Eighteen months after Sallie Mae spin-off Navient revealed that its wholly-owned subsidiary Navient Solutions Inc could one day be on the receiving end of a federal lawsuit related to its student loans servicing practices, the day has come to pass. The Consumer Financial Protection Bureau, along with two states, filed lawsuits against the nation’s largest student loan company for allegedly cheating borrowers out of repayment rights. [More]
Education
Feds Will Forgive $30M In Federal Loans For Students Of Defunct American Career Institute
By 1.13.17
Under the “Borrower Defense” program, a student’s federal education loans can be forgiven if they can prove their college used deceptive practices to convince them to enroll. The Department of Education confirmed today that this program will be used to forgive $30 million in federal student loans for thousands of former students from the defunct American Career Institute. [More]
Student Loan Servicing Issues Contribute To Older Borrowers’ Defaults
By 1.5.17
In 2015, nearly 40% of all federal student loan borrowers over the age of 65 were in default, thanks in part to issues they faced when it came to the servicing of their debts, including problems enrolling in income-driven repayment plans and accessing protections as co-signers. [More]
Former ITT Tech Students Sue To Be Included In Bankruptcy Proceedings
By 1.3.17
When a retailer goes bankrupt, little thought is given to the store’s customers, but what happens when a for-profit educator goes bust? Do its customers — the former students — have any right to be involved in the bankruptcy proceedings? [More]
Lawsuit: Government Illegally Garnishes Disability Benefits To Repay Student Loans
By 12.30.16
Earlier this month, a Government Accountability Office report found that $171 million was garnished from older Americans’ Social Security benefits in order to repay federal student loan debts. Now, one of those borrowers is suing several government agencies accusing them of taking money from his monthly disability checks despite the fact he was eligible for a student loan discharge. [More]
Many For-Profit Colleges Get More Than 90% Of Funding From Federal Government
By 12.21.16
For-profit colleges operate under the so-called “90/10 Rule,” which states that a school can’t receive more than 90% of its revenue from the federal government. However, there’s a loophole that does not count certain military-related education funds — like the GI Bill — against that 90%, meaning these schools can go over that 90% threshold without violating the 90/10 Rule. And according to a new report, hundreds of for-profit schools are indeed getting nearly every dollar of their funding from taxpayers. [More]
Report: $171M Garnished From Older Americans’ Social Security To Repay Student Debt In 2015
By 12.20.16 — Updated: 12.21.16
It can take years, even decades, for student loan borrowers to repay their debts. To that end, a new report has found that tens of thousands of older adults – including senior citizens – continue to be saddled with mountains of student debt later in life, often having their government benefits cut to repay the costs. [More]
DeVry University Must Pay $100 Million To Former Students For Misleading Ads
By 12.15.16
At the beginning of the year, the Federal Trade Commission sued popular for-profit college DeVry University, claiming the school’s advertising misled would-be students about how likely a DeVry degree is to get them a job. And now to ring out the year, the school and the Commission have reached a $100 million settlement that sends all that money right back into students’ pockets. [More]
Trump Education Secretary Nominee Is Indirectly Invested In Student Loan Company
By 12.6.16
It’s generally unwise for someone who works in government to have a personal investment in companies that could be affected by policies that he or she oversees, and that turns out to be the case for Betsy DeVos, President-Elect Trump’s nominee for Secretary of Education. Her investment in a company that refinances student loans is relatively small and indirect, but it exists, and is a potential conflict of interest. [More]
For-Profit College Industry Eyes Resurgence Under Trump Administration
By 12.2.16
At its height, the for-profit college industry represented about 25% of all federal student aid, even though these schools only accounted for about 8% of U.S. college students. Meanwhile, these schools were spending the large majority of their money on advertising instead of education, and their students were defaulting on loans at double the rate of other borrowers. Since then, several education chains have shuttered due in no small part to federal investigations and regulations, but investors are seeing sunnier days ahead under a business-friendly Trump White House. [More]
Student Loan Repayment Programs Will Eventually Forgive $108B In Debt
By 11.30.16 — Updated: 12.2.16
While several recent reports have suggested that many student loan borrowers face needless hurdles when trying to reduce their monthly payments through the Department of Education’s income-driven repayment plans, a new study has found the programs are working and will eventually forgive $108 billion in outstanding student debt. [More]
Xerox Pays $2.4M To Settle Allegations It Overcharged Student Loan Borrowers
By 11.23.16
Xerox does a lot more than make huge copy machines for your office. For more than a year, the company’s student loan servicing division has been under state and federal investigation for allegations that it violated debt collection laws and overcharged borrowers. Now Xerox has agreed to pay $2.4 million to close the book on one such investigation in Massachusetts. [More]
Study: Students “Easily Duped” By Fake News, Sponsored Content
By 11.22.16
You might assume that a child raised on online content may be better positioned to tell when news and information is coming from legitimate sources and when that source is a fake or an ad. However, the results of a new study appear to indicate that this always-connected generation is no better equipped to sort fact from fiction online. [More]
Trump University Fraud Lawsuits Settled For $25 Million
By 11.18.16
Ten days before President-elect Donald Trump was set to go to trial on one of three fraud lawsuits involving his defunct Trump University, the parties involved in all of these cases have reached a settlement worth $25 million. [More]
Another For-Profit College Chain Has Closed, Leaving Thousands Of Students Stranded
By 11.2.16
So far in 2016, a handful of for-profit college operators have announced plans to cease operations, closing hundreds of campuses across the country. Joining the likes of the ITT Technical Institute, Wright Career College, and Brown Mackie College brands, Heritage College and Heritage Institute closed its door abruptly this week. [More]
Some Student Loan Borrowers Improperly Denied Payment Assistance
By 11.1.16
Each year, more than five million student loan borrowers are better able to manage their debts thanks in part to government-based loan repayment plans. But yet another report has found that not all students qualified to participate in these income-driven repayment plans are able to, though at no fault of their own. [More]
New Rules Aim To Make It Easier For Students To Seek Financial, Legal Relief From Failed Colleges
By 10.28.16
In the last few years, multiple for-profit college chains have closed with little or no warning given to their students, while others remain on the brink of closure. And many of the for-profit schools that remain bar wronged students from ever suing the college in a court of law. Today, the Department of Education finalized the massive overhaul of its “Borrower Defense” rules in an effort to make it easier for students to hold colleges financially and legally responsible for their actions. [More]
Student Loan Debt For Recent College Graduates Increases Again, Now At $30K
By 10.18.16
With college tuition continuing to increase, it probably won’t surprise many people to learn that college graduates are leaving school burdened with more loan debt. According to a new report, the average amount of student loan debt for new graduates has passed $30,000 for the first time. [More]
