Thursday, November 12, 2015

The below info is from the NY Times at: http://www.nytimes.com/2015/10/07/opinion/why-student-debtors-go-unrescued.html?_r=0

Reading it, we have to ask the Do-Nothing Congress and the OTL (Out to Lunch) President:

So WHAT are YOU - Congress, President Obama and all you Candidates for President - Going to DO to FINALLY  RESCUE Student Loan Debtors?

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The Opinion Pages of the NY Times | Editorial

Why Student Debtors Go Unrescued

Photo
Credit Ping Zhu
A vast majority of the more than 10 million Americans who have defaulted on or are behind on repaying their student loans could have benefited from income-driven repayment plans that are intended to ease pressure on distressed borrowers and keep them from defaulting on their federal loans.
These plans can allow borrowers with low income or high debt — or both — to pay less each month, or even nothing, until their finances improve without being penalized or going into default. But many borrowers never even hear about these payment plans, thanks to poor customer service by the companies that are paid more than $600 million a year by the government to manage these accounts, process monthly payments and enroll distressed borrowers in alternative repayment plans.
As a result, borrowers who could easily have been spared slip into default. The government needs to demand more from these companies, which have operated with little oversight and have clearly been failing borrowers for a long time.
The Consumer Financial Protection Bureau, which has primary authority over the industry, has now issued a disturbing report on this problem. It can’t delay and should get the ball rolling by suing companies that violate the law and writing consumer-friendly rules that loan servicing companies would be legally required to follow.
The bureau’s report — drawn from 30,000 public comments filed with the agency from May to July — suggests that some servicers are actually pushing struggling borrowers toward default by giving them misinformation, by making it difficult for them to refinance at lower rates and by withholding valuable information about affordable payment plans that are in the struggling borrower’s best interest.
Instead of explaining how income-based payment plans protect the borrower’s credit, loan servicers sometimes tell people that their only options are to pay the full amount due or go into forbearance — a process in which the person can stop paying for a specified time, though the interest generally continues to accrue and the loan balance grows.
In some cases, borrowers reported, servicers chose to apply a larger portion of a borrower’s monthly payment to his or her low-interest loan, deliberately leaving the high-interest loan with a larger balance. Companies can make more money if loans take longer to pay off. Moreover, critics charge that the servicer business model relies on limiting the length and complexity of employees’ conversations with customers, leading them to suggest the simplest option even when it is not in the borrower’s interest.
Servicers can also fail to give borrowers lower interest rates than they are entitled to, either because they have met certain conditions — like making timely payments for a specified period — or because they are entitled to an interest break under the law. Often borrowers do not know they are entitled to the lower rate or, if they do request it, do not notice when the servicer fails to make the change.

Last year, for example, the Justice Department sued Sallie Mae and its former subsidiary, Navient, charging that they had violated the Servicemembers Civil Relief Act for nearly a decade by denying members of the military the 6 percent rate cap to which they are entitled for loans taken out before their military service began.

The Consumer Financial Protection Bureau, the Treasury Department and the Department of Education agreed last month on a basic set of principles that they believe will prevent borrowers from being eaten alive. The agreement calls for servicing companies to adopt consistent, accurate and transparent servicing standards, violations of which should be promptly punished.
The bureau can get started by vigorously enforcing the law and creating rules under which this wayward industry will be required to do business.