4 Simple Ways to Help 44 Million Americans With Student Debt

4 Simple Ways to Help 44 Million Americans With Student Debt

 The student-loan-debt crisis is very real, yet policies have failed to respond with any urgency.  There are 44 million student loan borrowers holding a total of almost$1.3 trillion in student-loan debt. Eight million or more federal student-loan borrowers are in default. One in seven borrowers will default on federal student loans within three years of repayment. In total, more than 30 percent of people saddled with student debt are unable to pay their debts at all. Young borrowers are finding it difficult to keep up with their monthly payments, choosing to delay starting families and buying homes. Older borrowers are also affected, with over one-third of borrowers over the age of 40 struggling to stay current on their loan payments. Many borrowers are unaware of the free federal-government programs that exist to help ease their debt burden. The student-loan servicing companies hired by the Department of Education often fail to provide enough information to accurately inform and assist the borrower, leaving room for unscrupulous companies who charge unwitting borrowers thousands of dollars to enroll in free government programs. What to do? The Checklist to Support Student Loan Borrowers is a simple, four-point policy package, developed by Student Debt Crisis, that details common sense reforms which would help the 44 million Americans hamstrung by student debt. Refinance Student Loans Establish a program to refinance both federal and private student loans. Federal refinancing could help private student-loan borrowers take advantage of the repayment programs and additional protections of federal loans. Under one proposal, 25 million student-loan borrowers could lower their interest rate and monthly payments, saving an average of $2,000 over the life...
It looks like the beginning of the end for ITT Tech

It looks like the beginning of the end for ITT Tech

It is highly unlikely ITT can meet the requirements requested by the Department For-profit educator ITT Technical Institute announced Monday that it will no longer accept any new enrollments, according to a notice at the top its website. The news came four days after the US Department of Education (ED) imposed sanctions on ITT Education Services, the college chain’s parent company, barring the school from enrolling students who use federal financial aid and requiring ITT to provide a letter of credit showing it’s sufficiently funded. Those sanctions will likely cause the demise of ITT Tech, according to Ben Miller, a senior director at the Center for American Progress and a former senior policy advisor at the Department of Education (ED). “It is highly unlikely ITT can meet the requirements requested by the Department,” Miller told Business Insider. “It does not have the $153 million needed to satisfy the financial conditions and now will not have new students to help bring in revenue.”… Continue Reading at Business...
These 3 scary trends show repayment plans alone can’t fix the student debt crisis

These 3 scary trends show repayment plans alone can’t fix the student debt crisis

More worrisome signs that young Americans are actually in big trouble when it comes to education debt.  First, the good news: The rise of income-based student loan repayment plans — along with better practices by loan servicers — has helped relieve student debtors by some measures, according to a Bloomberg analysis of new Department of Education figures. Since June 2013, the delinquency rate — defined in the analysis as the share of borrowers who are at least a month behind on payments — has fallen from about 25% to 19%. (Note that for individuals, being just one day behind technically makes you delinquent.) The White House recently painted a fairly rosy picture of student debt in the United States, releasing a July report arguing that this debt is generally beneficial for the economy because it raises incomes and leads to other positive effects like higher voting rates. But these positive highlights belie other more worrisome signs that young Americans are actually in big trouble when it comes to education debt.  Here are three alarming facts from Bloomberg’s analysis of the student loan crisis. For every $5 of debt, less than $3 is actually getting paid back. Even though the amount of straightforward delinquencies is down, late repayments are a much bigger problem when you add the less straightforward delinquencies to the mix, such as borrowers who are in bankruptcy, have gotten approved for postponement, have asked for forgiveness because of a disability and those who are in default, which means they are delinquent by at least 270 days (about 9 months)… Continue Reading at...
Clinton names Warren ally to transition team

Clinton names Warren ally to transition team

The choice may also indicate Clinton plans an aggressive approach to for-profit colleges and student loan companies if she is elected president. Hillary Clinton has named a progressive with close ties to Elizabeth Warren to her transition team in a move that seems aimed at mollifying liberals unhappy with earlier choices. POLITICO has learned that Rohit Chopra, who battled for-profit colleges and loan servicers as the student loan ombudsman at the Consumer Financial Protection Bureau, has joined the team. Chopra was an early hire at the consumer agency by Warren when she led it. When he was mentioned last year as a possible candidate to become New York’s top financial regulator, he won a ringing endorsement from the Massachusetts Democrat. Warren has been vocal about her belief that “personnel is policy,” and many Democrats expect her to have an elevated voice in Clinton’s transition process, including through allies like Chopra. Bringing him onto the transition team may help quell liberals’ criticism of the appointment of former Interior Secretary Ken Salazar as the director. Progressives have assailed Salazar’s positions in favor of fracking and the Asia-Pacific trade deal. The choice may also indicate Clinton plans an aggressive approach to for-profit colleges and student loan companies if she is elected president. Continue Reading at Politico…...
Student Loans Are Still a Crisis

Student Loans Are Still a Crisis

We shouldn’t be downplaying student debt or the push for debt-free education. Since student debt, free tuition, and debt-free higher education have emerged as presidential campaign–level issues, a narrative has begun to emerge among elite news media that the rising price of college and ever-increasing student debt are phantom problems given the overall lifetime benefits of a college degree. Unfortunately that narrative, which has been highlighted over the past few weeks to varying degrees by major media outlets, including NPR and Vox, rests on a pretty narrow set of assumptions about college and its benefits. And, in fact, it misunderstands the entire point behind the push for debt-free public college. It is absolutely true that some form of postsecondary education and training have become more important, and nearly essential, in today’s workforce. Unemployment rates for college graduates are consistently low, and the average lifetime earnings boost remains high relative to a high school degree. Anyone who argues that college “isn’t worth it” is doing so with anecdotal examples or bad data… Continue Reading at...
You can now complain to the CFPB about your federal student loans (and you should!)

You can now complain to the CFPB about your federal student loans (and you should!)

In the worst case, processing problems can effectively prevent borrowers from accessing an affordable repayment option. Last week, the Consumer Financial Protection Bureau’s (“CFPB”) Student Loan Ombudsman released its midyear report analyzing complaints submitted directly by consumers about their student loans. Importantly, the CFPB’s Student Loan Ombudsman announced that it is now officially accepting complaints about federal student loans. Although it has actually been accepting federal student loan complaints for a few months now, this is the first time it is openly soliciting these complaints. As this report shows, complaining can actually make a difference. The CFPB uses these complaints to inform its policy recommendations, supervision of student loan servicers and debt collectors, and enforcement actions. If you have applied for an income-driven repayment (“IDR”) plan in the past year, you may be familiar with some of the problems discussed in the report (and now you know you are not alone). The CFPB documented problems with delays in processing IDR applications and annual renewals. It also documented complaints about servicers rejecting complaints without giving borrowers an opportunity to fix mistakes or update documentation. These problems can be costly for borrowers. For example, if an error causes the borrower to miss an important deadline, any outstanding interest will be capitalized (meaning its added to the principle balance) resulting in the borrower paying more interest over time. In the worst case, processing problems can effectively prevent borrowers from accessing an affordable repayment option. The CFPB’s report highlighted some key steps that the Department of Education (“ED”) and servicers can take immediately to improve servicing for borrowers. The CFPB urged servicers to...