read The CFPB report does not deal with any illegal activities the agency may have found in the private student loan marketplace, but Chopra told me many of the practices taking place do raise some serious questions. We want to make sure policymakers know they may need to take action if servicers dont come up with more clear and transparent ways of handling student loan borrowers funds, he said. The National Consumer Law Center praised the CFPB for its report and called on all federal regulators that oversee this marketplace to make sure that current rules and laws are being enforced. We also need to look at new laws and regulations to make sure that borrowers get what they are entitled to and to make sure there is more relief available to help financially distressed borrowers, said Deanne Loonin, director of NCLCs Student Loan Borrower Assistance Project . Where to find help Along with its report, the Consumer Financial Protection Bureau released a consumer advisory: Stop Getting Sidetracked by Your Student Loan Servicer . Other resources include the CFPBs Repay Student Debt , an interactive web tool designed to help you navigate your repayment options and Ask CFPB to find answers to common questions.
The BAP found that the debtor did not have reasonably reliable future financial resources and reversed and remanded the bankruptcy courts decision that the student loans were not dischargeable. Between 2003 and 2006, the debtor entered into 15 separate student loans with National Collegiate Student Loan Trust (NCSLT) with a total original balance of $70,100. The Bankruptcy Judge found that the debtors NCSLT loans were not an undue hardship pursuant to Section 523(a)(8) of the Bankruptcy Code and therefore they should not be discharged and the debtor appealed this ruling to the BAP. Under Section 523(a)(8), student loans are not dischargeable unless they impose an undue hardship on the debtor, which the debtor bears the burden of proving by a preponderance of the evidence. While undue hardship is not defined by the Bankruptcy Code, the BAP said that in the Eighth Circuit, a totality of the circumstances test is used.
The authority would have all powers available under existing law to collect payments from borrowers, including payments from borrowers who default. Under the consumer protection part of the bill, private student loan debt data in Wisconsin would be required to be collected and tracked by the Department of Financial Institutions and the Higher Education Aid Board to help policy-makers and the public better understand the depth and breadth of student loan debt. The data would include a ranking system based on private loan interest rates, loan terms and consumer protections. A recent study ranks Wisconsin No. 10 in the nation for number of college students with debt, with 67% of graduates from four-year schools having loans to repay.
PREV of NEXT Mark Harrison / The Seattle Times A.J. and Amy Roberts sold their Edmonds condo and downsized to help get a handle on debts particularly their student loans. Hide / Show comments I guess actually enjoying your life and taking vacations can wait a few years or… (October 26, 2013, by tutone) MORE I’ll take it a step further tutone- If you’re living your life intelligently, there… (October 27, 2013, by m5po) MORE “I don’t know about this couple though.
Unlike federal student loans, private loans not only cost more they offer less repayment flexibility and typically cannot be discharged in bankruptcy . Almost all student debt is difficult, if not impossible, to refinancesticking borrowers with high rates in a low-rate environment and adding to the economic drag. In the ombudsmans annual report , released Wednesday, Chopra detailed the problems that borrowers have trying to pay down their private loans, and how a seemingly intentionally confusing system often holds borrowers hostage. In the end this takes a toll on their credit scoreand on their ability to buy a home or anything else with borrowed money. Repaying a student loan should be simple, CFPB director Richard Cordray said in a statement. When servicers process payments to maximize fees and penalties they undermine the trust of their customers.
Chopra tied 75% of the decrease in household formation over the past few years to college debt. Treasury Secretary Jacob Lew told the members of the Financial Literacy Education Commission several days ago that a college education is vital to young people, increasing the chances of upward income mobility by 75%. But high levels of student debt are keeping graduates from achieving goals such as saving for retirement, starting new businesses — and buying a home. A roadblock to homeownership Surveys reveal that many indebted college graduates have found student debt to be a barrier to owning a home. Respondents to a poll by the Young Invincibles this past spring showed that 47% have put off buying a home to make their monthly student loan payments.
The late payments don’t disappear off your credit reports for seven years, even when you pay off the debt. However, a debt paid in full is far less damaging than an outstanding or settled debt. In addition, the further away you get from the dates of the delinquencies, the less they will affect you. The time to fret about taking on the responsibility of a student loan for someone else is before you sign on the line. I’m sure it’s disappointing to both of you that your husband’s career investment hasn’t paid off yet.
Forcing lenders to fess-up to that reality would also encourage them to be more proactive, especially if the default trigger for government-backed loans were made to coincide with that of all other types of consumer lending activity. As for the payment misapplication and incorrectly calculated payoff quotation matters, these can happen from time to timebut they should not happen to the extent thats been reported. Not only should lousy customer service not be tolerated by companies wanting to stay in business, but it should also be penalized by the Department of Education (which does the majority of the loan servicing-subcontracting), because these failures can lead to defaults that the government will then be called upon to cover. And as it pertains to the forced payment-adjustment issue, its hard to understand how a two-sided agreement can be materially altered without both parties consenting to that change. But instead of saddling borrowers with the costly and time consuming effort of challenging improper servicer conduct in court, the practice should be outlawed, pure and simple. The Biggest Issue All that said, what disappoints me more than anything, however, is our apparent unwillingness to address the single greatest impediment to resolving the student loan crisis: the roughly $500 billion of education debt thats controlled by private lenders and their investors (approximately $300 billion of FFEL loans, plus more than $150 billion of private loans).