executive taking the helm of the entire federal student loan system.
New Defense to Repayment Regulations On Hold and May Be Rewritten
The Obama administration created new regulations last year designed to protect student loan borrowers harmed by the predatory practices of for-profit schools. These new rules were scheduled to go into effect on July 1. However, U.S. Dept. of Education Secretary Betsy Devos recently announced that she will seek to pause the implementation of these regulations so that they may be rewritten. This may have grave implications for borrowers victimized by predatory institutions, many of whom are still waiting for relief.
New Report from CFPB Details Ongoing Problems for Public Service Borrowers
The Consumer Financial Protection Bureau (CFPB) is out with a new report detailing how federal student loan servicers are failing borrowers on track for Public Service Loan Forgiveness (PSLF). Borrowers are frequently given incorrect or insufficient information about eligibility requirements; there are delays or errors in repayment plan processing that cause borrowers to lose qualifying payments; and borrowers are given incorrect or incomplete information about qualifying service and payments. With up to 25% of the U.S. workforce eligible for this program, the implications of this report are far-reaching.
