Articles Posted in Student loans

For those of you who are on the receiving end of credit dings due to federal agencies messing up your student loans, the recent Kirtz decision allows a consumer to sue a federal agency under 15 U.S.C. Sections 1681n and 1681o for defying the terms of the Fair Credit Reporting Act.  The history of this case can be found here:  https://www.scotusblog.com/case-files/cases/department-of-agriculture-rural-development-rural-housing-service-v-kirtz/

While the case itself dealt with some agricultural entity, it will apply to all federal agencies that seek immunity from wrongdoing under the FCRA.  Only those in the 3rd Circuit are legally bound, but opinions like this have a way of wandering to other circuits and directly affecting the laws there almost immediately.

We are now regularly seeing false information being reported on someone’s credit reports about the remaining balance, payment status and other student loan related information.  Please reach out to us to help evaluate whether you have a case under the FCRA.  Remember, negative information on your credit can wreck havoc on other things including:

Finally!  Relief for Joint Spousal Consolidation Federal Student Loans

Did you know that married couples were allowed to consolidate their debt under a program that existed from 1993 to 2006 which allowed a single monthly payment and often a lower interest rate.  But it meant that each spouse was 100% liable for the other spouse’s debt.  Moreover, borrowers who had these Joint Spousal Consolidation loans were often left out of most programs.  We’ve long known of the problems plaguing borrowers in this “One Way In, No Way Out” program.

Borrowers were unable to sever the loans despite divorce, an uncommunicative partner, domestic violence or financial abuse.  Borrowers also were not eligible for most of the best programs which required a Direct Loan because they were trapped in the FFEL Consolidation Loan.

Good news: the Administration announced last week that in February, it will begin early implementing the SAVE provisions that provide cancellation of borrowers’ remaining balance in as few as 10 years of qualifying payments depending on the total amount originally borrowed.

Borrowers enrolled in SAVE will have their remaining balance forgiven after 10 years of qualifying payments if they originally took out $12k or less in federal student loans, with one additional year of payments required for every additional $1,000 borrowed, up to a max of 20 years for those with only undergraduate loans, and 25 years for those with any federal student loans for grad school.

So if you are a little over $12k initially borrowed, no worries, they are allowing for one additional year of IDR (SAVE) for each $1,000 over.

Most people I speak with about the disability discharge of federal student loans are concerned that the test is similar to the Social Security Disability analysis.  It’s not.  You don’t have to deal with a scale of whether you can feed or dress yourself.  You don’t have to be approved for SSD.

It’s a vocational test.  Something we’ve dealt with often with our ADA or FMLA work for our former plaintiffs’ employment law practice.

The TPD standard doesn’t mean the borrower can’t work at all, it just means that due to their medical condition(s), they can’t reasonably work enough to be able to sustain themselves.