$7.5 Billion In Student Loan Relief Under Education Department Settlement

[Swordsmyth]

On Thursday the education secretary announced that about 264,000 student loan borrowers will be given about $7.5 billion in debt relief under a settlement of claims. The settlement was made in a class action lawsuit in which lead plaintiff Theresa Sweet sued Betsy DeVos, the Trump-era Education Secretary, for routinely ignoring Obama-era regulations and denying relief claims. Some say this will allow an avenue forward for students saddled with college debts due to predatory loan practices.

Eileen Connor, director of the Project on Predatory Student Lending, issued a statement saying, “This momentous proposed settlement will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government. It will not only help secure billions of dollars in debt cancellation for defrauded students, but charts a borrower defense process that is fair, just, and efficient for future borrowers.”

The proposed settlement will still require court-approval in a July 28th hearing.

More at: https://www.thefinancialtrends.com/...relief-under-education-department-settlement/

 

[GlennwaldSnowdenAssanged]

Sounds better than just giving money to every person that acquired college debt.

 

[jmdrake]

Loan forgiveness is actually Biblical. And it's the basis of the bankruptcy system that Trump took advantage of more than once during his business career.

Deuteronomy 15:1-2 ESV
“At the end of every seven years you shall grant a release. And this is the manner of the release: every creditor shall release what he has lent to his neighbor. He shall not exact it of his neighbor, his brother, because the Lord's release has been proclaimed.​

https://www.abi.org/feed-item/examining-donald-trump’s-chapter-11-bankruptcies

Donald Trump, the current frontrunner for the Republican presidential nomination, has come under fire from both the media and the other candidates for his business record. Although Trump has never filed for personal bankruptcy, he has reportedly filed for business bankruptcy at least four times. Trump responded to the criticism by arguing that businesses often have to file for bankruptcy and that filing for bankruptcy was a financially sound move each time he did it. In fact, during the September 16 Republican debate, Trump observed that “hundreds of companies” have done the same thing. PolitiFact, the Tampa Bay Times’ award-winning fact-checking blog, recently analyzed the claims, from both sides, about Donald Trump’s business bankruptcies in an article straightforwardly titled “Fact-checking claims about Donald Trump’s four bankruptcies.” The website found that there is validity to many of Trump’s points about business bankruptcy being in the best interests of companies. Trump has filed for business bankruptcy four times: the Trump Taj Mahal in 1991, Trump Plaza Hotel in 1992, Trump Hotels and Casinos Resorts in 2004 and Trump Entertainment Resorts in 2009. Each time, the bankruptcy was a Chapter 11 filing. While Chapter 7 and Chapter 13 bankruptcy deal with personal bankruptcies, Chapter 11 is most often used by businesses filing for bankruptcy. Chapter 11 bankruptcy allows a financially struggling business to reorganize in order to keep going.​

That said, the entire SYSTEM needs to be re-examined. In the 21st century with the ability to do remote learning there is no reason why education should be as expensive as it is. That's especially true for state funded schools.

 

[nobody's_hero]

Loan forgiveness is actually Biblical. And it's the basis of the bankruptcy system that Trump took advantage of more than once during his business career.

I don't know that I'd consider bankruptcy the same as debt forgiveness. I fully support students being able to file bankruptcy to liquidate the bad debt, but it isn't a painless process, nor should it be.

The good thing is college students are typically young and they have time to rebuild their credit. Might not be going out as young adults and buying a house right away, but that's not happening right now anyway for various reasons.

 

[jkr]

another half measure?
forgive and forget of forget it

jubilee now

 

[jmdrake]

I don't know that I'd consider bankruptcy the same as debt forgiveness. I fully support students being able to file bankruptcy to liquidate the bad debt, but it isn't a painless process, nor should it be.

The good thing is college students are typically young and they have time to rebuild their credit. Might not be going out as young adults and buying a house right away, but that's not happening right now anyway for various reasons.

In bankruptcy, unsecured debts are discharged...as in "forgiven." A student loan is, by definition, an unsecured loan.

https://www.nolo.com/legal-encyclopedia/chapter-7-bankruptcy-faq.html

Chapter 7 bankruptcy wipes out most types of unsecured debt. Unsecured debts are debts that aren't guaranteed by collateral property. (A mortgage is a secured debt guaranteed by the home; an auto loan is a secured debt guaranteed by a vehicle.) Unsecured debts wiped out by Chapter 7 bankruptcy include credit card debt, medical bills, and gasoline card debt.

However, you can't wipe out all unsecured debt. For instance, child and spousal support and student loans (except in limited circumstances) are nondischargeable—you'll remain responsible for repaying them after bankruptcy. Some other debts might not be dischargeable if the creditor objects, such as recent debts for luxury goods, debts incurred based on fraud (such as lying on a credit application or writing a bad check), and tax debts first due within the previous three years. Learn more about which obligations remain after Chapter 7 bankruptcy in What Bankruptcy Can and Cannot Do and When Chapter 7 Bankruptcy Isn't the Right Choice.​

Here is the secret the politicians forgot to tell you. There were already ways prior to this to get student loan debts discharged even though you couldn't do it through bankruptcy. So this is just doing for everyone what those in the know were already doing for themselves. If your concern is the moral hazard, I agree. But there is a moral hazard built into the system the other way too. It's too easy to get a student loan in the first place precisely because they lenders know they are federally guaranteed. The lenders aren't worried about whether or not there is a potential for payout later. The entire SYSTEM is broken. There are some IT schools that have figured this out. They let students go to school for free, help them find jobs, then contract with their new employers to deduct from their salaries later. The schools only get paid if the students get paid. If the student flunks out of school? No money for the school. If the student can't find a job? No money for the school. Job placement becomes the profit center for the school as opposed to an afterthought that typically does a half-ass job of placing students.

See:

https://www.cnbc.com/2018/12/21/6-schools-that-dont-require-tuition-until-you-get-a-job.html

When you pay: Instead of tuition, students can pay for their education once they receive a job with a $50,000 annual salary. Once students snag a job that meets the salary minimum, graduates pay back 17 percent of their salary over a period of two years (with the maximum payment capped at $30,000). If you don’t find a job, or meet this income level, you don’t have to pay a cent. And if you lose your job, or your monthly pay dips below $4,166.66, you can pause the repayment for that month.
​

 

[nobody's_hero]

In bankruptcy, unsecured debts are discharged...as in "forgiven." A student loan is, by definition, an unsecured loan.

https://www.nolo.com/legal-encyclopedia/chapter-7-bankruptcy-faq.html

Chapter 7 bankruptcy wipes out most types of unsecured debt. Unsecured debts are debts that aren't guaranteed by collateral property. (A mortgage is a secured debt guaranteed by the home; an auto loan is a secured debt guaranteed by a vehicle.) Unsecured debts wiped out by Chapter 7 bankruptcy include credit card debt, medical bills, and gasoline card debt.

However, you can't wipe out all unsecured debt. For instance, child and spousal support and student loans (except in limited circumstances) are nondischargeable—you'll remain responsible for repaying them after bankruptcy. Some other debts might not be dischargeable if the creditor objects, such as recent debts for luxury goods, debts incurred based on fraud (such as lying on a credit application or writing a bad check), and tax debts first due within the previous three years. Learn more about which obligations remain after Chapter 7 bankruptcy in What Bankruptcy Can and Cannot Do and When Chapter 7 Bankruptcy Isn't the Right Choice.​

Here is the secret the politicians forgot to tell you. There were already ways prior to this to get student loan debts discharged even though you couldn't do it through bankruptcy. So this is just doing for everyone what those in the know were already doing for themselves. If your concern is the moral hazard, I agree. But there is a moral hazard built into the system the other way too. It's too easy to get a student loan in the first place precisely because they lenders know they are federally guaranteed. The lenders aren't worried about whether or not there is a potential for payout later. The entire SYSTEM is broken. There are some IT schools that have figured this out. They let students go to school for free, help them find jobs, then contract with their new employers to deduct from their salaries later. The schools only get paid if the students get paid. If the student flunks out of school? No money for the school. If the student can't find a job? No money for the school. Job placement becomes the profit center for the school as opposed to an afterthought that typically does a half-ass job of placing students.

See:

https://www.cnbc.com/2018/12/21/6-schools-that-dont-require-tuition-until-you-get-a-job.html

When you pay: Instead of tuition, students can pay for their education once they receive a job with a $50,000 annual salary. Once students snag a job that meets the salary minimum, graduates pay back 17 percent of their salary over a period of two years (with the maximum payment capped at $30,000). If you don’t find a job, or meet this income level, you don’t have to pay a cent. And if you lose your job, or your monthly pay dips below $4,166.66, you can pause the repayment for that month.
​

I get all that, just that I don't think that's what they have in mind. They propose what essentially constitutes a bailout. Meaning the schools won't learn anything from it, the indebted students won't, and the banks won't.

If the process for filing bankruptcy already exists, then that is what they should be allowed to do. Additional special rules or processes aren't really needed. Just let the students file for bankruptcy the same way that you would let people drowning in medical bills.

 

[vita3]

"Loan forgiveness is actually Biblical. And it's the basis of the bankruptcy system that Trump took advantage of more than once during his business career"

Trump has been fiscally irresponsible his whole life.

He does deserve credit for having balls to go for it, blow it up & somehow escape under letters of law.