Has your student loan debt paid off
In the battles of borrowers to get student debt relief
- Biden's education department canceled billions of student debt, but trillions are still outstanding.
- Even if you qualify for relief, you might not know about it or you might get a 0% forgiveness rate.
- Borrowers told insiders that there is a lack of clarity, and experts say that much more needs to be done.
- You can find more articles on Insider's business page.
Nearly 45 million people in the United States have outstanding student loan debt. That adds up to a $ 1.7 trillion problem.
President Joe Biden, who had promised during his campaign to deal with the crisis immediately, did so through the Department of Education and paid off billions in debts in just a few months.
Biden's Education Secretary Miguel Cardona has canceled the debt of about 72,000 borrowers defrauded by nonprofit schools - valued at about $ 1 billion - in an attempt to turn the way scammed students loan out.
Cardona also ditched some paperwork to ease loan burdens for borrowers with disabilities. This affected 230,000 borrowers and 41,000 of them canceled debt, providing $ 1.3 billion in student loan relief.
But Biden didn't take the measures he promised as a presidential candidate. And while Cardona's cumulative $ 2.3 billion relief over three months may seem impressive, it's less than 0.2% of outstanding student loans that float through the system.
Even if you do qualify for debt relief, there is no guarantee that you will get it. Insider spoke to borrowers who were directly affected by Cardona's actions, and they are still out of the woods. Experts say the student debt crisis doesn't need to be addressed nearly in earnest.
Education did not respond to Insider's request for comment.
Fraudulent borrowers still cannot get relief
After about five years of waiting, Alexander Cockerham was approved for student loan allocation.
From 2007 to 2009, 38-year-old Cockerham attended the nonprofit ITT Technical Institute where he graduated as an associate. In 2015, the Securities and Exchange Commission sued ITT, accusing it of misleading investors about late payment rates and student loan defaults, and the federal government blocked access to federal loans and grants. The facility was closed shortly thereafter.
Cockerham told Insiders he took out around $ 42,000 in private and federal loans to attend the school. He's paid off his personal loans but still has around $ 26,000 in federal loans outstanding.
At the end of 2015, for example, he applied for student loans as part of the “Borrower Defense for Loan Repayment” program. Cockerham received his verdict in 2020.
"I was told that I was approved for student loans, but only for a certain price, because they said they felt I was getting some benefit from my education there and wasn't completely scammed," said he.
His forgiveness rate was 0%. “So absolutely nothing was given,” he said.
In September 48 attorneys general and the Consumer Financial Protection Bureau raised more than $ 330 million in private student loan making to 35,000 former ITT Tech students.
If the full amount of his federal loan were relieved, Cockerham said he would try to finally buy a home. He's been married for almost a decade and has just had his first child. He said he had tried looking at houses in the past, "but that student loan debt was hanging heavily on my head." It turned down financial services companies who told it it needed to pay off more debt.
How the government can decide on a forgiveness rate of 0%
The Trump administration would compare a cheated borrower's income levels to those in similar programs, among other factors, to determine how much of the loan to pay off. Betsy Mayotte, the president and founder of the Institute of Student Loan Advisors, said this resulted in some people being approved for the program but 0% of their loans being redeemed, just like Cockerham did.
Mayotte told Insiders that the Trump administration “was very much against the whole idea of borrower defense in the first place”. She said she worked with people who waited three or four years for their applications to be processed at all.
"Telling someone, Yes, we agree, you have been betrayed by your school and you still have to pay off all of your debts’ is insane, "she said. "I mean, there is no other industry in which they do that."
She said the Biden government's recent action made her "so happy" that she would return and discharge the full amount of partial discharges. However, people who are still outstanding will not be affected, Mayotte said.
Cockerham, who may be affected by this recent layoff, said, “I just saw what I heard on the news. I haven't heard from the newest secretary from [education] or the Biden administration. "
"I wish they had someone who would go through this in a little more detail."
Joshua Kronemeyer, 27, is still in student debt for spending a semester and a half at the Art Institute of Phoenix at age 16.
Just the relief from these loans, taken out by a now defunct for-profit member of the arts institutes, would reduce his student loan debt by a fifth, he told Insider.
"Honestly, I wish you had someone to investigate this a little closer, right down to the hole you dig yourself," said Kronemeyer.
Kronemeyer can be entitled to settle its loans; Some former art institute students are eligible to have their loans canceled as a result of a lawsuit against the nonprofit school and education department. In that lawsuit, it was argued that the department illegally granted loans to Art Institute schools that were not yet accredited at the time, so that borrowers would not have to repay them.
Kronemeyer said he plans to look into debt relief soon, but he expects his application to be denied the first time, as he has heard it happened to others in the same position.
Disabled Borrowers Those who are entitled to help struggle to access it
Cardona's efforts to ease the burden of borrowers with disabilities have rocked a three-year surveillance program that required borrowers to provide income information each year to prove they had not exceeded a certain threshold.
Called the Total and Permanent Discharge from Disability Program, it would resume credit if a borrower's income rose above this level or if the borrower did not provide income information.
Laura Speake, 26, could qualify for the program. They told insiders that they were about $ 30,000 in debt in both federal and personal loans. You left college after three years but hope to return and graduate. She hopes to go to school one day and work in the book industry, maybe as a small town librarian.
However, she has concerns that the program loans will be repaid: this is an obstacle to continuing education.
The Federal Student Aid website says, "If you are approved for a TPD discharge based on SSA documentation or medical certification and apply for a new direct loan, Perkins loan, or TEACH grant during your three year post-discharge monitoring period, you have to resume repayment on. " previously made loans. "
"I'm not lazy. I'm not looking for an easy way out, ”said Speake. “You know, I want to work. I want to learn. I want to make a difference in the world. I want to do my part. I want to pull my weight. "
Experts told insiders that Cardona's action for the program was worth it, but shouldn't actually have been necessary.
Bethany Lilly, the director of income policy at The Arc, an organization that advocates for people with disabilities, told Insider that the Social Security Agency already has information to verify people's incomes. So there is no reason why education should have asked for this information.
The department has "some very confusing and illogical standards that really harm the beneficiaries," Lilly said.
To improve the debt relief process for borrowers with disabilities, the department should be “as automated as possible” and work with the SSA to permanently remove the obligation to provide income records.
Persis Yu, an attorney for the National Consumer Law Center and director of the Student Loan Borrower Assistance Project, told Insider that Cardona was correcting something that shouldn't have happened in the first place.
"I find it disappointing that these borrowers were not recorded at the beginning of the suspension period," said Yu, referring to the 41,000 borrowers who missed their records. "I'm not sure how that happened, but in hindsight it seems pretty obvious, doesn't it?"
Yu also said the program's design was flawed from the start. "The monitoring period itself is a huge problem and a huge barrier for people with disabilities who qualify for the program, who actually access the program," she said. “That will certainly be exacerbated by the pandemic, like so many things. But it's just a function in and of itself that doesn't work. "
A “massive nondescript” amount of canceled debt
Alan Collinge, founder of Student Loan Justice, told Insider that, compared to the magnitude of the debt crisis, it is "massively nondescript" for students to cancel debt for duped borrowers and borrowers with disabilities.
"We are in a pandemic and have lost tens of millions of jobs," said Collinge. "The people who are hurt the worst are usually the ones who have student loans."
Democratic lawmakers have kept pressure on Biden to cut up to $ 50,000 in student debt per person. Massachusetts Senator Elizabeth Warren, who campaigned for the $ 50,000 figure, said in a press conference last month that executive action is the quickest way to get it done.
In early April, Biden's chief of staff, Ron Klain Politico, announced that the White House was “reviewing” its legal authority to cancel $ 50,000 per person. Shortly thereafter, White House press secretary Jen Psaki said an option was not out of the question. And Education requested released data from Warren showing that $ 50,000 cancellations would wipe out 84% of the federal debt burden.
February insider polls asked how much debt respondents want to cancel. The most popular option among 1,154 respondents was not Biden's $ 10,000 proposal (19% supported that amount) or Warren's $ 50,000 proposal (13%), or no forgiveness at all (22%) - a quarter of respondents said all Students to award loans.
Cockerham works in a job he got while studying computer science at Community College. A program he turned to after graduating from ITT did not bring him any job offers. His unpaid loans are still on his portal with Navient, the private entity that the government has hired to manage some federal government-backed loans.
“We are hardworking Americans, like everyone else. We were taken advantage of. And we think what was done to us was just completely unfair, ”he said. "We need help, and that forgiveness would be just a lifeline for many of us."
On Tuesday, when Warren, as chairman of the Senate Economic Policy Subcommittee, held her first student debt relief hearing, she invited Navient CEO John Remondi.
Citing a decade of allegations of abusive and misleading practice, she said, "The federal government should definitely fire Navient, and because it was under your leadership, Navient should fire you."
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