Student Loan Update

Yes, you don’t need the reports to know the student

Yes, you don't need the reports to know the student   loan crisis is going to get worse.  Just keep reading this blog.  Americans are facing a "looming" student loan default crisis that is more serious, and more complex, than previously understood, an analysis of new federal data suggests.  Almost 40% of borrowers who entered college in 2004 are likely to default on their loans by 2023, the report predicts. And the impending crisis will hit marginalized students the hardest, with sky-high default rates among black students and those at for-profit colleges.  Yeah, the more student loan debt you have, the more defaults you get.  And with the balances bigger, the default rates increase.  For people who entered college in 1996 and took out loans, the data shows, 18% had defaulted after 12 years, and more than a quarter had defaulted after 20. But those numbers jumped sharply for those who entered college in 2004: Some 27% had defaulted after 12 years, a nearly 50% increase.  More Bad Student Loan Debt News FROM THE INTEREST GROUPS The American Legion and National Consumer Law Center published an op-ed in Politico's Morning Consult on the taxation of death and disability on student loan discharges. In it they argue, when a borrower dies or becomes permanently disabled before paying off a student loans, the loans can be discharged, relieving the disabled borrower or surviving family members of the burden of paying off a loan they often cannot afford. However, The Internal Revenue Service may treat the amount of the forgiven loan as taxable income. Although some will be able to exempt this income because they are insolvent, not all will qualify. As a result, a family that was relieved to have a student loan forgiven may then end up struggling to pay a big tax bill - all while dealing with the death of a child.  OTHER On October 14th PBS News Hour has a featured episode titled "More older Americans than ever are struggling with student debt". Watch it online now. Student Loan System Is Broken Megan McArdle is right:  Most of the eye-popping figures that you hear about student debt are in fact averages that include graduate programs. Once you separate those figures, you see that most people with bachelor’s degrees actually took on modest sums that look more like a car loan than a mortgage. There are pockets of trouble in Undergraduate Land: students at for-profit colleges, and people who borrowed relatively small sums but never finished their degree. But most of the high-debt burdens fall on people with graduate degrees.  As long as those degrees bring a big income boost, that’s fine. But there’s a troubling wrinkle: The proliferation of master’s degrees may simply allow employers to demand an advanced degree for jobs that used to be open only to candidates with a bachelor's degree. That makes things easier for employers, by winnowing down those huge stacks of resumes. It’s certainly nice for the colleges. But it costs the graduates enormous amounts, not just in tuition, but in the earnings they forgo while they’re in school. And considering all the subsidized repayment programs the government has made available to help graduates manage their debt burden, it is also costly for taxpayers.  The Answer? That problem is federal student lending itself. The government has no incentive to make only those student loans that make sense. It ought to get out of this business and leave it to people who are playing with their own money.  Read more at: http://www.nationalreview.com/corner/455300/martin-center-article-borrower-defense-repayment-controversy
Student Loan debtorPRISON

loan crisis is going to get worse.

Just keep reading this blog.

Americans are facing a “looming” student loan default crisis that is more serious, and more complex, than previously understood, an analysis of new federal data suggests.

Almost 40% of borrowers who entered college in 2004 are likely to default on their loans by 2023, the report predicts. And the impending crisis will hit marginalized students the hardest, with sky-high default rates among black students and those at for-profit colleges.

Yeah, the more student loan debt you have, the more defaults you get.  And with the balances bigger, the default rates increase.

For people who entered college in 1996 and took out loans, the data shows, 18% had defaulted after 12 years, and more than a quarter had defaulted after 20. But those numbers jumped sharply for those who entered college in 2004: Some 27% had defaulted after 12 years, a nearly 50% increase.

More Bad Student Loan Debt News

FROM THE INTEREST GROUPS The American Legion and National Consumer Law Center published an op-ed in Politico’s Morning Consult on the taxation of death and disability on student loan discharges. In it they argue, when a borrower dies or becomes permanently disabled before paying off a student loans, the loans can be discharged, relieving the disabled borrower or surviving family members of the burden of paying off a loan they often cannot afford. However, The Internal Revenue Service may treat the amount of the forgiven loan as taxable income. Although some will be able to exempt this income because they are insolvent, not all will qualify. As a result, a family that was relieved to have a student loan forgiven may then end up struggling to pay a big tax bill – all while dealing with the death of a child.
OTHER On October 14th PBS News Hour has a featured episode titled “More older Americans than ever are struggling with student debt”. Watch it online now.

Student Loan System Is Broken

Megan McArdle is right:

Most of the eye-popping figures that you hear about student debt are in fact averages that include graduate programs. Once you separate those figures, you see that most people with bachelor’s degrees actually took on modest sums that look more like a car loan than a mortgage. There are pockets of trouble in Undergraduate Land: students at for-profit colleges, and people who borrowed relatively small sums but never finished their degree. But most of the high-debt burdens fall on people with graduate degrees.

As long as those degrees bring a big income boost, that’s fine. But there’s a troubling wrinkle: The proliferation of master’s degrees may simply allow employers to demand an advanced degree for jobs that used to be open only to candidates with a bachelor’s degree. That makes things easier for employers, by winnowing down those huge stacks of resumes. It’s certainly nice for the colleges. But it costs the graduates enormous amounts, not just in tuition, but in the earnings they forgo while they’re in school. And considering all the subsidized repayment programs the government has made available to help graduates manage their debt burden, it is also costly for taxpayers.

The Answer?

That problem is federal student lending itself. The government has no incentive to make only those student loans that make sense. It ought to get out of this business and leave it to people who are playing with their own money.

Read more at: http://www.nationalreview.com/corner/455300/martin-center-article-borrower-defense-repayment-controversy

New Year, Same Tune!

From me, here, anyway. Student loan debt should be dischargeable in bankruptcy. DC area bankruptcy attorney Brian V. Lee blogs about this too: In 2016, 43 million Americans carried a total of over $1.3 trillion in student debt. More than 40% of the nearly 22 million borrowers with federal student loans were in default or behind… Continue Reading

Value Of A College Degree?

What is the value of a college education? That is a question, the connection to student loan debt raises our question. How much student loan debt is a college education worth? College Worth Bryan Caplan has a piece in the Atlantic delving in detail as to what students learn and why a college degree does… Continue Reading

Student Loan News

Planning for paying kid’s college costs consumes lots of folks these days, but the bubble is bursting. Timing when tuition will stop rising, even decline, is a bit like timing the stock market.  This bubble will burst for sure. Colleges Going Bankrupt? There are over 4,000 colleges and universities in the United States, but Harvard… Continue Reading

NCT, For Profit, More Student Loan Messes

Wow, NCT (National Collegiate Trust) just gets messier. The entity, which bought private student loans, made a deal with the CPFB (Consumer Protection Finance Bureau) last week, which is being challenged. Which Entity Owns the Student Loans? This is the problem NCT has had, and I have successfully defendant some of their student loan lawsuits… Continue Reading

Student Loan Solution?

So, I have thought for a while that part of the resolution to the student loan crisis was for the government to get out of the business of student loan lending, which has caused tuition costs to skyrocket without any increase in the value of a college degree.  And that part of getting the government… Continue Reading

Student Loan Problems?

For student loan problems, be careful whom you pay. Like many attorneys, I give free consultations. And have a written retainer agreement before I take any money from clients. Game of Loans Full marks to whoever came up with the name for the crackdown on crooked student debt relief providers. Federal and state authorities are… Continue Reading

Student Loan Discharge Cases

Let’s look at a recent student loan discharge case result in bankruptcy court. Disbarred Lawyer? Not the most sympathetic plaintiff, right? First, in order to discharge, get out of, a student loan in bankruptcy court, you have to file a lawsuit against the student loan lender(s).  So, you are the plaintiff. Thanks to friend Bobby… Continue Reading

Student Loan Mess – PSLF

PLSF (Public Service Loan Forgiveness)  started ten years ago, providing forgiveness of the balance of student loans after ten years of payments IF you worked in qualified jobs during those ten years. Who Will Qualify for PSLF? Unfortunately, lots of folks who think they are getting student loans forgiven – will not. From the Jillian… Continue Reading

Is The Government About To Nail NCT?

NCT (National Collegiate Trusts) is a frequent subject of my student loan blog posts. What Is NCT again? NCT is a company, well, 15 separate trusts, that buy (allegedly) private student loans from banks, packages them into trusts that, well, let me quote from the Bloomberg news site article by Shahien Nasiripour: The trusts, created more… Continue Reading