The Great College Loan Swindle

On a wind-swept, frigid night in February 2009, a 37-year-old schoolteacher named Scott Nailor parked his rusted ’92 Toyota Tercel in the parking lot of a Fireside Inn in Auburn, Maine. He picked this spot to have a final reckoning with himself. He was going to end his life.

Beaten down after more than a decade of struggle with student debt, after years of taking false doors and slipping into various puddles of bureaucratic quicksand, he was giving up the fight. “This is it, I’m done,” he remembers thinking. “I sat there and just sort of felt like I’m going to take my life. I’m going to find a way to park this car in the garage, with it running or whatever.”

Student Income Loans Transfer Wealth to Investors, Risk to Students

At more than $1.3 trillion dollars as of 2016, US student loan debt has become widely discussed in the media, the business press and academia as a new debt bubble with the potential to burst and trigger a global economic crisis that puts everyone at risk. The student debt bubble is regularly compared to the subprime mortgage debt bubble that resulted in the failure of banks, the great recession and the public bailout of Wall Street and the auto industry in 2008. Prior to the subprime crisis, high- and low-risk mortgages were packaged together into investment bonds so that when enough of the high-risk mortgages defaulted, the bonds that had been rated as safe collapsed. Similarly, one form of student debt investment security, Student Loan Asset Backed Securities (SLABS), is composed of pooled student debt.

Obama’s New Education Secretary Declined to Help Victims of Student Loan Fraud

Last week, the U.S. Senate confirmed John B. King Jr., a man who has refused to use his authority to provide justice and relief to Americans defrauded by for-profit colleges, as secretary of education.

Sam Sacks reports at The District Sentinel via Truthout:

    King has thus far declined to act, despite having served as the acting Secretary of Education since January. He has subsequently become the subject of ire of thousands of debt-saddled college students who have appealed to the department to forgive their obligations to for-profit schools that fraudulently lured them into traps.

David Cameron Snubs My Retrospective Student Loan Hike Open Letter

Two weeks ago I sent the Prime Minister an open letter about the disgraceful retrospective hike in student loans. Those who started university since 2012 currently repay 9% of everything earned above £21,000 - this threshold was supposed to rise annually from 2017, but the Government has now frozen it.

The impact of this is substantial. It will leave millions, including many who've already now left university, paying £1,000s more for their loans than they were told when they signed up.

Martin Lewis Accuses David Cameron Of 'Snubbing' Millions Of Students' Over Loans Hike

High profile finance expert Martin Lewis has said he has been "snubbed" by David Cameron after writing an open letter to the Prime Minister highlighting an "unfair" hike in student loans.

Lewis, the founder of MoneySavingExpert.com and former head of the Independent Taskforce on Student Finance Information, penned a lengthy note to Cameron explaining why the retrospective loan repayment changes were unfair - and potentially illegal.

Canada To Get More Aggressive Collecting Student Loans, Documents Show

OTTAWA — Hundreds of thousands of university and college students walking onto campuses this week with help from federal loans could find themselves targeted harder than ever to repay billions of dollars in loans and grants.

Employment and Social Development Canada, which oversees the Canada Student Loans program, has set more aggressive collection targets after feeling pressure from its political masters to stem the rising amount of student debt the government must write off each year, an amount that topped $300 million just two years ago.

American Legion Condemns Education Department Over Student Loan Investigation

The American Legion, the influential veterans organization, has criticized the U.S. Department of Education's handling of federal allegations that student loan giant Navient Corp. intentionally cheated troops on their federal student loans.

The Legion, one of the nation’s oldest and most politically powerful veterans groups, this week told the House Veterans' Affairs Committee that it was concerned the Education Department seems to be dragging out a review of whether Navient violated the Servicemembers Civil Relief Act.

Congressional Leaders Agree To Cut Aid To College Students To Pay Student Loan Contractors

House and Senate leaders have agreed to cut funding for the nation’s largest source of grants for college students to pay student loan contractors, according to legislation that would fund the federal government through next year and avert a shutdown.

Money appropriated for the Pell grant program this year would fall $303 million, or 1.3 percent, to $22.5 billion, according to a proposal first introduced over the summer by retiring Sen. Tom Harkin (D-Iowa). Most of those funds would instead be used to pay private contractors that collect borrowers’ monthly student loan payments. Harkin has defended the move as necessary.

Tom Harkin Wants To Take Money From College Students To Pay Reviled Loan Contractors

An outgoing Senate Democrat wants to take federal money from low-income college students to pay student loan contractors, whose tactics toward borrowers have been criticized by consumer advocates, federal regulators and the U.S. Department of the Treasury.

Sen. Tom Harkin (D-Iowa), chairman of the Senate education committee and the appropriations subcommittee in charge of federal education expenditures, has proposed taking $303 million from the Pell grant program to increase revenues for some of the nation’s biggest student loan specialists, according to a July 24 version of a 2015 fiscal year spending bill now being negotiated by congressional leaders.

Obama Administration To Reward Student Loan Company Accused Of Cheating Troops

The Obama administration plans to reward Navient Corp, the student loan specialist formerly owned by Sallie Mae, with new business some three months after federal prosecutors accused the company of intentionally cheating troops on their federal student loans, according to three sources familiar with the administration's plans.

The move is likely to stoke comparisons to recent multi-billion-dollar settlements reached between big banks and federal authorities over financial crisis-era misdeeds. Banks agreed to pay sizable sums, but public interest groups have criticized the settlements because the banks suffered few business consequences and their executives escaped criminal and civil charges.

Half Of Federal Student Loan Borrowers Not Paying On Time

Less than half of borrowers with the most common type of federal student loan are repaying their debt on time, new data released by the U.S. Department of Education show.

About 51 percent of Americans with student loans made directly by the Education Department, known as Direct Loans, have either fallen behind or are not making expected payments, according to data on the $686 billion portfolio. Borrowers who aren't making expected payments for reasons that include temporary financial hardship or a return to school are included in the tally. Not included are borrowers not expected to pay back their loans because they've either never left school, or are less than six months out of school. The figures are based on dollar amounts, rather than the number of borrowers.

Sallie Mae Braces For Nearly $200 Million In Penalties As Education Department Ponders Next Move

Sallie Mae and its former loan servicing unit have struck a deal with federal authorities to resolve allegations that the nation's largest student loan company cheated active duty troops, as well as other borrowers who were being charged late fees.

The two companies more than doubled to $173 million the amount they have set aside to cover settlements resolving allegations brought by the Federal Deposit Insurance Corp. and the Department of Justice.

Newfoundland and Labrador to replace student loans with grants

Newfoundland and Labrador has become the first province set to entirely replace its student loans system with needs-based grants. The proposal was included as part of the governing Progressive Conservatives' earlier election platforms, and follows implementation of the removal of interest from student loans, which occurred in August 2009. Since then, Prince Edward Island and Nova Scotia have also eliminated loan interest. 

Student Loan Borrowers Struggle When Co-Signers Die Or Go Bankrupt

WASHINGTON, April 22 (Reuters) - The U.S. consumer financial watchdog warned on Tuesday that some student loan borrowers could be thrown into default if relatives who co-signed their loans die or declare bankruptcy.

The Consumer Financial Protection Bureau said in a new report published on its website that many private student lenders stipulate that the balance of a loan will come due if a parent, grandparent or other co-signer becomes unable to share responsibility for the loan.

Sallie Mae Cheated Soldiers On Federal Student Loans, Government Investigators Find

Federal investigators have uncovered evidence that Sallie Mae cheated active-duty soldiers on federal student loans, according to people familiar with the matter.

The findings, if eventually made public as part of a lawsuit or settlement agreement, may threaten Sallie Mae's lucrative contract with the U.S. Department of Education to collect payments on federal student loans. The department's contract requires loan servicers comply with all federal laws when handling federal student loans.

Student Loan Borrowers' Costs To Jump As Education Department Reaps Huge Profit

The U.S. Department of Education is forecast to generate $127 billion in profit over the next decade from lending to college students and their families, according to the Congressional Budget Office.

Beginning in the 2015-16 academic year, students and their families are forecast to pay more to borrow from the department than they did prior to last summer’s new student loan law, which set student loan interest rates based on the U.S. government's costs to borrow. The higher costs for borrowers would arrive at least a year sooner than previously predicted.

If you're poor, don't come to law school

"I'm sorry, Eric, but there is nothing we can do for you." Sharp pain and anger grew in my chest as I stared across the large wooden desk. I could feel the tears welling up in my eyes.

"Are you going to be OK? Let me know if I can do anything." The words of the Associate Dean were meaningless, a social performance dictated by institutional etiquette.

"You mean I have to drop out of law school in my third year?" Absurd. A comedy. I wanted to laugh and cry.

Student Loan Defaults Surge To Highest Level In Nearly 2 Decades

Recent college students are defaulting on federal loans at the highest rate in nearly two decades, reflecting "crisis" levels of student debt and a lackluster economy that leaves graduates with bleak employment prospects.

One in 10 recent borrowers defaulted on their federal student loans within the first two years, the highest default rate since 1995, according to annual figures made public Monday by the Department of Education.

CFPB Takes Aim At Sallie Mae For Student Loan Servicing

A federal consumer regulator has taken aim at the Department of Education’s preferred companies for servicing the agency’s $1 trillion in student loans, highlighting potentially poor customer service and raising the specter of increased government scrutiny.

The move, in the form of a Monday blog post by the Consumer Financial Protection Bureau’s top student loan official, relied on Education Department surveys, which grade the four preferred companies -- SLM Corp., or Sallie Mae; Nelnet; FedLoan Servicing, or the Pennsylvania Higher Education Assistance Agency; and Great Lakes Higher Education Corporation & Affiliates -- and determine how many new loans each will receive in the coming year to service as a new crop of students enter college and graduate.

Student Loan Forgiveness Program Available To Millions Who Aren't Utilizing It, CFPB Says

WASHINGTON -- More than 33 million workers qualify to have their student loans forgiven because they work in schools, hospitals or city halls, but too few take advantage of the options because the programs are overly complicated and often confusing, the government's consumer advocate said Wednesday.

Roughly a quarter of the U.S. workforce could take advantage of federal rules that give favorable loan repayment options to those in public service fields, including the military, according to the Consumer Financial Protection Bureau. The agency recommended Congress review the loan forgiveness programs and encouraged employers to make sure their workers know they are available.