There's a Program to Cancel Some Private US Student Loans. Most Don't Know About It. (yahoo.com) 50
The New York Times reports on a program to forgive U.S. student loans from private lenders — a kind of private parallel to a federal program which "allows those who were seriously misled by their schools to have their federal student loans eliminated."
The problem? Eight U.S. senators complain the loan discharge process remains "burdensome and confusing" — and most students don't even know it exists. Navient, a large owner of private student loan debt, has created, but not publicized, a program that allows borrowers to apply to have their loans forgiven.... A nonprofit group of lawyers has stepped in ease the process: On Thursday, the Project on Predatory Student Lending, an advocacy group in Boston, published Navient's application form and an instruction guide for borrowers with private loans who are seeking relief on the grounds that their school lied to them...
For nearly a decade, in the early 2000s, Navient — then known as Sallie Mae — struck deals with for-profit schools to issue private loans to their students. Lawsuits from state attorneys general later accused Navient of making those loans knowing that most would never be repaid. Many schools indemnified Navient for the private loans, agreeing to defray the company's loss if the loans defaulted. In 2022, Navient settled with 40 state attorneys general and canceled $1.7 billion in debt on those private loans — but only for borrowers who had already defaulted. Because those debts were unlikely to ever be repaid, the deal cost Navient only $50 million, the company said in regulatory filings. Borrowers who had kept paying their bills... remained stuck.
But a pressure campaign from lawmakers, federal regulators and lawyers representing borrowers prompted the company to create the "school misconduct discharge." Navient began sending a 12-page application form this year to some borrowers who complained about their private loans. The document lists dozens of types of impropriety by schools — such as inflating job placement rates and graduates' earnings, or misrepresenting their educational programs — and asks borrowers to choose which apply to their experience. Applicants are required to submit documentation for their claims...
[Navient's CEO, David Yowan] told investors on a conference call in January that Navient had put $35 million in reserve for losses on school misconduct claims. He cited "new regulatory expectations" as the reason. Navient has not disclosed how much of its $16.6 billion private student loan portfolio consists of loans that could be eligible for the debt cancellation program.
The problem? Eight U.S. senators complain the loan discharge process remains "burdensome and confusing" — and most students don't even know it exists. Navient, a large owner of private student loan debt, has created, but not publicized, a program that allows borrowers to apply to have their loans forgiven.... A nonprofit group of lawyers has stepped in ease the process: On Thursday, the Project on Predatory Student Lending, an advocacy group in Boston, published Navient's application form and an instruction guide for borrowers with private loans who are seeking relief on the grounds that their school lied to them...
For nearly a decade, in the early 2000s, Navient — then known as Sallie Mae — struck deals with for-profit schools to issue private loans to their students. Lawsuits from state attorneys general later accused Navient of making those loans knowing that most would never be repaid. Many schools indemnified Navient for the private loans, agreeing to defray the company's loss if the loans defaulted. In 2022, Navient settled with 40 state attorneys general and canceled $1.7 billion in debt on those private loans — but only for borrowers who had already defaulted. Because those debts were unlikely to ever be repaid, the deal cost Navient only $50 million, the company said in regulatory filings. Borrowers who had kept paying their bills... remained stuck.
But a pressure campaign from lawmakers, federal regulators and lawyers representing borrowers prompted the company to create the "school misconduct discharge." Navient began sending a 12-page application form this year to some borrowers who complained about their private loans. The document lists dozens of types of impropriety by schools — such as inflating job placement rates and graduates' earnings, or misrepresenting their educational programs — and asks borrowers to choose which apply to their experience. Applicants are required to submit documentation for their claims...
[Navient's CEO, David Yowan] told investors on a conference call in January that Navient had put $35 million in reserve for losses on school misconduct claims. He cited "new regulatory expectations" as the reason. Navient has not disclosed how much of its $16.6 billion private student loan portfolio consists of loans that could be eligible for the debt cancellation program.
Nothing is cancelled (Score:3, Insightful)
The American taxpayers that didn't take out the loans will have to pay for it.
This is Biden trying to buy votes
Re:Nothing is cancelled (Score:5, Interesting)
How are taxpayers on the hook for any of these loans? These people are not being given money.
This is different than all those PPP loans elected officials had forgiven [cbsnews.com]. The taxpayers were definitely on the hook for those hundreds of billions of dollars. And that was on top of all the fraud in the program.
And let us not forget the $2.2 trillion in covid money which was spent without any oversight of where it went [reuters.com]. This from the same guy who is a convicted felon for fraud. Funny how the two match up.
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That's fun. A little bit of amusing misdirection there which allows you to continue to pretend that you're correct.
Re: Nothing is cancelled (Score:2)
> You're either screwing over taxpayers by making them pay back the loans
The original lenders sold the loans, which largely ended up in Navient. Why? Because the loans were tied to high risk borrowers and the loans were a liabilty related to schools committing fraud. Navient likes low income/high risk loans. Part of the Navient business model is to rely on individuals who dont know any better or cant afford counsel. Navient will be happy to allow a borrowerto to pay anything (you can haggle down to 5$ a
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I know this is a little complicated for you to understand, but nullifying improper loans doesnt cost taxpayers (Navient) anything.
Yes, it does. Even in your fantasy scenario, a multitude of government drones needs to do the work to gather the information and go to court. It's not just "Hey judge, can you nullify this?" "Sure bro".
Buyers take a risk when purchasong bulk loans. Are you too young to remember 2007? Risk is priced in and if you want to be irresponsible, thats a voluntary risk. Any borrower can bankrupt out of these kinds of loan at anytime, so the ability to discharge, has always been available...again, Navient preys on low income borrowers who are unlikely to retain a bankruptcy lawyer. They get really aggresive with the family if the borrower dies.
Yup. I remember. I survived it unscathed because I wasn't retarded. I didn't take out huge loans to major in underwater basket weaving. Instead, I went into the workforce and spent the next 8 years making ~$175k/year. At the end of 8 years, who came out on top? Me, or the morons who went to school fo
Re: Nothing is cancelled (Score:2, Informative)
The PPP loans were really a runaround the constitution (takings clause). Basically a government cannot mandate shutdown of your business or put you out of a job (takings) without just compensation. The PPP basically gave businesses loans so the state would not have to pay unemployment during temporary shutdowns, it was a huge success and most of the loans were paid back without the state requiring to dole out welfare (which wouldâ(TM)ve been bankrupted in days since it was never designed for 100% unemp
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Basically a government cannot mandate shutdown of your business or put you out of a job (takings) without just compensation.
This would come as a surprise to health departments across the county.
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> the predatory ones who advertised all these great degrees and failed to actually do any educating.
There are some fancy nameplate schools (including my alma mater) that also sold worthless (unemployable) that should get normal treatment under the Warrant Act (merchantability fitness).
The mechanism is easy - take the loan amount that was applied to worthless degrees and deduct them from the new loan amount transfers to these universities.
It's far less complex to calculate than the Income Tax system.
The s
hate boner detected (Score:1)
Re: (Score:2)
Re: hate boner detected (Score:1)
How is that any different than most liberal arts degrees? At least real estate has a potential job in it. I donâ(TM)t see a problem as long as the government and by extension taxpayer doesnâ(TM)t have to pay for your dumb decisions.
Re:Nothing is cancelled (Score:4, Insightful)
Corporate welfare? That’s just fine, how big of a check do you need?
People are struggling? Fuck those lazy bums maybe they should stop being poor.
Re: Nothing is cancelled (Score:1)
And also rewarding literal bank robbers.
Re:Nothing is cancelled (Score:4, Insightful)
Big deal. At least someone is pandering to normal American citizens for once rather than just throwing tax breaks and subsidies to corporations.
Re: Nothing is cancelled (Score:1)
Free stuff for all! Wipe out all consequences! (Score:1, Insightful)
You know, I went to an expensive school. Some of it was covered by "need-based aid" (thanks, classmates whose parents paid full price), much of it was covered by Mom and Dad, who borrowed some it and paid it off (thank you, Mom and Dad), and the rest was covered by me, when I took out a few thousand in loans to pay for a summer term so I could get my second (non-bullshit) major finished up in four years, which I paid off in full as soon as I graduated and got a job (thanks, Younger Me!).
You know what didn't
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>"I didn't bumb around in bullshit oppression studies majors like my family had money to burn"
That is one of the things that really, really irritates me. It would be one thing if your family had tons of money and everything was private-pay. Fine, get whatever degree in whatever ridiculous major you want, you are likely to do well, regardless. But when it is tax money or other borrowers footing the failure bills for these nonsense studies, that is a different matter, entirely.
The days of "just get a de
You've been tricked (Score:3, Insightful)
What you going to find is about 70% of them are STEM or law and you've got another 29% that are either business or marketing degrees or teaching degrees.
The kind of degrees you are railing against or less than 1% and most of those are various forms of racial studies degrees. I'm going to go out on a limb here and say that in a country like America we could probably use more people studying the eff
Re: You've been tricked (Score:1)
They are not at all 1%. They are about 10% of what people GRADUATE in, but they are not what people spend their student loans on. Almost 30% of all University courses have them as people too dumb/lazy start in STEM or law and instead of dropping out, they switch majors multiple times. The primary problem is the banks have no incentive, because the federal government backstops the loan anyway. If you were to loan money to start a business, the bank would want to make sure you have a chance of completing what
Your Goal post shifting (Score:2)
I mean, you're literally arguing against education though....
That said I think you're just baiting the mods because points are limited on
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Cool story grandpa. Run your figures through the inflation calculator and tell it in 2024 dollars.
Re: Free stuff for all! Wipe out all consequences! (Score:2)
20 years ago...so fudge it by 30% or so to get today's dollars. Won't change much.
20 years ago 70% of tuition (Score:5, Insightful)
You old farts are pulling the ladder up behind you. The government paid for your college education and now you act like they didn't. And then when somebody points that out you get angry because you like to pretend you hold yourself up by your bootstraps.
And for those of you rocking high school diplomas the reason the economy was so strong was because massive productivity boosts from college grads kept you going. When you were making the equivalent of $80,000 doing woodworking or some s*** or running your family's business 20 years ago how the hell do you think that was possible?
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20 years ago 70% of tuition [was] paid for by the government. Now it's 20%...You old farts are pulling the ladder up behind you. The government paid for your college education and now you act like they didn't
Your claims didn't have the ring of truth to my ears, so I looked the numbers up.
Here's what the inflation-adjusted federal spending per student looks like [fee.org]: the graph plainly goes up and to the right (the data source is the U.S. Bureau of Economic Analysis and the U.S. Department of Education). The only dip of note was when the dotcom bubble burst.
While it sounds like state-level spending may have dropped after the dotcom bubble burst (Pew suggests in Figure 4 [pewtrusts.org] that it's down about $2500 per student, inflati
I'm going off numbers shared (Score:4, Insightful)
Like it or not we drastically cut the amount of money we spend sending kids to college right after all us old farts graduated.
I get that that makes you feel bad and it should. Every single one of us should be ashamed of ourselves for letting that happen. Especially for the stupid reasons we had and still have.
Re: I'm going off numbers shared (Score:1)
If you get your facts from a comedian that canâ(TM)t even support his own figures âoebecause it is a comedy showâ, that demonstrates what is wrong with modern schools.
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I'm going off numbers shared [by] the Dean of Louisiana State University during his interview with John Oliver... Like it or not we drastically cut the amount of money we spend
What did the dean actually say? Because you're now making an entirely different assertion than before. The words you just put in their mouth—that spending was drastically cut—are very different than a claim that the percent of tuition covered by the government is down (the latter of which is a affected numerous other factors, most significantly the cost of education). So which is it and do you have a link?
I'll withhold judgement on the dean until I can review their comments, but the numbers you
Your worldview is false (Score:2)
Re:20 years ago 70% of tuition (Score:4, Interesting)
College grads are more productive? Is writing 100 lines of code more important than fixing a broken pipe? That depends on what the code is for, and what the pipe is for.
It is important to remember that we don't live in Lake Wobegon. More than half of the population has an IQ that is average or less. High quality college programs, i.e., those that actually lead to highly productive work, arguably require above average intelligence.
The idea that everyone needs to go to college has led to colleges creating, what shall we call them? Less rigorous programs? Did you know that you can get a college degree, from an accredited state school, in floral arrangement? That's not a serious college degree, that's just a way to rake in money.
When an engineer develops new pipe materials i (Score:2)
Also a nuclear power plant can generate more power than a bunch of dudes on a treadmill, who knew?
Re: When an engineer develops new pipe materials i (Score:1)
For every one engineer capable of making a better pipe, significantly more English majors* rack up unpayable amounts of debt.
Arguing in favor of "education" as a catch-all disregards this important distinction. The world *would* be poorer if talented people were denied career opportunities in the technical fields. The world would go right on ticking if the humanities shrunk down to their natural, unsubsidized size.
*English deparments aren't doing so well these days, but I use "English major" as a catch-all
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As far as 80K for woodworking, you know that TODAY talented woodworkers make bank.
I know a guy who just does plumbing for fire control systems, and he makes 150K as an installer. Trades are some good money now.
Re:Free stuff for all! Wipe out all consequences! (Score:4, Informative)
Student loans were created by the federal government to make college more accessible. But the government did not attach conditions to these funds. They did not provide a definition of tuition and an overhead rate cap. The result is that colleges like any bureaucracy granted funds without constraints grew like cancers and spent the money in unintended ways. Colleges received the loan money, spent it and raised tuition. The Federal Government raised the amount they would back, so banks lent more. Rinse and repeat for almost six decades and we are where we are now.
Hate to break it to you, but you didn't really pay for an education. You funded a federal jobs program and as a side-effect of your generous largess got a diploma.
Caveat: The actual jobs number is likely really somewhere between 3 and 7 million since many of these jobs are higher paying than freeway construction jobs.
Slashdot... (Score:3, Insightful)
Responsibility AND compassion (Score:4, Interesting)
>"program to forgive U.S. student loans from private lenders â" a kind of private parallel to a federal program"
Not *as* bad, but still bad. You can bet the burden of that expense will still be heaved onto other borrowers (current or prospective), who will be punished unfairly. Still doesn't have any accountability for bad decisions by the lender, the borrower, or the school that supplied what is often a useless degree and/or to someone who either didn't have the ability or background to complete the chosen degree program.
Much better would be-
1) No forgiveness, period, for anyone, by anyone. Lenders have no "guarantee" from anyone that they will be paid back, so lenders will actually start to CARE about who they are lending to and why.
2) Schools should be held at least partially responsible for their outcomes, so THEY will care about who they are admitting and why and for what. Attach a partial dollar amount refund to those, paid by the school to the lender, for some of the bad outcomes. They can pay for it by eliminating the insane amount of administrative overhead or cutting ridiculous programs. Plus they can dip into their deep endowments.
3) Better educate prospective college-attenders and their parents, in high school, before decisions and commitments are made. What are the student's strengths, weaknesses, an interests? What are their motivations? What is realistic? What are good and bad outcomes? Do they even need a degree? What other programs are available? What does the labor market look like for the possible programs? It isn't enough that some field might pay more, or the student "likes" that topic.
4) Create some forms of safety nets for those who still fall through and are genuinely in need. Perhaps cut the interest rate to zero for a period, extend the payment period way out, offer generous "pause" options for legitimate hardship events. Provide relocation service assistance and guidance to place them in a better labor market.
you know we're talkin' 'bout 'merka, RIGHT? (Score:1)
Fuck that, enlightened self interest (Score:1, Troll)
There are 2 things on this earth that increase wages without inflation: competition and productivity.
We gave up on competition. We stopped enforcing anti-trust law in the Reagan administration.
All we've got left is productivity and now a bunch of old farts want to take even *that* away while bitching about the price of bread... sheesh.
No more safety net B.S.. Instead of dangling our children over an abyss and using tots & pears to hop
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>"college grads are orders of magnitude more productive. "
That is very much debatable, especially when you look at WHICH grads and WHICH careers. It is also difficult to associate cause and effect. Many people who would have been orders of magnitude more productive would have been so, regardless if they were degreed or not; they kinda self-select to be in the group more likely to seek a degree.
>"Instead of dangling our children over an abyss and using tots & pears to hope the net catches them le
My grandfather died of a heart attack at 55 (Score:3)
Of course when I was a kid the government paid 70% of the tuition versus the 20% now and that was perfectly okay for me. Just like how I deserve all the medication I need. Because I earned it.
Everyone else though they're just scabs. I got mine f*** you.
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He didn't have heart medication and so nobody else should have it either. Nothing should ever change and everything should always get worse.
Not quite. In your analogy it would be as if your grandfather promised to pay for heart medication and didn't pay. So instead us taxpayers are paying for it, and now medical companies charge even more and more, because they know the government (and it's almost unlimited bank account) will pay for it no matter what. The end result is that NO ONE IN THE FUTURE CAN AFFORD HEALTH MEDICINE. Your appeal to emotion is what causes this whole mess.
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You're a reliable clown.
People generally don't have a problem with forgiveness when the people responsible are held accountable (predatory loans, diploma mills, gender studies majors).
People do have a problem when the president starts ruling by executive order to gather votes before the election.
Next election there's just going to be more kids with worthless degrees and high debt because nothing was actually fixed.
Everyone here bitching about this program (Score:1, Troll)
It's funny how members on the right wing get really cozy with criminals whenever they're hurting people they don't like. I seem to remember there being something
It's your responsibility (Score:1)
Re: It's your responsibility (Score:2)
What's really insane is that you want your wife to pay the rest of us for her decision. Why not accept some forgiveness to even the scales a little? 25+ years of the government making money on the spread between her loan rate and the bond rate they pay having funded the loan seems more than enough taxpayer profit if you ask me.