Student Debt Crisis http://studentdebtcrisis.org Your One Stop Hub For Student Debt Issues Sat, 23 May 2015 16:37:11 +0000 en-US hourly 1 Senators Ask VA to Help Veterans Affected By School Closures http://studentdebtcrisis.org/veterans-school-closures/ http://studentdebtcrisis.org/veterans-school-closures/#comments Sat, 23 May 2015 16:37:11 +0000 http://studentdebtcrisis.org/?p=2898 Senate Democrats are looking at ways to give VA the authority to provide relief to veteran students who were paid GI Bill benefits to attend classes at the now defunct Corinthian College or one of its subsidiaries.

Last month the Department of Education levied $30 million in fines against Corinthian for inflating job placement numbers at its subsidiary colleges. Last year, the schools came under federal scrutiny for allegations of fraud, including the use of false statistics on graduation and job placement rates.

On April 27, 2015, Corinthian shut down all 28 of its locations including Heald College, Everest College and WyoTech, leaving hundreds of veterans in the lurch. On May 4, the parent company declared bankruptcy.

One selling point that several for-profit colleges tout is their job-placement rate, luring potential students with promises of a job after graduating from their college. This is where Heald College, a subsidiary of Corinthian fell afoul of federal investigators. A Taco Bell employee was considered to be “fully employed” in her degree field of accounting, and Safeway and Macy’s employees who had business administration degrees were also reported by Corinthian as “employed in their field”. The federal allegations also stated that Heald paid temporary employment agencies to hire graduates in short-term jobs, some no longer than 2 days, so they could be counted as successfully placed in their degree field.

Students who received federal loans to attend any of the closed institutions can have their debt forgiven if they choose not to use any of the credits earned at a Corinthian school, however if they choose to keep their credits and transfer to another school they will remain responsible for any student debt. However, veterans who used their GI Bill benefits at a Corinthian school have no recourse; if they choose to attend another school and their credits do not transfer, there is no provision in current law allowing them to have their GI Bill reinstated.

Read More at Military.com…

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AFL-CIO, Student Debt Crisis, and 20+ Organizations Launch the Borrowers Hotline http://studentdebtcrisis.org/afl-cio-student-debt-crisis-and-20-organizations-launch-the-borrowers-hotline/ http://studentdebtcrisis.org/afl-cio-student-debt-crisis-and-20-organizations-launch-the-borrowers-hotline/#comments Fri, 15 May 2015 19:51:49 +0000 http://studentdebtcrisis.org/?p=2893 Media Advisory for May 19-21                                                       Contact:Natalia Abrams 310-365-1069

AFL-CIO, Student Debt Crisis, and 20+ Organizations Launch the Borrowers Hotline

Hotline will offer free counseling and advice for borrowers with student debt

(Washington D.C) More than 40 million Americans are buried under a $1.3 trillion mountain of student loan debt but have limited resources and lack affordable assistance to help repay their loans. To help these borrowers manage their debt, apply for government programs, and enforce their legal rights, a group of labor unions, consumer advocacy, youth and student debt relief organizations are creating a website and holding a free three-day hotline. The website and the hotline will operate as a triage system to inform borrowers of what their available options are and provide resources such as referrals to student loan attorneys and vetted credit counselors. 

Who: A large coalition of labor, youth advocacy and student debt relief organizations. For a full list of sponsoring organizations, click here.

What: Free Student Debt Assistance Website and Hotline

How: Visit www.theborrowers.org to get free resources and sign up for the hotline to help lower their monthly payments.

When: The hotline will operate on May 19th – 20st from 9 AM – 10 PM ET and on May 21st from 9am – 3pm ET

Why: Only 25% of eligible borrowers have taken advantage of federal resources to get favorable loan repayment options and far too many fall prey to predatory debt relief companies and scams. Driven by the belief that no one should pay for FREE government services, the coalition created The Borrowers Hotline to help all student loan borrowers who are in desperate need of assistance.

The groups behind the hotline are also urging the Department of Education to create a system to help borrowers better navigate the many programs that are available to help.

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The Borrowers Hotline Ready To Help You With Free Student Loan Advice http://studentdebtcrisis.org/studentdebthelp/ http://studentdebtcrisis.org/studentdebthelp/#comments Tue, 12 May 2015 19:17:14 +0000 http://studentdebtcrisis.org/?p=2871 Dealing with student loans? We’ve got friendly FREE help at ‪#‎TheBorrowers‬ Hotline. Call slots are filling fast…

RSVP TODAY!
Phone lines open NEXT WEEK:
May 19 & 20- 9amET-10pmET
May 21- 9amET-3pmET

Click here to RSVP for #TheBorrowers Hotline.
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We are The Borrowers. We are retail workers, small business owners, homemakers, educators, union members, advocates. We may not all be experts, but we all know first-hand the impact of student debt on individuals, families, and the whole economy. Student debt isn’t “your fault” and you don’t have to face alone. It’s a national problem that will take collective action to solve. Join us May 19-21 to learn one-on-one from other Borrowers what your rights and options are. Get free help finding, understanding, and applying for government programs or finding an expert that can help you manage your debt or enforce your rights. Or just find a sympathetic ear. Borrowers helping Borrowers. Solidarity in student debt.

Click Here to RSVP For Free Advice or to Check Out the Resources at TheBorrowers.org…

]]> http://studentdebtcrisis.org/studentdebthelp/feed/ 0 Interest Rates on Student Loans Are Expected to Drop Soon http://studentdebtcrisis.org/interest-rates-drop/ http://studentdebtcrisis.org/interest-rates-drop/#comments Tue, 12 May 2015 18:06:33 +0000 http://studentdebtcrisis.org/?p=2865 In a rare bit of good news for students facing hefty college bills, interest rates on federal student loans are expected to head lower soon.

Rates on U.S. student loans are on track to drop by half a percentage point for the upcoming academic year when they are reset in July. As tuition prices escalate, borrowers have racked up $1.2 trillion in student debt, mostly in federal loans.

The expected reset would mean a college student with the average $28,000 in federal loans could save about $800 over 10 years in the most popular loan program for undergraduates, called the Stafford, assuming rates stay constant, according to a government financial-aid calculator. Currently, borrowers pay 4.66 percent annually.

 “It’s a lucky time to get a student loan,” said Ward McCarthy, chief financial economist at Jefferies & Co. “Historically, these rates are extremely low.”
Pay Up

The shift won’t help students saddled with older loans that have fixed interest rates as high as 8.5 percent. Since last June, U.S. Senate Democrats, led by Elizabeth Warren of Massachusetts, have unsuccessfully tried twice to pass bills letting student-loan borrowers refinance their existing loan balances at lower interest rates…

Read the Entire Article at Bloomberg Business…

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Two For-profit College Executives Have Been Charged With Fraud http://studentdebtcrisis.org/two-for-profit-college-executives-have-been-charged-with-fraud/ http://studentdebtcrisis.org/two-for-profit-college-executives-have-been-charged-with-fraud/#comments Tue, 12 May 2015 18:00:02 +0000 http://studentdebtcrisis.org/?p=2862 The SEC has announced fraud charges against the former-CEO and current CFO of for-profit college ITT Educational Services.

And now shares of ITT are crashing.

In early trade on Tuesday, shares of ITT were down as much as 8% after the SEC announced charges against former ITT CEO Kevin Modany and its current CFO, Daniel Fitzpatrick, for concealing the performance of some student loans guaranteed by the company from investors.

In a release, the SEC said:

The SEC alleges that the national operator of for-profit colleges and the two executives fraudulently concealed from ITT’s investors the poor performance and looming financial impact of two student loan programs that ITT financially guaranteed. ITT formed both of these student loan programs, known as the “PEAKS” and “CUSO” programs, to provide off-balance sheet loans for ITT’s students following the collapse of the private student loan market. To induce others to finance these risky loans, ITT provided a guarantee that limited any risk of loss from the student loan pools.

In a statement, the SEC alleges that…

Continue Reading at Business Insider…

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Student Loan Payments Swamp Borrowers http://studentdebtcrisis.org/student-loan-payments-swamp-borrowers/ http://studentdebtcrisis.org/student-loan-payments-swamp-borrowers/#comments Tue, 12 May 2015 17:49:22 +0000 http://studentdebtcrisis.org/?p=2857 An improving job market still isn’t enough to help struggling borrowers pay back their student loans.

In the first three months of 2015, 11.1% of student loan borrowers were at least 90 days behind on their payments, according to data from the New York Federal Reserve released Tuesday. While that’s slightly less than the 11.3% who were seriously delinquent during the last quarter of 2014, the authors note that the report likely underestimates the true level of borrowers delinquent on their student loans.
The share of student loan borrowers, who are behind on their payments and not in a grace period or program that allows them to postpone their payments, doesn’t fit on this chart.
That’s because the delinquency rate is the share of all borrowers with student debt, who are behind on their payments. But about half of those people aren’t currently required to make payments either because they’re in some kind of a grace period or they’re in a program that allows them to postpone their payments.

This suggests that the delinquency rate of those borrowers actually required to make payments on their student loans is about twice as high, the N.Y. Fed researchers wrote in a footnote to the report.

Nearly one-third of student loan borrowers, who are required to make payments, are one month behind on their payments, according to data from the St. Louis Federal Reserve, reported by The Wall Street Journal last month.

The New York Fed figures suggest that the $1.19 trillion in outstanding student loan debt, which is up $78 billion from last year, is still weighing on borrowers, even several years after the Great Recession. That albatross is likely preventing borrowers from buying houses, cars and saving, behavior that

Continue Reading at Market Watch…

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Senate, House to Restore Students’ Rights to Sue For-Profit Colleges in Dispute http://studentdebtcrisis.org/senate-house-to-restore-students-rights-to-sue-for-profit-colleges-in-dispute/ http://studentdebtcrisis.org/senate-house-to-restore-students-rights-to-sue-for-profit-colleges-in-dispute/#comments Fri, 08 May 2015 19:47:47 +0000 http://studentdebtcrisis.org/?p=2840

NEW YORK (MainStreet) — The arbitration clause–or the arb clause–is often the bane of many consumers who want to seek redress for a grievance against a company in court. Arb clauses turn up anywhere from payday loan contracts to college enrollment agreements and prevent customers from suing. Rather than facilitate good-faith mediation, arb clauses have increasingly put the power to settle disputes in the hands of a company selling a product or service.

For-profit colleges have routinely included anti-student arb clauses in enrollment agreements. A bill introduced in Congress last week called the Court Legal Access & Student Support (CLASS) Act would attempt to stop this arbitration land grab by prohibiting schools from receiving federal student aid dollars that restrict students’ ability to pursue legal claims, individually or as part of a class action lawsuit.

The bill’s proponents say that if the CLASS Act had been law, students defrauded by Corinthian colleges, which was shut down last week, would have been able to sue the school directly to have their student loans written off rather than take the more problematic route of going through the Department of Education (ED).

“For years, unscrupulous for-profit colleges have enriched themselves by devouring billions in federal student loan dollars while leaving students with worthless degrees and a mountain of debt,” said Senator Dick Durbin (D-Ill.), who introduced the bill with Rep. Maxine Waters. (D-Calif.)“Students have had little to no recourse, unable to hold these companies accountable in court because of the fine print in enrollment contracts,” Durbin stated.

“This legislation will help put an end to the use of mandatory arbitration clauses in federally funded school enrollment agreements – a trend that does nothing but protect the predatory institutions that are harming our children,” said Waters.

According to Lauren Saunders, managing attorney at the National Consumer Law Center, the bill would invalidate the arbitration clauses, which hamstring the customer when it comes to seeking redress in the courts by denying them access while the lender calls the shots.

Continue Reading at Main Street…

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Even The Private Sector Recognizes How Student Loan Debt Hurts The Whole Economy http://studentdebtcrisis.org/even-the-private-sector-recognizes-how-student-loan-debt-hurts-the-whole-economy/ http://studentdebtcrisis.org/even-the-private-sector-recognizes-how-student-loan-debt-hurts-the-whole-economy/#comments Fri, 08 May 2015 18:49:21 +0000 http://studentdebtcrisis.org/?p=2843 With graduation season upon us, soon-to-be graduates and their families are beginning to confront the harsh reality of the debt they’ve taken on to earn their cap, gown, and diploma.

Some people may think of the fight for affordable college for all as a progressive fight only. However, student loan debt affects all Americans. When a conservative chief investment officer of fixed fundamental income at one of the world’s largest asset management companies stresses the looming student loan debt crisis and its potential to drag the whole economy down, you know the cause for concern over the nation’s $1.2 trillion in student debt isn’t just a liberal issue.

Rick Rieder, Blackrock Inc.’s chief investment officer, wrote an urgent and pragmatic think-piece asserting that even investment banker-types should consider their and the economy’s stake in the rising cost of college. Rieder cites four interconnected reasons why everyone–even those lucky enough to be free of the burden of student debt– need to pay attention and should care about student debt’s implications for the whole economy.

The first reason, Rieder says, is that the student debt burden will keep older Americans pushing off retirement and working for longer in order to pay off their children’s college, or have less savings from helping pay for their child’s tuition earlier on. Older folks keeping their jobs also keeps younger people from snagging those jobs.

Second, student loans keep younger Americans with debt from saving much money at all. “By some estimates, more than half of college students now borrow annually to cover the costs of education, and more than half of student loan borrowers still have outstanding debt balances into their 30s,” writes RIeder. “This early-life debt means that the younger generation has less money to save.”

Making student loan payments monthly, with average balances per borrower that have climbed about 74 percent over the past decade, means that many Americans are literally putting away nothing.

Third, Rieder points out that the housing market will really take a hit, since young Americans with debt and no savings have no cash for a downpayment. Millennials are also putting off purchasing cars, getting married, and starting families. This has a grave impact on the economy.

Finally, student loan debt is creating an even wider class divide. The general consensus is that attaining some kind of post-secondary education is necessary to socioeconomic mobility and a shot at financial security. But for those who face a reality where college is just too expensive, even with loans, employment options are bleak. Without a college degree…

Read More at Generation Progress…

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More Than 240,000 People Want To Cancel All Student Debt, SDC Attends Petition Delivery http://studentdebtcrisis.org/more-than-240000-people-want-to-cancel-all-student-debt-sdc-attends-petition-delivery/ http://studentdebtcrisis.org/more-than-240000-people-want-to-cancel-all-student-debt-sdc-attends-petition-delivery/#comments Fri, 08 May 2015 17:40:39 +0000 http://studentdebtcrisis.org/?p=2838 “We need to get back not only to low tuition, but to no tuition,” said Roger Hickey, sporting an “I am a student debt voter” T-shirt outside Senator Elizabeth Warren’s office last Thursday. Hickey works for Campaign for America’s Future, and on April 30, he helped deliver a petition with over 240,000 signatures to Warren’s office. The petition, which gathered its signatures all in one month, demanded that the US government cancel all student debt, public and private.

There are currently 40 million student loan borrowers with $1.3 trillion in debt, which “pales in comparison to what we spent on the Iraq war,” said John Hlinko, founder of Left Action. “So what about a similar war on debt?” While there has been a huge increase in military spending, Pell grants, or money given to low-income students that does not need to be repaid, have been cut from the current budget. Many are starting to feel like the right to accessible education is under attack.

The petition given to Warren was sponsored by a coalition of organizations including Campaign for America’s Future, Democracy for America, Working Families, Daily Kos, andThe Nation, among others. Senator Warren has spoken out frequently about reforming student loans, and she recently tried to introduce a budget amendment that would have decreased the interest rate on loans to 3.9 percent, but Senate Republicans blocked it. She also recently joined a liberal push to make college at least debt-free.

Natalia Abrams, the executive director of StudentDebtCrisis.org, graduated shortly before the UC system increased tuition by 32 percent in one semester in 2009. Many of her friends had to drop out of college. “I started Occupy Colleges, literally a Facebook page and a Twitter page from my bedroom”, she said. “But I just had to do something. It felt like that was the economic injustice for students.”

Abrams believes that this is also part of a larger movement against austerity and state disinvestment—states have been spending less per student than they have at any time in history. This means that students have to make up that difference. She feels the country needs debt-free college and debt cancellation simultaneously “to be able to get out of this mess.”

Continue Reading at The Nation…

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U.S. Eyes New Path to Student Loan Debt Relief http://studentdebtcrisis.org/u-s-eyes-new-path-to-student-loan-debt-relief/ http://studentdebtcrisis.org/u-s-eyes-new-path-to-student-loan-debt-relief/#comments Fri, 08 May 2015 06:39:32 +0000 http://studentdebtcrisis.org/?p=2854 The unprecedented collapse and now bankruptcy of Corinthian Colleges has left in its wake a large political battle over student debt relief. At the center of the storm is the U.S. Department of Education, which is now deciding how to structure a debt relief process. Its decisions are likely to have long-term implications for student loan borrowers regardless of whether they attended Corinthian institutions.

Here’s an explanation of some of the moving parts to Education Department debt relief.

Corinthian declared bankruptcy on Monday. Will that affect debt relief for students?

The Education Department’s decision making about loan forgiveness for Corinthian students will not change because of Corinthian’s bankruptcy, a department official said.

Federal regulators earlier this year negotiated $480 million of loan forgiveness for students who took out private loans to attend Corinthian campuses. The bankruptcy won’t affect relief because it was not funded by Corinthian. Instead it’s being provided by the ECMC Group under an agreement with the Consumer Financial Protection Bureau. ECMC purchased 53 Corinthian campuses earlier this year.

What about the department’s nearly $30 million fine against Corinthian?

“We will do everything we can to make our claim to the $30 million,” a department official said.

Corinthian’s bankruptcy filing, which shows $19.2 million in total assets and $143.1 million in debt, names the Education Department as one of the company’s 30 largest creditors, though it lists an “unknown” amount owed.

Corinthian on Tuesday formally appealed the fine. The company says the department unfairly rushed to judgment and lacked proper justification for its findings that Corinthian misrepresented job placement rates.

Various groups are lobbying the department on Corinthian debt relief. Who’s asking for what?

Perhaps the most high-profile advocates have been a group of more than 100 former Corinthian students who organized adebt strike. Calling themselves Debt Collective, they’re refusing to pay their federal loans and say they were scammed by Corinthian.

Congressional Democrats have, since last year, been pushing the Education Department to provide direct relief to Corinthian borrowers. Senator Dick Durbin of Illinois and Senator Elizabeth Warren of Massachusetts have been among the most vocal.

The attorneys general of nine states have similarly called for debt relief. There’s also a coalition of student, consumer, education and labor groups.

They’re pushing the department on several fronts: defense to repayment claims, closed school discharges and other powers the agency has to forgive debt. Some issues are settled; others remain up in the air.

OK, first up: the defense to repayment claims. What’s the deal with those?

The Higher Education Act says that a college’s wrongdoing can relieve a borrower of his or her obligation to repay the federal loans used to attend that college. This is known as a defense to repayment — a reason why the government can’t legally force a borrower to repay the loan.

The department’s current rules, written by the Clinton administration, say that borrowers can use the defense to repayment escape hatch when their college’s wrongdoing rises to the level of violating state law.

How often have borrowers pursued this option?

Rarely. In the past 15 years, the department received a total of five claims under this provision of the law. Those cases were each handled on an “ad hoc basis,” an official said.

As of April 30, the department had received defense to repayment claims from 254 borrowers, the vast majority of which are from former Corinthian students. Luke Herrine, one of the advisers to Debt Collective, said he sent an additional 785 claims to the department on Friday.

Is the Education Department receptive to those claims?

For months, the department has said it’s been “carefully considering” ways to make it easier for borrowers to make defense to repayment claims. On Monday, department officials took a firmer stance, saying they were committed to debt relief for students “defrauded by Corinthian” — but said they hadn’t decided on the process.

What, exactly, are department officials deciding?

Officials are setting up a mechanism for handling defense to repayment claims — a task they’ve described as a challenge.

“We don’t have a lot of practice on this,” Education Secretary Arne Duncan said last month. “The rules aren’t very clear.”

Among the questions still unresolved: Who will collect and process the claims? How will they be judged — and by whom?

“We’re guided by the law here,” a department official said…

Continue Reading at Think Progress…

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