October 27, 2021

epic clerical error may wipe out $5 billion in student loan debt

student loan forgiveness

According to The New York Times, National Collegiate, a conglomeration of 15 trusts that hold 800,000 private student loans worth $12 billion, has recently lost multiple court cases due to bad paperwork — effectively clearing dozens of debtors of the money they owe. The loans currently being disputed total more than $5 billion.

The Times spoke with Samantha Watson, a mother of three who took out private loans to finance a degree in psychology at Lehman College in the Bronx. When her daughter became sick, Watson was unable to afford her high student loan payments. National Collegiate sued her, but their paperwork was incoherent, unorganized and incomplete, her lawyer, Kevin Thomas of the New York Legal Assistance Group, told The Times.

Unfortunately, most borrowers will not experience the same kind of happy ending. Defendants often settle with National Collegiate or ignore the summons altogether.

Link to article: http://www.cnbc.com/2017/07/19/this-clerical-error-could-wipe-out-5-billion-in-student-loan-debt.html 



Obama signs Executive Order on Financial Aid Student repayments

Obama_signingIn an attempt to ease crushing student debt, President Obama will sign an executive order Monday afternoon that will allow at least 5 million people to cap their student loan payments at 10 percent of their income.

Obama will direct Secretary of Education Arne Duncan to amend student loan regulations to allow for the payment ceiling, which the administration wants to make available to borrowers by December 2015.


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Obama’s ‘Pay as You Earn’ Student-Loan Plan Starting Date Is Set for

Starting on the 21st of this month eligible borrowers of federal student loans will able to enroll in President Obama’s “Pay as You Earn” program, the Department of Education is expected to officially announce on today.

The new income based repayment plan (click here to review on the Chronicle)  effectively caps monthly a graduates loan payments at 10 percent of a borrower’s current discretionary income.  Also after 20 years of making these payments, the government will forgive the balance on the loans.  Currently the Education Department’s income-based repayment program caps monthly loan payments at 15 percent of discretionary income, with loan forgiveness after 25 years.

The program will accept new enrollees who were new borrowers after October 1, 2007, and who also took out a loan on or after October 1, 2011.

Debt to Degree a new report correlating debt & degree completion

Education Sector has created such a measure, the “borrowing to credential ratio.”For each college, we have taken newly available U.S. Department of Education data showing the total amount of money borrowed by undergraduates and divided that sum by the total number of degrees awarded.

The results are revealing:

• Nationwide, the overall borrowing to credential ratio has risen sharply in recent years.

• Certain segments of the higher education industry—in particular, for-profitcolleges—are racking up far more student debt per degree than others.

• State policies matter a great deal, with seemingly similar public university systems achieving widely varying results for students.

• Among elite colleges and universities, some are making good on their pledgeto help low- and middle-income students graduate without major financialburdens while others are riding a wave of student debt to fame and fortune.

Keep in mind that this formula does not take into account the enrollment growth and thus lack of time for those new students to graduate, thus in many of the for profits case their number are artificially high as if they added 5000-35000 new students their numbers are significantly elevated due to their newness and do not reflect actuals.  This is a decent indicator for those schools with consistent flat enrollments

managing-student loan-debt

but not for those with rapidly changing enrollments.  Thus, those schools with declining enrollments may show better that actual results while those with enrollment growth will show higher inaccurate debt amounts.

 click here to viewreport: http://www.educationsector.org/sites/default/files/publications/Debt%20to%20Degree%20CYCT_RELEASE.pdf