In The News: Teacher To Betsy DeVos: ‘Why Didn’t You Forgive My Student Loans?’

August 5, 2019

By Zack Friedman, Forbes

Secretary of Education Betsy DeVos

An educator thought she was on track to receive student loan forgiveness.

She made the payments. She thought she did everything right.

Then, she was told years later that she didn’t qualify.

Here’s what you need to know – and how you can avoid her fate.

New Lawsuit: Student Loan Forgiveness

As first reported by NPR, Debbie Baker, a Director Education at a non-profit organization in Tulsa, Oklahoma, expected that her $76,000 of student loan debt would be forgiven through the Public Service Loan Forgiveness program, a federal program through the U.S. Department of Education that forgives federal student loans for individuals who work in public service.

According to Baker, her student loan servicer – the company responsible for collecting and managing her student loan payments –  allegedly told her for nine years that she met all the requirements to receive public service loan forgiveness. As such, Baker thought she would have all her federal student loan forgiven after meeting the program’s requirements, which she believed she met. However, after making her usual monthly payments under an income-driven repayment program, the U.S. Department of Education said she did not qualify for student loan forgiveness. You can imagine Baker’s reaction.

Now, Baker is a plaintiff in a new lawsuit filed by the American Federation of Teachers, one of the nation’s largest teacher’s unions, against the U.S. Department of Education, which is led by Secretary Betsy DeVos. The lawsuit alleges, among other things, that:

  • the Public Service Loan Forgiveness program is “grossly mismanaged” and
  • the program, as it’s currently administered, violates the Due Process Clause of the Fifth Amendment to the U.S. Constitution
  • the U.S. Department of Education is aware that student loan servicers make misrepresentations to borrowers, which results in borrowers getting rejected for student loan forgiveness and suffering financial and other harm.

Was Baker given the wrong information from her student loan servicer? Was it Baker’s responsibility to understand all the requirements of the program? Is the program administered properly? What is the proper role of student loan servicers – advisors or student loan payment collectors? Many of these issues may be addressed as a result of this lawsuit.

To Read More, Click Link Below:

https://www.forbes.com/sites/zackfriedman/2019/07/15/punlic-service-loan-forgiveness-lawsuit/#217b029c32ab

In The News: ‘I’m Drowning’: Those Hit Hardest By Student Loan Debt Never Finished College

August 1, 2019

By Elissa Nadworny, NPR

Most days, 25-year-old Chavonne can push her student loan debt to the back of her mind.

Between short-term office jobs in the Washington, D.C., area, she drives for Uber. But once in awhile, a debt collector will get hold of her cellphone number — the one she keeps changing to avoid them — and it all comes back fresh. “I’ll be like, ‘Oh no!’ ” she says. “It’s a sad reminder that I owe somebody money!”

In April, she got another reminder when the government seized her tax refund.

All this for a degree she never finished.

Back in high school, she recalls, her teachers and friends pushed her to go to college. And so, without too much thought, Chavonne enrolled at the University of Mississippi and borrowed about $20,000 to pay for it.

Far away from home and in a challenging environment, she struggled — and after three semesters, she’d had enough. Her college days are five years behind her, but the debt she took on is not.

Today, rent, car payments, gas and food are higher up on her list of priorities. And so she’s in default, not paying on her loans.

The one thing that could help Chavonne earn more money, of course, is earning a degree. But because she’s in default, she doesn’t have access to federal student aid that could help her go back and finish. It’s a vicious cycle for Chavonne and millions of other students who leave college with debt and without a degree.

From mid-2014 to mid-2016, 3.9 million undergraduates with federal student loan debt dropped out, according to an analysis of federal data by The Hechinger Report, a nonprofit news organization.

The default rate among borrowers who didn’t complete their degree is three times as high as the rate for borrowers who did earn a diploma. When these students stop taking classes, they don’t get the wage bump that graduates get that could help them pay back their loans.

The perception is, work hard and pay what you owe, says Tiffany Jones, who leads higher education policy at the Education Trust, “but it’s not manageable even if you’re working.”

To Read More Click Link Below:

https://www.npr.org/2019/07/18/739451168/i-m-drowning-those-hit-hardest-by-student-loan-debt-never-finished-college

In The News: Feds find potential fraud in student loan repayment plans

July 26, 2019

By Collin Binkley, ABC News

Tens of thousands of federal student loan borrowers may be getting their monthly payments lowered by lying about their income and family size, yet the U.S. Education Department is doing little to catch them, according to a report released Thursday by a federal watchdog agency.

Among the most extreme cases reported by the Government Accountability Office are two separate borrowers who claimed to have 93 relatives in their households, along with 3,300 cases in which borrowers said they had no income even though federal data suggest they made $100,000 a year or more. All were approved for lower loan payments.

Investigators were reviewing the Education Department’s oversight of its popular income-driven repayment plans, which allow borrowers to pay lower monthly rates based on their incomes and family sizes. After 25 years of payments, all remaining debt is wiped clean.

Education Secretary Betsy DeVos said her agency will conduct comprehensive review of the repayment plans and will refer cases of fraud to the Justice Department for prosecution. She placed blame on previous administrations, saying the problems are proof that “many of the policy ideas previously pursued were poorly implemented.”

“Misrepresenting income or family size is wrong, and we must have a system in place to ensure that dishonest people do not get away with it,” DeVos said. “We didn’t create that problem, but rest assured we will fix it.”

The federal watchdog agency says it identified 95,100 cases in which borrowers were approved as having no income even though it appears they were earning money. Using wage data from the Department of Health and Human Services, investigators found that borrowers in a third of those cases may actually have been making $45,000 a year or more, including some who topped $100,000.

They concluded that the department “does not have procedures to verify borrower reports of zero income, nor, for the most part, procedures to verify borrower reports of family size.” Borrowers applying for the repayment plans can check a box indicating they have no income, and the department generally takes them at their word with no further documentation needed, the investigation found.

If approved, borrowers with no income typically are not required to make monthly payments.

Click Link Below to Read More:

https://abcnews.go.com/Politics/wireStory/feds-find-potential-fraud-student-loan-repayment-plans-64575667

In The News: More student loan borrowers carry six-figure balances

July 23, 2019

By Annie Nova

ONE TIME USE H/O: Elisha Bokman

Elisha Bokman has been out of school for eight years. Still, her student loan balance is half a million dollars.

Today, for her doctorate degree in naturopathic medicine and master’s in acupuncture from Bastyr University, she owes $499,322.69.

She and her husband struggled to buy a house because of her debt. Eventually, the financial stress led them to a divorce. “He felt like he couldn’t live his life or do the things he wanted to do,” Bokman, 38, said. She wanted to open her own medical practice, but she said her student debt prevents her from getting a business loan.

“It really effects the remainder of your life,” Bokman said. “There’s no out.”

Around 178,000 graduate students owed more than $100,000 in the 2015-2016 academic year, up from 51,000 in 2003-2004, according to Mark Kantrowitz, the publisher of SavingForCollege.com. In the first quarter of 2019, over 6% of all student loan borrowers owed more than $100,000, up from 5.4% in 2017.

Recently, Democratic presidential candidates Elizabeth Warren and Bernie Sanders have proposed forgiving student debt. Warren’s plan would reduce people’s tabs by up to $50,000, whereas Sanders’ would erase it all.

To Read More, Click Link Below:

https://www.cnbc.com/2019/07/12/she-owes-500000-in-student-loans-giant-balances-are-on-the-rise.html

In The News: Debt free at 23: How this woman paid off $20K in loans in just one year

July 18, 2019

By Sofia Pitt

For CNBC

Paying with paper instead of plastic helped Kristy Epperson eliminate $20,000 in student loan and car loan debt in just one year.

After earning her bachelor’s degree in nursing from Wright State University in 2017, Epperson owed about $16,000 in student loans from multiple borrowers with interest rates of between 3.6% and 6.8%. She also had roughly $4,000 left on her car loan, at an interest rate of 4.2%.

Even as Epperson began slowly chipping away at that debt, she managed to achieve another financial goal: homeownership. She was able to buy a place in Dayton, Ohio, with only 5% as a down payment. Becoming a homeowner forced her to take a hard look at her expenses and reevaluate her spending habits — which made her more determined to wipe out her student loan and auto debts.

“If something happened, if I lost my job, I’d have no way to pay my bills,” Epperson tells Grow. “I needed a better long-term plan.”

In addition to getting a second job as a substitute teacher, which brought in an extra $100 to $300 a month, Epperson created an expense spreadsheet and began tracking her purchases to help her pay down debt faster. She used her Instagram page, @DebtFreeAtTwentyThree, to share her setbacks, strategies, and accomplishments.

To Read More, Click on Link Below:
https://www.usatoday.com/story/money/2019/07/17/student-loans-car-loans-woman-paid-off-debt-cash-budget/1754028001/

In The News: Making the FAFSA Mandatory

July 15, 2019

By Andrew Kreighbaum
For Inside Higher Ed

In a bid to boost the number of students receiving financial support for college, Texas will soon become the second state to require high school seniors to complete the Free Application for Federal Student Aid before graduating.
A handful of states have looked at making FAFSA completion mandatory for graduating high school students. Beginning with the 2020-21 academic year, Texas will provide a serious test case for the policy after big successes in Louisiana, which enacted the requirement last year.

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Completing the form is a leading indicator of college enrollment. And there’s ample evidence that more financial aid is associated with outcomes like college completion. Actually achieving big gains in FAFSA completion, though, requires significant investment and outreach by schools and state officials.
During the past academic year, Louisiana saw FAFSA completions by high school students climb by more than 25 percent. College access groups say high school seniors leave millions of aid dollars on the table each year by not completing the form — often because it’s too difficult or they don’t believe they’ll qualify for aid.
“As the forerunner of this kind of policy, the early successes that Louisiana has seen with mandatory FAFSA has to be encouraging for other states,” said Bill DeBaun, director of data and evaluation at the National College Access Network. “We shouldn’t assume Texas will see the same effects Louisiana did. But given the scale of the state, even a modest effect could make a big splash on the FAFSA completion cycle.”
If Texas has 25 percent of the growth Louisiana saw in FAFSA completions, that would mean an additional 12,700 students submit the application, DeBaun said.

To Read More, Click On Link Below:
http://www.insidehighered.com/news/2019/07/10/texas-becomes-second-state-require-fafsa-completion

Why You Should Pay Off Your Student Loans Early

Hello and thank you for stopping by to support No Debt But Love! This site represents a movement to live out Romans 13:8 as we leave no debt outstanding, but the continuing debt to love one another. This means we will pay off all our debts: student loans, home mortgages, car loans, and credit cards.

My personal struggle has been student loans as I have been on this repayment journey for 8 years. I would like to recognize a supporter of No Debt But Love. She is a fellow YouTuber and blogger. Her name is Mary, and her YouTube channel is called “A Merry Life, On A Budget”. Check out the links to her channel and her blog below.
YouTube Channel:
https://www.youtube.com/user/amerrylife
Blog:
https://amerylife.com

This blog entry will feature a friendly critique of an article I came across titled, “Why You Might Not Want to Pay Off Your Student Loans Early” published by the Motley Fool. Here’s the link below. have also featured this article in a previous post.
https://www.fool.com/personal-finance/2019/06/29/why-you-might-not-want-to-pay-off-your-student-loa.aspx

The first reason the article gives for not paying off loans early is due to borrower protection and the possibility of getting debt forgiven after 10 years of public service.
However, 99% of applicants for student loan forgiveness are denied. This prospect doesn’t sound promising. Here’s support of my perspective provided by Forbes below.
https://www.forbes.com/sites/zackfriedman/2019/05/01/99-of-borrowers-rejected-again-for-student-loan-fworgiveness/#173bad7db16b

The 2nd reason…The interest rates on your student loans may be lower than other debt. In my frame of reasoning, debt is the amount you owe to someone else. If any debt you have accrues interest, this means compound interest is working against you and not for you. Lord forbid you experience a layoff, resulting you to defer payments.

The 3rd Reason…You could potentially earn a better return on your money by investing it. Whenever you invest there is risk associated with financial instruments we choose to purchase. Usually, the greater the rate of return, the greater the risk you subject yourself to. It would be wise to consider the opportunity costs should you choose to invest as opposed to not investing.

The fourth and final reason…You’ll be giving up a tax deduction (if you qualify.) To this I would say, why hold on to debt to get a tax deduction? If you are a high-income earner and or owe a substantial amount of debt, the $2,500 would either phase out or wouldn’t make much of a difference. Wouldn’t it be better to have your student loan debt paid off and not have interest payments to make?

This concludes this blog post. What do you think? Should you pay off student loan debt early or on the 10-year standard repayment plan? As for me, I hope to have my student loan debt paid around this time next year, concluding 9 years of torture lol. video… Well until next time everyone… Stay Strong… Fight On… and have No Debt But Love, Peace and Blessings.

A YouTube video corresponding to this blog post is in the works! Stay tuned!

As student loan debt mounts, high schoolers ‘shockingly’ unaware of aid options

July 9, 2019

By Brittany De Lea
For Fox News

Exorbitant college Opens a New Window. costs are a significant problem for Americans, but new research shows prospective college students are unaware of how the financial aid Opens a New Window. process works.

A new study from ACT, which surveyed about 1,200 last year, found that many students “lack the most up-to-date … debt-related information” needed to make enrollment and financial aid decisions.

That’s particularly troubling at a time when outstanding student loan debt has surpassed $1.5 trillion, second only to mortgage debt.

Meanwhile, tuition and fees for the 2018-2019 school year averaged $35,830 at four-year private, nonprofit institutions, according to data from The College Board. At public four-year in-state institutions, the average was $10,230 – and $26,290 at public, four-year out-of-state colleges.

The average borrower has nearly $40,000 in student loan debt.

Here’s a look at what most college students surveyed did not know about the financing process.

  • An “overwhelming majority” didn’t know that the U.S. government subsidizes a borrower by paying interest on existing loans while the student is still in college.
  • A majority of respondents did not know about loan repayment options, which allows students to repay loans based on their earnings after college.

To Read More, Click the Following Link:

https://www.foxbusiness.com/personal-finance/student-loan-debt-aid-options

Why You Might Not Want to Pay Off Your Student Loans Early

July 2, 2019

By Christy Bieber

For The Motley Fool

Owing money on student loans can feel like a major financial burden. After all, you have to send money to lenders each month and tons of debt shows up on your credit report.

While you may be tempted to get rid of your student debt ASAP by making extra payments and throwing as much cash at it as you can, this may not actually be the best financial decision. In fact, there are a few key reasons why paying off your student loans early might be a bad idea indeed. Here are four of them.
Student in graduation outfit with dollar sign hanging from tassel.

Image source: Getty Images.
1. Federal student debt comes with borrower protections you can’t get with other debt.

With most types of debt, lenders don’t really care if you’re facing financial hardship — you have to pay back what you owe on schedule. And you can’t just change your payment plan to reduce your payment so it matches your income, nor can you expect to get some of your debt forgiven if you do work that serves the public.

If you have federal student loan debt, on the other hand, there are unmatched borrower protections available to you. Depending on your situation, these borrower protections include:

Eligibility to get loans forgiven if you work in public service and make 120 on-time payments
The option to put loans into forbearance or deferment, and pause payments if you go back to school, are unemployed, serve in the military, join the Peace Corps, or meet other qualifying requirements
The ability to change repayment plans and pick a plan that caps payments at a percentage of income

The government may even subsidize interest on some of your loans during periods when payments are deferred.

Putting extra money toward paying down loans with all these borrower protections rarely makes sense. After all, if you could pay a small percentage of your income for 10 years and get the rest of your loans forgiven because you work for the government or a nonprofit, why pay off your loans early?

Click the Link Below to Read
https://www.fool.com/personal-finance/2019/06/29/why-you-might-not-want-to-pay-off-your-student-loa.aspx

JPMorgan’s Jamie Dimon: Student lending in the U.S. is a ‘disgrace’ and it’s ‘hurting America’

June 28, 2019

By Julia La Roche

For Yahoo Finance

JPMorgan Chase (JPM) CEO Jamie Dimon says student lending in the U.S. has been “a disgrace” and it’s “hurting America.”

“Is there an issue with student debt? There is, but you’ve got to stop the creation of bad debt,” Dimon told Yahoo Finance’s Andy Serwer in an exclusive interview at the unveiling of JPMorgan’s new flagship bank branch in Midtown Manhattan.

Dimon added that the government has “irresponsibly” lent more than $1 trillion since taking over in 2010.

“And now they want to forgive it,” he said.

Student loan debt has soared over the last decade. (Graphic: David Foster/Yahoo Finance)

 

Student loan forgiveness has become a focal point of the 2020 election, with Democratic contenders rolling out plans. This week, Sen. Bernie Sanders (I-VT) unveiled a sweeping cancellation plan that proposed taxing financial transactions.

“I think they should look at all parts of student lending, fix the broken parts, and then forgive those people need forgiveness, and then help people get into school, and then make sure the schools are responsible in getting the kids out,” Dimon said. “And what we’ve done is a disgrace, and it’s hurting America.”

He pointed out that a tax on financial transactions would be paid by investors.

“How they go about taxing, I’ll leave that to the politicians to figure that out,” he said.

To read more, click the following link:

https://finance.yahoo.com/news/jpmorgan-ceo-jamie-dimon-calls-student-loans-a-disgrace-171749043.html