$1.7 Billion in Student Loan Debt Cancelled for 66,000 Borrowers (qz.com) 72
Quartz reports:
For years, the student loan servicing company Navient allegedly encouraged student loan borrowers to enter costly long-term forbearance programs that pushed them further into debt, as well as take on private loans they couldn't pay back, according to lawsuits filed by several states, and joined by 39 attorneys general.
Those claims were resolved through a settlement announced Thursday (January 13) affecting some 400,000 borrowers. Navient says it will cancel $1.7 billion in private student loan debt for 66,000 borrowers, as well as pay an additional $95 million in restitution to 350,000 people with federal loans. The former deal mostly focuses on students who took out loans to attend for-profit colleges between 2002 and 2014....
While Thursday's settlement is significant for private student loan borrowers in debt, it extends to just a fraction of the estimated 12 million student loan borrowers Navient has served since 2014. Borrowers eligible for debt cancellation include those who took out private subprime student loans between 2002 and 2014 through the company's predecessor, Sallie Mae.
Borrowers who were behind on payments for seven consecutive months prior to June 30, 2021 qualify to have their loans canceled, but those who are current on their loans do not.
Navient "expressly denies violating any law", according to a statement from the company, in which their chief legal officer insists "these matters" were "based on unfounded claims," but that settling them for $1.85 billion "allows us to avoid the additional burden, expense, time and distraction to prevail in court."
But Mike Pierce, executive director of the Student Borrower Protection Center, tells Quartz that "This is a really big day for people with student debt."
"Borrowers that are still struggling more than a decade later with loans, with the worst terms, after going to the worst schools, are finally debt free."
Those claims were resolved through a settlement announced Thursday (January 13) affecting some 400,000 borrowers. Navient says it will cancel $1.7 billion in private student loan debt for 66,000 borrowers, as well as pay an additional $95 million in restitution to 350,000 people with federal loans. The former deal mostly focuses on students who took out loans to attend for-profit colleges between 2002 and 2014....
While Thursday's settlement is significant for private student loan borrowers in debt, it extends to just a fraction of the estimated 12 million student loan borrowers Navient has served since 2014. Borrowers eligible for debt cancellation include those who took out private subprime student loans between 2002 and 2014 through the company's predecessor, Sallie Mae.
Borrowers who were behind on payments for seven consecutive months prior to June 30, 2021 qualify to have their loans canceled, but those who are current on their loans do not.
Navient "expressly denies violating any law", according to a statement from the company, in which their chief legal officer insists "these matters" were "based on unfounded claims," but that settling them for $1.85 billion "allows us to avoid the additional burden, expense, time and distraction to prevail in court."
But Mike Pierce, executive director of the Student Borrower Protection Center, tells Quartz that "This is a really big day for people with student debt."
"Borrowers that are still struggling more than a decade later with loans, with the worst terms, after going to the worst schools, are finally debt free."
Universal basic income next (Score:1)
Re: (Score:2)
No work assignments for UBI.
But if you don't work, you can't vote.
Re: (Score:2)
No work assignments for UBI.
But if you don't work, you can't vote.
"Service guarantees citizenship!"
...
"Would you like to know more?"
I like it.
Re: (Score:2)
Didn't think someone would guess my source for the idea. A+ for you.
Re:Universal basic income next (Score:4)
A friend of mine made a very good pitch for "if you don't work, you don't vote." The pitch being that nobody on the public dole should be allowed to vote themselves move benefits.
Re: (Score:3)
Well, switching to a student grant system would be the logical next step, so as to stop creating problems, followed by a UBI that is index-linked to a standardized shopping basket. I'm not sure you could do much more in America, but Britain could also do with reversing the privatization of healthcare and funding the damn thing properly. A sick nation is an expensive nation.
Re: (Score:2)
Well, switching to a student grant system would be the logical next step
Technically we do have that, it just needs more funding.
Re: (Score:2)
It is about spending a dime now, or ten dollars later. A UHC, preferably single-payer would save trillions in the US.
Simple statistics: The US spends more per capita, and total on health care than any country, even "socialist" countries like Denmark/Norway/Sweden. Right now, basically anything short of letting people die in the streets is better than what we have now, and would save taxpayers enough money to actually toss in a UBI as well.
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Yeah, but it would be socialism/liberalism.
We can't have that.
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That sounds similar to the Higher Education Contribution Scheme (HECS) system we have in Australia - as an Australian citizen you can go to uni and have your education funded by a government backed discounted loan that has to be paid back at a fixed rate every year once your income exceeds a certain threshold - about $50000.
The benefit of this is that similar to the free Uni education that preceded this system, anyone could still afford to go to Uni (but only for your first degree) - but it meant you would
Re: (Score:2)
Education is partly about getting a job, but only initially. Once you've been in a job for 4-5 years, job experience will count for more. A degree is 3-4 years, so what gives it an edge? Well, you're also learning about how to learn and how to exploit resources (such as the Internet and library) to best advantage. This, however, is something a liberal arts degree will also provide - to an extent, depending on the specific degree. As such, I'm not opposed to liberal arts, in a joint honours with a more techn
Re: Universal basic income next (Score:2)
Re: (Score:2)
A sick nation is an expensive nation.
A sick nation is a profitable nation for healthcare corporations, be it insurance, parma or care/treatment, and that's all that seems to matter in this country.
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The company made money by giving loans for students attending for-profit colleges. These are the Betsy DeVos supported schools. Those companies and those for-profit colleges prey on poor students and veterans. Ol' Betsy was prime Dear Leader material, he too had a "university" devoted to parting people from their money, grifters of a feather.
So naturally you find a way to support them. Well done, you stupid git.
Re: Nothing like Marxism/Maoism back from the dead (Score:2)
Re: (Score:2)
You want society to keep working?
Did not break any law? (Score:5, Insightful)
And they forgive loans only to those who were more than 7 months behind. All those who actually paid are out of luck. Courts should not allow this provision. In fact all lenders can file amicus briefs asking the court to disallow such a deal. If it goes through all the borrowers of all the loans will make the rational decision to be at least 7 months behind.
Notional Amount (Re:Did not break any law?) (Score:1)
Re: Did not break any law? (Score:2)
I agree. I fit this settlement except that I was able to refi part of my loans against my house. After 10 years of payments, I owed more than I borrowed from SM. My bankruptcy atty refused to even consider an adversarial proceeding.
Oh, my degree was not underwater basketweaving or gender studies like RINO "republicans" like to say. I was an MBA from Duke. In my 45+ years of existence, that was the worst thing I ever did. Had I slept with 1000s of people and contracted every STD, that degree would still be a
Sad⦠(Score:2)
Re: (Score:1)
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the increasing percentage of the population going to university
Demand pull inflation. Perish the thought of the government stepping in and putting a lid on education costs.
Re: Sad⦠(Score:5, Insightful)
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The BPACPA massively increased the monetary supply for education by removing the default risk.
Educational institutions never suffered a default risk. Loans don't have to be paid until after graduation. And schools collect their fees up front. It moved the default risk away from the lenders and on to the students. You WILL pay your loans back. So lenders have no motivation to evaluate the ROI and payback risks for different types of degrees. 'Soft' subjects like humanities and arts could get loans just like STEM subjects.
there is more than sufficient supply of people willing to work as teachers
In the soft subjects. Not so much in STEM fields. And it's not willing to work,
Re: Sad⦠(Score:1)
Re:Sad⦠(Score:4, Insightful)
More people are going to college because when the government underwrote the loan system and also made school loans non-dischargable so more kids went to college because they could secure loans even though in the previous environment the banks and loan companies would never ever issue loans to prospects who under normal conditions couldn't pay them back and would be able to discharge them in bankruptcy. This dumped a shitpot more money and bodies into the mix for colleges to access, and they had to upgrade facilities to meet increased demand. Since they were upgrading facilities, and the primary reason many kids were going to college was not for a career after they finished their education but to get a higher education in whatever they felt like which would magically provide a career, the available facilities became the primary draw for many prospective students instead of a quaternary draw behind cost and school performance and program availability. Which means it became a rate race not for quality of education vs price, but who could boast the neatest facilities and college "culture". And it goes without saying the effectively free government money increased the graft in school administration exponentially.
Re: (Score:2)
Since they were upgrading facilities, and the primary reason many kids were going to college was not for a career after they finished their education but to get a higher education in whatever they felt like which would magically provide a career,
That was always how it worked in most cases (exceptions like medicine and engineering aside), and the whole idea behind liberal arts. You go to university and get a degree, and learn in the process about learning and extending knowledge and how to think and synthesi
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That was always how it worked in most cases (exceptions like medicine and engineering aside), and the whole idea behind liberal arts.
And the only people who got liberal arts degrees were those willing to work their asses off to pay for it, a distinct minority, or those whose parents were both rich enough and willing to be the cosigner of the loan, thus insulating them from the consequences of their actions and by far the vast majority of those who got liberal arts degrees at the time. Dischargeable loans were a firebreak against idiocy. The government in its oh so infinite wisdom removed that firebreak
Re: Sad⦠(Score:5, Insightful)
Re: Sad⦠(Score:2)
Re: (Score:1)
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The problem with a loan system is that you're charging the students, the industries that then use those students, the industries that outsource to the university AND the population at large (including those overseas unless they give up citizenship) -- mostly to fund the lifestyles of the lenders, with only a small amount going to the universities themselves, in such a way as to enslave students to the loan sharks.
This doesn't seem like a productive or efficient way to do things.
Yeah, classic.. (Score:2)
I want to see the distribution of degree or course of study.
Anyone wanna bet the percentage of courses like Gender Studies, Ethnic Studies, and the like.
Re: (Score:3)
Interesting question. Of course student loans come hand-in-hand with useless studies that can be mastered by people that do not have talent, skill and potential and should have stayed away from advanced education anyways. Got to push your product to as many suckers as possible after all!
Unfortunately, STEM education (direly needed by any modern society and economy) sort-of gets thrown under the bus too. But you can fix that by importing graduates from abroad. At least as long as those think it is worthwhile
So why make any payments on a student loan? (Score:2)
Re:So why make any payments on a student loan? (Score:4, Insightful)
"Borrowers who were behind on payments for seven consecutive months prior to June 30, 2021 qualify to have their loans canceled, but those who are current on their loans do not. " At least until Jan 20 2025 and there "may" be a new administration.
Yeah, this makes no sense to me.
It's like those asking to forgive all student debt: forgive debts of those that presumably got scammed into getting into debt in the first place, but all those that came before and have paid all (or nearly all) of their debt off don't get any relief (presumably because the debt no longer exists, or they were rich enough to afford it).
Put another way: if both had, say, $70000 in debt, forgiving it for one puts them ahead financially in life, while the other person is already behind financially compared to the other.
It's fine to solve an injustice, just don't create another for someone else in the process.
Jury duty (Score:2)
It's fine to solve an injustice, just don't create another for someone else in the process.
That reminds me of jury duty: solve one injustice by creating another dozen (or thereabouts, depending on jury size).
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At least until Jan 20 2025 and there "may" be a new administration.
What's funny is the con artist put in place someone who refused to allow loan forgiveness, yet he himself takes great advantage of loan forgiveness for his failing properties and golf courses.
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Good point. He did it, so we should be like him.
When it comes to loan forgiveness, be careful to distinguish between private money and taxpayer money.
Re: (Score:2)
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Re: Cancellation
> must be within one of the restitution-participating stateslisted above,Arkansas, Kansas,
Michigan, Rhode Island, South Carolina,Vermont,West Virginia, or associated with a military addressed postal code
So this isn't even across all loans (as the summary implies), as you have to meet some state-mailing-address criteria.
While there's a bunch of discussion about public education, these loans were largely issued to people enrolling in unaccredited institutions.
That's quite a business model (Score:2)
Re: (Score:3)
Navient is the processor of the loans. The loans are sold as securities on the stock market to pension funds, etc. That's who is going to lose the $1.9B, not Navient. I believe Navient only has to pay $95M. Note that Navient is a new company formed out of the collapse of Sallie Mae. But... these loans have been in default for a long time and the value of the effected bonds has already been hit. What is new is that the student borrowers are permanently being forgiven. If you investigate further I would ex
Re: That's quite a business model (Score:2)
Navient Corp. NAVI -0.27% , a student-loan servicer that split off from Sallie Mae in 2014, agreed to the sum in a settlement with 40 state attorneys general. The loans are private loans, so the losses will be covered by Navientâ(TM)s investors rather than the federal government.
Source (paywalled): https://www.wsj.com/articles/s... [wsj.com]
Moral of the story (Score:2)
Borrow as much as you can
Earn as little are you can
Make some other sucker pay
Profit!
Re: (Score:2)
That's been the business plan of the rich and shameless for decades now. Why not everyone else?
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Interesting to see your role models.
The bubble is bursting before your very eyes (Score:5, Insightful)
It won't be long now. Much of student loans out there are exactly the same as sub-prime mortgages 15 years ago. Loans were given willy nilly to people who could never possibly pay them off in order to affect the oxymoron that is social engineering. Somebody gets stuck with the bill for the bailout. That would be the people who pay the most in taxes who are smart enough and successful enough to earn that kind of money.
So, what you're going to see going forward is inflation of hiring standards where having a degree is not enough and having a useless degree is worthless.
Tax Problem (Score:1)
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Just be so poor there's nothing to take out.
Wow (Score:1)
Notional Amount vs. Market Value - common fallacy (Score:1)
But these were all sh*tty loans that were never going to be repaid. So the market value - the amount deemed likely to be collected by squeezing water from the stones (aka the suckers) - was just $50 million == 5 x 10^7.
“Navient booked an after-tax charge of approximately $170 m
ITT Tech... (Score:2)
Re: (Score:2)
One does have to wonder about (Score:2)
Must have pissed off somebody important (Score:2)
Because all they were doing is being good capitalists and ripping off their customers as much as possible.
Education shouldn't be a business (Score:2)
That Makes Sense (Score:2)
Companies give back billions of dollars all the time without any wrong doing being involved. Absolutely nothing to see here!
We should seriously be pulling the charter of any company that does shit like this. They clearly don't further the public interest by existing.