Trump administration rolls back protections for people in default on student loans

[Mr. Sparkle]

Source: Washington Post

Days after a report on federal student loans revealed a double-digit rise in defaults, President Trump’s administration revoked federal guidance Thursday that barred student debt collectors from charging high fees on past-due loans.

The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.

The Obama administration issued the memo after a circuit court of appeals asked for guidance in a case against United Student Aid Funds (USA Funds) challenging the assessment of collection costs. Bryana Bible took the company to court after being charged $4,547 in collection costs on a loan she defaulted on in 2012. Though she had signed a “rehabilitation agreement” with USA Funds to set a reduced payment schedule to resolve her debt, the company assessed the fees.Education officials sided with Bible, prompting USA Funds to sue the department in 2015. Earlier this year, the company agreed to pay $23 million to settle a class-action lawsuit born out of the Bible case, though it did not admit any wrongdoing.

Read more: https://www.washingtonpost.com/news/grade-point/wp/2017/03/17/trump-administration-rolls-back-protections-for-people-in-default-on-student-loans/

[Tatiana]

1. Guess we can file this under "elections have consequences."

Everyday it's like waking up to a new living nightmare.

[LompocDem]

9. It will take a long time to...

...fix the damage by this administration. My long term hope is that the mid term elections or events before will send a signal to all republican politicians that they must make a choice for their own political survival between the Dark side or the Force. I'm a 64 year old sci fi aficionado who sees so many parallels in our present fight and plight. My short term hope is a perp walk by the shitgibbon in front of the media that he detests. I can see it now, 'This is fake news! I'm not here and this is not happening!' The orange one would actually look good style wise in an orange jumpsuit IMO.

[KingCharlemagne]

19. A socialist revolution will fix it right away. Of course, a socialist revolution would also

wipe out a good portion of the Democratic Party's donor base too.

Trump is worse than socialism.

[Igel]

37. Revolutionary educational systems are also top notch.

Not.

It's like a lot of other things: You got a bunch of people working for one group to control another, and it goes a bit off the rails. Perhaps in a 5-year period, perhaps over a decade, perhaps over a generation. But the tendency to consolidate power with one group by applying compulsion to another is strong, and immediately says there is the "we the people" then there are those whose purpose in life is to serve the "we the people" but who, sadly, are just wee not-quite-people.

[hatrack]

2. Yes, that will make everything better, won't it?

And those student loan holders will get really entrepreneurial and start up lots of new businesses, and become "Job Creators" with this new system in place, right?

[fountainofyouth]

3. Is there a person alive today who more fully represents predatory business practice than POTUS does?

[Kimchijeon]

4. What a surprise

Oh wait... it's not a surprise, at all.

[Cryptoad]

5. Turnip Juice , anybody?

[QC]

6. This will be great for Betsy's student loan collection agency,

but I'm sure there's no connection.

[KingCharlemagne]

20. +Infinity - nt

[dalton99a]

7. This is a must read.

Vile assholes.

[Orrex]

8. Quite a few on DU have expressed a "fuck 'em if they can't live up to their responsibies" attitude

I wonder how they'll react to this brutal policy.

[cstanleytech]

12. Its just hard to have much sympathy anyone that has a good high paying job and have not had any

major problems like job loss or being unemployed but they still decide to only pay the barest minimum as that will not pay off the debt any time soon and then they whine about still being in debt when its their own decision to only make the barest minimum payment.
Now that aside there are ones I do have sympathy for and those are the ones who were paying more than the minimum on time every month in and effort to pay off the debt but then through no fault of their own they lost their job or something else major came along in life and fucked them over and they keep trying to get out from under the debt but cant, those are the ones that "do" deserve debt help because they are trying but just cannot get a break.

[Orrex]

15. College borrowers are the victims of a deceptive and aggressive sales pitch

And because, at age 17, they were foolish enough to believe their schools, their prospective colleges, and society in general, they get punished for decades with brutal and inescapable debt.

[cstanleytech]

25. Be that as it may be if they made an effort that went beyond a barest minimum payment and got fucked

by circumstances beyond their control then sure I have zero objections to providing them with debt relief and even allowing them to discharge the debt via bankruptcy.
If they have only made the barest minimum payment and yet haven't had anything other than good luck in life with a well paying job and other things yet the debt climbed due only to their decision to pay the barest minimum? No.

[Orrex]

27. Not sure I agree with that framing

If they have only made the barest minimum payment and yet haven't had anything other than good luck in life with a well paying job and other things yet the debt climbed due only to their decision to pay the barest minimum? No.

The required monthly payment should not be dismissed as "the barest minimum," in part because the actual barest minimum is zero. Paying the monthly installment should meet the interest and pay down the principal, slowly though it be.

And what about people who pay that monthly installment because they can afford to pay no more than that? When they run into hardship, they risk immediate default with minimal recourse. Sure, the lenders pretend to grant deferment and/or forbearance, but the interest keeps on adding up, which only adds to the problem long term.

You seem to be objecting to financially secure people who simply elect not to pay what they owe, even though they certainly could do so. Well, they're not really the problem, and frankly that misses the point.

Nearly every article about money-saving tips and retirement strategies assumes disposable income of $1000 or more per month. For the vastly overwhelming majority of society, that's nothing at all like the actual world. Let's stop setting the standards by a statistical minority and instead start building policy based on the economic reality that most Americans face.

[cstanleytech]

29. "And what about people who pay that monthly installment " They would fall into the

got fucked over category but if its someone who like you said has $1000 or more of disposable income (which I am personally $1000 short of) then they should not be crying over the debt.

[Orrex]

35. Sorry--I came at you a little stronger than I meant to in that post

This is a subject that quickly gets me fired up, and I tend to get a little loose in my ranting.

[58Sunliner]

17. What does that have to with predatory practices?

It isn't about payment per se, it's about these institutions being able to assess excessive fees
on people and driving them further into debt and into the court system.

[Orrex]

23. That's my view exactly.

Student loans and associated fees, unlike Trump's many defaulted obligations, aren't subject to bankruptcy, so you're stuck with them unless you're lucky enough to die or suffer permanent and total disability.

By all means, keep the loan principal off-limits to bankruptcy, but make the fees and penalties subject to discharge via bankruptcy. Borrowers would be much better able to pay off their loans, then, instead of spending their lives struggling against the lenders' predatory and usurious practices.


I borrowed $20K and paid off about $11K of it, but I ran into bad financial trouble during the 2008 economic collapse. As a result, I now owe $20K. That means that $11K went into the toilet for no reason at all.

[cstanleytech]

30. Your case is an example of one where debt relief should have been given imo

as you couldnt help it that you ran into trouble and in cases like that imo they should have a system setup where the repayment and the interest can be suspended for up to 24 months.
It would then give people such as yourself a chance to get back on their feet without crippling them with additional debt.

[Orrex]

34. Sadly, I think that my experience is all too common

Last edited Sun Mar 19, 2017, 09:00 AM - Edit history (1)

I know (and know of) lawyers and doctors with student loan debt running into hundreds of thousands of dollars, but they don't seem the list bit concerned about paying. But I also know single mothers working two part time jobs whose wages are being garnished to protect Sallie Mae's shareholders.

[KingCharlemagne]

21. Do you believe in bankruptcy as a means of debt relief? - nt

[cstanleytech]

24. In some cases yes and yes I know that they can't discharge the debt via bankruptcy which I think

needs to be changed especially for those who made an honest effort to repay it but just got fucked over due to no fault of their own.

[58Sunliner]

18. Read on!

[DFW]

10. Of all people, Trump wants to favor debt collection agencies?

The biggest and most smug debt defaulter ever to set foot in the Oval Office wants to make others suffer at the hands of debt collectors?

[defacto7]

11. Others can suffer, but he shouldn't...

because he's special.

[BumRushDaShow]

13. Yet he dismisses the $640,000,000 debt that he owes

http://www.motherjones.com/politics/2016/12/guide-donald-trump-debt

[FakeNoose]

26. What about the Russians?

I'm sure he owes a lot to Pootie too, but it's probably off the books.

That's a debt he can't ever ignore.

[BumRushDaShow]

31. Exactly. nt

[Igel]

38. Probably off the books.

Right.

Look, I was bookkeeper for a church. I was told that there was all kinds of crap happening "off the books"--all kinds of expenses, contributions, etc.

Except that for 5 years when I handled the $ not one person complained when they didn't get credited for IRS purposes with their contribution, and that included oddballs who turned in silver 1-oz ingots and gold coins. There wasn't one asset that passed through the office or was dealt with by the ministers that wasn't documented with a receipt. I could go back from 1989 to 1974, when the organization was started, and account for every cent of income and every cent expended, and make it balance over three checking accounts and three money market accounts. Our CPA was insistent that everything be perfect. Once spent several days trying to track down why my accounts didn't balance, and finally realized that the bank had screwed up not one but several checks. Went in, showed my evidence to the bank manager, and it was resolved. My books were right; the bank screwed up.

On tv, it's easy to have multiple sets of books. It's a bit harder when others are looking over your shoulder. The harder they look, the harder it is to mislead them.

"You're just stupid and don't recognize when you're being duped. Mabel said there are two sets of books, and I believe her." Mabel being somebody who was 75, hadn't finished high school back in the '30s, and spent her life as a housewife. And hadn't even so much as looked at the books. But who had the awesome qualification of having been denied a grant from the church to replace her roof and was cousins with the person spouting off. (Were things quite right? No. It was documented quite well that a loan had been made to a minister who was otherwise unemployed. He decided to leave town and his wife. Note that "everything's documented and on the books" does not mean "publicized." In fact, had Mabel looked at the books, she'd have had a real scandal. But fake scandals are so much more, well, suited to one's taste. Esp. since she liked the minister that absconded with $10k from the widow's fund.)

[bucolic_frolic]

14. Anytime anyone complains the retort is

'well, you voted for Trump!'

Just keep browbeating with the consequences of electing this idiot

[58Sunliner]

16. Another blow against the people. This guy is a sadist.

He enjoys taking advantage of people.

[KingCharlemagne]

22. Trump U. goes national, we might say. - nt

[58Sunliner]

39. So true. He keeps thinking of how he'd screw them for more money.

[JHan]

28. yeah, who didn't see this coming. smh.

[Old Vet]

32. Never thought it would be this bad this fast.

I mean fuck....Defund planned parenthood, National library, meals on wheels. Almost gut the EPA, Dept of education, Interior dept, dept of energy, It goes on and on. How this nation survives this man is beyond me, The mid-term elections are so, so important to send a message to the government.

[JHan]

33. the swiftness of their vindictiveness has been breathtaking. Hurt the poor, hurt the vulnerable.

this is straight out of a bircher/heritage foundation fever dream.

[QC]

36. There's also a move afoot to eliminate Public Service Loan Forgiveness.

Heaven forbid that someone should not be ground into the dirt for getting an education.