It’s been an interesting couple of weeks for student loan borrowers, and by “interesting” I mean anxiety inducing. Betsy Devos, who has never attended a public school or a public college, but is now nonetheless the Secretary of Education, has rescinded regulations put in place by former President Barack Obama that would hold loan servicers to act in the best interests of their clients. These regulations were put in place by the former president’s administration after years of concern over the practices of a number of student loan servicers. With one memo to James Runcie – the COO of Federal Student Aid – the secretary made very clear just how much she values protecting borrowers versus how much she wishes to insulate to servicers from scrutiny of their practices.
On the heels of this news came an announcement that J.P. Morgan has helped solidify the position of Navient as the dominant student loan servicer in the nation. The student loan giant has purchased the banks $6.9 billion student loan portfolio in addition to its $85.3 billion in the government backed student loans and $22.6 billion in privately originated loans. Yes, this is the same Navient that is facing a lawsuit from the Consumer Financial Protection Bureau, and responded to the lawsuit by saying it should not be expected to do what’s best for their borrowers.
And finally, legislators are finally paying attention to the fact that the Public Service Loan Forgiveness program may not be forgiving loans. In an ongoing lawsuit, attorneys who had been working for years defending veterans and immigrants, were under the impression that their loans would be discharged after 10 years of payments. This proved not to be the case. The American Bar Association alleges that the feds welshed out, leaving a variety of public interest attorneys on the hook for the full amount of their loans and interest. Since the program was launched in 2007, the first enrollees in the program are coming due to their promised forgiveness in October of this year. It goes without saying that a number of people who thought that they had invested time in the program and were on their way to forgiveness are about to have a very rude awakening.
It is unfortunate that so much good work can be undone without any transparency whatsoever to those most affected by these actions. Worse, a number of good people stand to have their careers and plan futures destroyed by predatory servicing practices and losing out on forgiveness that was promised to those who would work in public service. If you are facing any of these situations, call us for a free consultation at our Fort Lauderdale or West Palm Beach offices. We can help you get on top of your student loans, and stay on top of them until some of these lingering questions and cases are resolved through the due process of the courts.
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