Changes to Private Student Loans & Bankruptcy Law
Legislation has been introduced to change bankruptcy law to treat private student loans like other consumer debt. On April 22, 2010 Congressman Steve Cohen chaired a hearing on the issue. Durbin first introduced this bill in 2007. Before bankruptcy law were changed 2005 only government issues student loans were protected in bankruptcy.
Senator Durbin
News release
CBS Money Watch’s
Student Borrowers Could Shed Loans With Proposed Law
The Chronicle of Higher Education
Lawmakers Introduce Bills to Change Student-Loan Bankruptcy Policy
Chairman Mille, Committee of Education and Labor
Time to Restore Fairness for College Loan Borrowers in Bankruptcy
National Association of Student Financial Aid Administrator
Private Student Loans to Be Discharged in Bankruptcy
Student Debt Increasing Record Rates Due to Recession
Student loans are up about 50% since 2007 according to data from Equifax credit bureau according to Reuters. This will create negative long-term consequences for the housing and auto markets.
According to Dann Adams, president of Equifax’ U.S. Consumer Information Solutions
“We’ve never seen these levels of debt for student loans”
“This generation of students will be less able to buy their first home given their debt load”
Read the full story Recession spurs student lending in U.S
Diane Rehm Show NPR – Student Loan Overhaul 2010 Obama
NPR’s Diane Rehm and her guest discuss the new system of student loans sign into law by President Obama. A must listen for anyone considering student loans or already in them. Students and parents call in with their questions and for advice. Listen online or download the podcast.
Guests
Kim Clark: U.S. News and World Report
William Wells: Director of Financial Aid at Wake Forest University.
Nina Marks: Founder of Marks Counseling Associates, and the non-profit Collegiate Directions
James Boyle: President, College Parents of America
James Boyle: President, College Parents of America
Source: NPR.org
Student Wins in Supreme Court Case over Loans
The U.S. Supreme Court has ruled in favor of a student in a bankruptcy case involving student loans. If a lender fails to object in a timely manner to a bankruptcy plan they cannot later seek to collect debt.
The lender, United Student Aid Funds Inc., was notified repeatedly of the repayment plan in bankruptcy. It filed no objection, nor did it appeal the bankruptcy court order approving the plan.
Source: NPR Read or Listen to the Story
Student Loan Industry Bailout – $112 Billion
The Department of Education estimates it will buy $112 billion in FFEL loans from private student loan companies. Under the Federal Family Education Loan program (FFEL) the government assumes the risk of default, and pays the financial fees for student loans through private companies.
These private loans are also costing the government more:
The CBO found that compared to the William D. Ford Federal Direct Loan program, an alternative system in which the government just directly provides students with loans, FFEL loans cost the government 10 to 20 percent more (PDF). Eliminating the unjustified subsidies and government financial backing for the FFEL program by expanding the existing direct loan program is projected to save $67 billion over the next decade.
Read the entire story at FireDogLake.com:
$112 Billion Student Loan Industry Bailout a Lesson in Corporate Welfare
Obama’s Student Loan Overhaul in Trouble
New York Times reports student loan changes Obama is trying to get passed are endangered.
Democrats in the Senate, where the private student lending industry has strong allies, predicted on Wednesday night that the education bill would not be part of an expedited budget measure containing the final revisions to the health care legislation.
Mr. Obama’s plan would end a program in which the government pays private, for-profit student lending companies to make risk-free loans using taxpayer money. Instead, the proposed overhaul would broaden the government’s existing direct-lending program, saving billions of dollars that the president had proposed using to expand Pell grant scholarships for low-income students.
Read the full story here
Spike in Defaults on Student Loans in NJ
Defaults on federal student loans spike over the past year for those students who left school in 2007. In one year the default rate increased by 83%. Read more
State Sued Over Student Loan Forgiveness by Dentist
A government agency in the state of Maine is being sued by a dentist after refusing to forgive her loans after she completed her time serving an under-served area in Maine. Read more
Organization Fighting for Justice for Students
There is an organization that is fighting hard to deal with the backwards laws regarding student loans. Today on a radio program I heard there founder speak and learned that debt collection laws do NOT apply to student loans. Learn more about their organization StudentLoanJustice.org
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Recently Written
- Changes to Private Student Loans & Bankruptcy Law
- Student Debt Increasing Record Rates Due to Recession
- Diane Rehm Show NPR – Student Loan Overhaul 2010 Obama
- Student Wins in Supreme Court Case over Loans
- Connecticut might Forgive Student Debt for Green Jobs
- Student Loan Industry Bailout – $112 Billion
- Obama’s Student Loan Overhaul in Trouble
- Denied Professional License due to Student Debt
- Spike in Defaults on Student Loans in NJ
- State Sued Over Student Loan Forgiveness by Dentist
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