Obama Administration Hits Back at Student Debtors Seeking Relief

[Purveyor]

Source: Bloomberg

October 14, 2015 — 10:39 AM EDT

On a day when Democratic presidential candidates sparred in a national debate over who would do more to help indebted students, the U.S. government launched a new attack on student debtors seeking loan relief.

On Tuesday, the Department of Education intervened in the case of Robert Murphy, an unemployed 65-year-old who has waged a three-year legal battle to erase his student loans in bankruptcy.

Unlike almost every single form of consumer debt, student loans can be erased only in very rare circumstances. Murphy’s case, which is currently being heard in a federal court in Boston, could make things a little easier for certain borrowers. A win for Murphy would relieve him of $246,500 in debt and could loosen the standard used to determine how desperate someone needs to be to qualify for relief.

The court asked the Education Department to weigh in on the matter. In a document submitted to the court on Tuesday, government lawyers urged the federal judges not to cede any ground to borrowers who say they are in dire financial straits. Doing so would imperil “the fiscal stability of the loan program” that has existed for half a century. The Department of Education did not immediately respond to requests for comment.

Murphy doesn’t deserve a break just because he is 65 years old, department lawyers wrote. Repaying his debt loan may require “that he remain employed at or past normal retirement age,” they said, even though “his income may top out or decrease” and “further employment opportunities may be limited.”

Read more: http://www.bloomberg.com/news/articles/2015-10-14/obama-administration-hits-back-at-student-debtors-seeking-relief

[turbinetree]

1. And this is why.....................................

this country is falling further and further behind when it comes to education.
Denmark charges all of it's citizens man women, child , in taxes to cover all of the educational needs from kindergarten thru college---------------society picks up the tab---------------not some for -profit institution holding the note, either federal or otherwise.
Granted, Denmark has around 10-15 million people in the society, but in Denmark they are happier when it comes to education, because they know at the end whatever they choose to have as a career, it will help society out in the long term---------------------we are not a happy nation-------------oldie but goodie --------------enjoy

Honk---------------for a political revolution Bernie 2016

[47of74]

13. I remember when I was traveling in Italy

And the tour guide said how little Italians had to pay for college compared to Americans.

I said to myself fuck I was born in the wrong country.

[turbinetree]

17. I lived in Germany..........................

and I still can remember being told that they paid for there education with a tax all the way through college.

And if you didn't want to go to college you had to make a decision before you graduated from high school either go into a trade school or a college, it was paid for.

The German's figured out a longtime ago, that when your society is educated, it makes the society on a whole better, you have more doctors, more teachers, or carpenters, plumbers, ect......and the individual made the choice on what they wanted to do, without the burden of the costs, because society picked up the tab.
Not here.

Honk----------------for a political revolution Bernie 2016

[47of74]

21. Plus an educated populace...

...makes it a bit more difficult for right wing extremists to get elected. The Republicans figured out that it's a whole lot easier to get people to vote for them when they aren't too educated.

[turbinetree]

23. Yep.....................this is correct......................

I loved Germany.
They are a Democratic -Socialist country, they work to make there society better, there citizens better, they actually sit down and have a Union member (s) sitting in the corporations board room making decision------------it's amazing, they do not attack the worker, the children, the parents, the woman, education, health care, men--------they sit down and work it out, and it influenced me and what I saw over there-----------not here
And they really don't tolerate extremists, even though they are making some news over there







Honk---------------for a political revolution Bernie 2016

[47of74]

26. Yeah VW wanted a union at their Tennessee plant.

Of course the teabaggers here saw that as intolerable obscenity, having the workers having a voice in the running of the plant.

[turbinetree]

29. And VW.............................

came back and said you right wingers can jump up and down all you want, but we are going to have a Union in this plant-----------------am I correct .

Because it drove Corker and the governor of that state berserk

[TexasBushwhacker]

53. Germany also has a lot of apprenticeships

They are very good with on the job training.

[turbinetree]

57. Yep................

they have there educational system together, that is for sure





Honk--------------for a political revolution Bernie 2016

[villager]

2. Good ol' hope and change.

"Spare change," I guess, for all of those carrying metastasizing debt

[MichMan]

3. Where are his kids?

Don't understand what kind of kids would let their dad go into poverty over 250k in student loans taken out in their behalf?

Don't the three of them feel any responsibility or are they hoping a ruling in his favor gets them off the hook?

I could never do that to my Mom.

[Z_California]

7. Big assumptions with this question

Assumption #1: He has kids
Assumption #2: If he has kids, they are financially able to help with a 250k debt load.

My wife's mom is in dire finanicial straits, but so are we. Wish I could help her more, but also wish we could fix our house and save for retirement.

Bottom line is nobody should be put in this situation just because they want an education.

[tammywammy]

8. Per the article he took out loans to send his three kids to college.

[Z_California]

11. Thanks

Broke my own rule: Don't comment unless you read the links.

[Bubzer]

9. Are you even remotely serious?

So it's okay for Corporations to get out of paying billions of dollars in taxes, but we cannot write off a paltry $246,500?

[SusanaMontana41]

32. Why do you assume that his adult children are in better financial shape than he is?

You don't know the man. You don't know the family.

How dare you judge.

[MichMan]

41. All three?

If I assume that his three adult children were wrong for allowing their parents home to get foreclosed over their college debts, I am judging them.

But you assume they are innocent victims that were taken advantage of without knowing anything about them either. The plaintiff was a 50 year old unemployed executive when he took out most of these loans. That much we do know.

One or the other of the children might not be in a position to pay, but all three? I wouldn't allow my parents to be thrown out of their homes over my debt, but that is just me I guess.

[BadGimp]

4. The administration has been hijacked by the Big Money Lenders

why is Student Loan Debt not eligible for bankruptcy in the first place? Oh yeah, Big Money owns our government..

[americannightmare]

5. This is why no matter how much...

good Obama does, the things he gets wrong, like this and TPP for example, will always outweigh...

[wolfie001]

15. Great point!!!

Education under Obama in general has been one big corporate mess of a F-word!

[americannightmare]

39. First mistake was...

tying himself to Arne Duncan...

[wolfie001]

40. True that! nt

[FairWinds]

6. This is part of a deliberate assault on the middle class . .

for which the Democrats are fully complicit.
Recall -
Joe Biden was key to this bankruptcy "anti-reform".
The Dept of Education has done almost nothing to reign in
predatory education loans from phony for-profit schools.
Many of those targeted for education predation are minorities.
Thanks for nothing Obama.
Obama's education policies have transferred tens of billions from
middle and working class families to the ONE PERCENT.
High pressure sales tactics are used against vulnerable people trying
to improve themselves to get them to buy worthless degrees.
Class warfare indeed.
Where is the fury?

[HappyinLA]

10. So where are his kids?

"From 2001 through 2007, Murphy took out several Parent PLUS student loans -- federal debt parents can use to finance their kids' education -- to send his three children to college. After accruing interest, the bill ballooned to $246,500. In 2002, Murphy lost his job as president of a manufacturing company when it closed shop to move overseas. He hasn’t found work in the last 13 years, he said, because he is viewed as too old for executive posts and overqualified for lower-level jobs. He lives on the salary his wife brings in as a teacher's aide, less than $15,000 in annual income. Murphy said he dried out his retirement savings, and his home was recently foreclosed."

Shouldn't they be helping him out?

[MichMan]

18. So he did all this after he lost his job?

This guy is not the best example of someone who has been taken advantage of by predatory lenders. According to the link, he took out most of the loans after he lost his job?

He wasn't some naive 17 yr old not understanding what he was getting into, he was a 50 year old executive.

Like to find out why his kids are standing by and letting his life be ruined. Why didn't they borrow the money themselves? Did they get eventually obtain a degree and what jobs do they hold now?

Do I feel sorry for someone who was flim flammed by a disreputable school and ended up in a low paying job, yes; this guy not so sure .

[csziggy]

28. Does student debt die after the loan taker die?

If so he may have done it as a strategy to not put his children in life long debt. Also he may have thought that he would get another job and be able to pay off the debt before his retirement.

It does not sound as though he is the best financial planner, though. If he a good paying job prior to 2002 did he not put anything aside for his children's college tuition?

My father worked in a very cyclical industry. Some years he earned a lot of money, some almost nothing. But we always lived at a low level of expenditure and he and my Mom managed to put four daughters through college without any debt, either for them or for us. Even when my sisters went through graduate school, they paid for it themselves with grants, scholarships and by working. It was easier back in the 1960s and 70s but it was still a matter of planning, scrimping and saving.

[End Of The Road]

34. "not...the best financial planner"???

These days you can plan plan plan and still lose everything tomorrow. Major illness in the family? That can wipe you out almost overnight even with decent insurance. Stock market? One of my smart friends (now in his mid-70s) lost a bundle between the dotcom crash and crash of 2008. He will never be able to retire. There are many reasons today's college students are in a bind and reform needs to begin with 1) higher taxes to reduce tuition at public universities and 2) reasonable loan practices. Like your parents, mine scrimped , planned and saved to get my brother and me through college back in the day. I worked nights to help pay. That economic landscape simply doesnt exist any longer except for a lucky few.

[TexasBushwhacker]

54. Yes he was an executive for a manufacturing company

He was well paid, but not well enough to put all 3 kids through school. The plant he worked at shut down and all the work was shipped overseas. So he was in his late 50s, an unemployed manufacturing executive. As bad as things are in the manufacturing sector for people at the bottom, imagine how few executive positions there are. He was willing to take a lower management level job, but he couldn't get that either because he was overqualified.

[magical thyme]

22. maybe they can't. if he took out parent PLUS loans, maybe they took out and are buried

under student loans as well.

Note that the entire system is a fucking scam. We don't know what kind of degrees they got, but I know what I got when I believed in the system and re-trained for a new career after my old one in crashed with high tech.

Government statistics said 14% growth for foreseeable future in my chosen field.
The State University said 100% employment for it's graduates.
The HR rep at the local rep quote me a salary range, and a year or two later gave a co-student the same range + a bit.
I estimated what the student loan payments would be in my head -- I was dead on, and since I always round up, I'd left some padding as I always do.

My calculations showed that based on the entry level salary -- leaving out any per diem, holiday, weekend or shift differential -- at 4 days/week I'd gross the same amount I borrowed. Add in some differentials, and I'd be doing that at 3 days/week.

I ran my ass into the ground and graduated summa cum laude. And then reality hit.

The reality was that the field is shrinking, not growing, due to a number of factors including hospital mergers, etc.

The reality was that half our class couldn't even get interviews after applying all over the country. And the other half got strictly per diem, 2 days/week offers. Not enough to live on and almost impossible to work a 2nd p/t job around an ever-changing per diem schedule.

The reality was that at our graduation celebration the head of the program told us to "just hang in there for 5 years. You should see the numbers in 5 years." When in fact, if you didn't get a job in the field within 6 months, you'd start forgetting everything you learned and you'd be competing with the next years' graduates.

The reality was that I was one of the "lucky" ones that got a p/t per diem job. The offer was at 75% of what the HR rep had quoted to us, and with zero per diem differential.

The reality is that everyone I know had to go back to their old jobs. In my case, that meant going back to a p/t job I'd worked at while in school, but at the entry level rate instead of the somewhat higher rate that I'd left at.

[SusanaMontana41]

33. Why do you assume they're not?

Why do you assume college grads can pay back student loans, regardless of who took them out?

But keep blaming The Little Guy.

Jesus H.

[HappyinLA]

35. Really?

A corporate executive who takes out $250k in loans is a little guy? And if his kids can't help because of loans of their own? So he took out around $83k per kid. If each kid is also burdened by loans, then what, each kid spent $100k on college? Sorry if I don't feel bad for those poor little guys.

[SusanaMontana41]

38. So you extrapolate this example and apply it to student debt in general?

The Little Guys ARE getting screwed. You totally misread my post.

I stand by my statement.

Do you really think that spending $100,000 for four years of college is excessive? Not today.

[brentspeak]

52. Apparently, you missed the part about him losing his good-paying job 13 yrs ago

Even though you were the one who actually posted that information.

[HappyinLA]

56. Did you miss the part

where he took out the loans after he lost his job? Why should I feel bad for him? He loses his corporate exec job, figures he'll find another, but in the mean time takes out $250k in loans?

It sucks for him, no doubt about it, but he did it to himself. I hope they are able to work it out with the feds in the end, I'm sure the stress of it all isn't doing his health any good.

[randome]

12. With that much debt, why did he hang onto the house?

He and his wife should have found a cheaper apartment. That's exactly what I'm about to do now that my 2 daughters are in college.
[hr][font color="blue"][center]Don't ever underestimate the long-term effects of a good night's sleep.[/center][/font][hr]

[Marthe48]

24. Why should people have to lose their home

to pay for college?

[brentspeak]

14. October 1, 2008: Senator Obama urges the Senate to bail out the banks

[Hoppy]

16. And who is the fellow in the background with a "Wha? Are you shitting Me? look on his face?

He looks like he is trying not to break out laughing.

[azmom]

58. I know right. Specially, when Obama says

Wall street's mistakes. Bernie knows as well as many of us, that it was not a mistake. His expressions are priceless.

[mike_c]

60. he looks like he's trying to keep his lunch down....

eom

[lark]

19. So, our government is now on the side of blood suckers!

Obama should be ashamed, but it's his Justice Dept. that's promoting this swill. Disgusting.

[CharlotteVale]

20. How very Republican of it.

[PSPS]

25. Didn't Biden play a role in immunizing the "student loan" scam from bankruptcy relief?

Why yes, he did:

http://www.ibtimes.com/joe-biden-backed-bills-make-it-harder-americans-reduce-their-student-debt-2094664

[smirkymonkey]

46. F**k him.

[Marthe48]

27. 2 people living on $15 K

losing their home, seems to me that this guy's life is real close to losing all that makes life worth living. If he kills himself out of despair, does he get out of the debt then? Or will Dept. of Ed. take his life insurance or make his widow liable?

The standards the Dept. of Education imposes are way too high. As I read the article, I was thinking loan sharks? If someone takes a loan on a house, and goes into bankruptcy, the person usually gets to have the debt forgiven and keep the house, or used to be like that.

And of course, big businesses weasel out of their obligations every day, and usually saddle American tax payers with their unpaid bills.

The guy should start a church, like John Oliver did. He'd probably get enough in donations to pay off his loans and build up his retirement fund.

[Downwinder]

31. ENRON paid five cents on the dollar.

Last edited Wed Oct 14, 2015, 08:43 PM - Edit history (1)

[Marthe48]

48. Yes, things like that.

We really need to go back to by the people for the people, get rid of personhood for corporations, get rid of Citizens United, and stop allowing onerous burdens placed on individuals while corporations skate. Thanks for mentioning that.

[The CCC]

30. Obama Administration Hits Back at Student Debtors Seeking Relief

Obama is just a Corporatist, maybe a little less of a Corporatist than some. but a Corporatist just the same.

[leftyladyfrommo]

36. People need to take some responsibiliy

For their own actions. I feel sorry for the guy. He has gotten himself into a real mess.

But who in their right mind would sign off on those loans in the first place? I know my parents would have just laughed in my face and told me to find a job to pay for my schooling.

I had a friend who did the same thing only for 3600. He was out of work and signed for his son. The said son spent one whole semester partying and didn't pass one class.

Why did the school let him sign when he was out of work? They certainly should have denied the loan in the first place. But he knew what he was doing and did it anyway.

[haele]

44. It sounds as if he was the president of a manufacturing company when he took the loans out.

Sending 3 kids through college in the mid 2000's/early 2010's - even then, just 2 years of tuition at a State university as an undergrad could cost $25K for a business degree and $30 for an engineering degree, not to mention all the books and student fees. The base cost per credit might be $115 a unit, but there's always additional fees to pay for the actual "school" you will be getting the degree from - to pay for labs, class modules, supplies provided, space, the adjuncts and visiting lecturers...up to $300 a semester on top of the tuition cost in the fee. Not to mention the cost that can go well over $200 for even a f'ng used textbook rental - or if the school gets money from Pearson or McGraw Hill to push their class supplemental, a $150 license good "for six months" just to be able to use the required online portal for classes to take "assessment tests" or for other online project work, if you need to use a specific software tool for your work.

I know, I just finished a bachelor's in Business and am almost $30K in debt - which will end up being $60K if I pay per schedule, even with Pell grants and a few scholarships. I went to community college and CLEPed my way through the first two years, and picked the most reasonably priced university with a good accreditation and reputation, but still - $30K in debt. Because I had a family to take care of as well as a full-time job and all the other costs that go along with it, and just having a degree is now necessary for me to be able to advance in my field - or even to remain employable at my age, should I have to look for a new job.

His story sounds legit to me. Three kids going to a state university (or private university) for around 4 years with three educational loans totaling to around 100K - that included compound interest, like a mortgage, so it would encourage early pay-off. If he paid per schedule, he'd end up paying $250K total. At probably around $2K a month. (my student loan payment is $300 a month). If the kids had dropped out, he wouldn't be on the hook for anything they hadn't spent, because the school is supposed to be going to FASFA or other legitimate school loan entity for disbursement per semester, instead of it all being paid up-front.
If a disbursement isn't requested, or if the parent/student cancels it, it isn't added to the account. There was a 10 day window where I could have refused a loan disbursement to my university every time the new semester started; I would have been dis-enrolled after 2 weeks as a "drop" with no financial penalty so long as I had never checked into class or if I told them I was quitting.

As for the bankruptcy issue, I suspect he had given up hope that the kids have jobs that pay enough to start kicking in, that they are stuck in dead-end jobs or in high-cost locations, or struggling to support their own families or businesses. If he hadn't lost his company, paying off those loans should have been "doable".

Haele

[MisterP]

50. "Old Economy Steve moment" right there

[Spitfire of ATJ]

37. I suppose they'll call dibs on his organs next.

[mike_c]

43. I have nearly $70K of student loan debt and I'm two, maybe three years...

...from retirement. I've been making payments for nearly 20 years, over $800 monthly. My loan balance has declined by only $5000 during that time. Fuck the department of education. Piss on their rat fucking black hearts.

Good god, I just did the math. Being conservative-- I started payments about 17 years ago but I've had a couple of short deferments during tough financial times, so I shortened the estimate to 15 years of monthly payments, or about 180 payments. I started out paying over a thousand dollars a month, but in 2005 changed my payment plan to lower my monthly payments, which were eating up my budget, so I used the lower payment amount of $850/month for all 180 of the payments I counted. This is just back of the envelope calculation, but 180 payments x $850 = $153,000.

Yes, you read that right. I have sent Sallie Mae and the Dept of Education, now Navient, at least $153K since the late 1990s and my loan principal has decreased only about $5,000 from $75K to $70K.

Fuck me sideways. Unless I'm really missing something silly, I have repaid almost double the original loan amount and still owe almost the entire debt. And I'm sixty-something.

[leftyladyfrommo]

45. And another way schools should be held accountable :

They sell their programs like a used car salesman. They tell kids that after they graduate they will be able to start at a job for such and such a high salary


And it's not true. Maybe some students that have an in somewhere can get those jobs but most students get out and never find a job in their field.

They end up taking whatever they can find. It's such a racket.

But, wow, your story takes the cake .

[smirkymonkey]

47. I'm pretty much in the same boat you are in. I'm only 51, but I will never get out from under this.

I so effing hate these predators. I have no problem paying back what I borrowed, but they are making a killing off my (and others') misery. I am paying as much as I can pay each month and I am barely covering the monthly accrued interest.

[Marthe48]

49. On top of defining forgiveness

There ought to be a cap on how much you have to pay back. Didn't someone mention paying for 10 years and let the rest go? I guess that was murdered in Congress, because no one is mentioning it here today.

Sorry you have such a horrible burden. Even payday loans were reined in.

[liberal_at_heart]

51. WTF? This is an outright betrayal of the American people.

We can bail out Wall Street, but we can't bail out average Americans. How the hell can someone have $246,500 in student loan debt anyway? This is price gauging and it is fraud.

[Nihil]

55. "Hope and Change"

And, to any of you who think that Clinton will be any better than Biden & Obama:



Single party government sucks doesn't it?

[azmom]

59. Bernie is correct when he says that it is time

for Wall Street to bail out Main Street.

[treestar]

61. on another court case

where the government is taking the government's side.