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Christie_1President Trump signed an executive order titled Restoring Public Service Loan Forgiveness a couple days ago.  While this should have to go through the normal channel of rulemaking which will take approximately one year, it appears that PSLF will be excluded for non-profits which engage in a “substantial illegal purpose” including:

(a)  aiding or abetting violations of 8 U.S.C. 1325 or other Federal immigration laws;

(b)  supporting terrorism, including by facilitating funding to, or the operations of, cartels designated as Foreign Terrorist Organizations consistent with 8 U.S.C. 1189, or by engaging in violence for the purpose of obstructing or influencing Federal Government policy;

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Christie_1As I blogged about a couple weeks ago, you can check the amount of IDR time you have been credited for on studentaid.gov now.  If for any reason it is not there, a private company has released the VIN Foundation Download My IDR Progress browser extension for Chrome.  It allows a borrower to grab a copy of their IDR payment history showing the qualifying vs. ineligible payments.

Yesterday the new Secretary of Education, Linda McMahon, was confirmed so perhaps we will learn of some concrete plans for the Department of Education shortly.

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arkovich_law-narrowI read today in the Pomp Letter that the average credit card balance is $21,000.  And the average interest rate is 28.6%.  Just wow.  In 30 months, the debt would double.  In our bankruptcy practice here in Tampa, Florida, we are regularly seeing people with 100k of credit card debt.

Many people are making only minimum payments of their bills – 10.75% according to a new report from the Philadelphia Federal Reserve (reviewing data for the third quarter of 2024.

I don’t know how you get out of that – unless you file bankruptcy.  Or have some kind of windfall such as a much better paying new job, inheritance or something.  Even with a much better paying new job, you would have to dedicate funds quickly to pay down that debt.  Back during the foreclosure crisis we ran into a lot of people who thought that they could easily catch up once they started working again.  Didn’t happen.  Even a $20k increase in pay is not that much paycheck to paycheck.  With interest so high, the balances got even larger or remained the same.

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Christie_1So the big news in the world of student loans is that the online system has once again been shut down for consolidations and IDR applications – as of Friday, Feb 21.  This is likely due to the 8th Circuit expanding its stay to stop all forgiveness under PAYE and ICR.  For now, someone’s best bet for forgiveness is to get onto IBR – Income Based Repayment.  IBR was Congressionally passed in 2009 and does not appear to be going anywhere.  It’s a 25 year program that allows for full forgiveness of any remaining balance once 25 years of IBR credits is obtained.

The 8th Circuit also halted the IDR Recount. While we don’t believe that any loans previously forgiven will be reinstated, we really don’t know what will happen to those pending loans benefitting from the IDR Recount – but still have months or years to go.  The best we can say is to keep copies and screenshots of anything to do with the IDR Recount.  You may need this one day.

So why is the consolidation button greyed out?  Both FFEL loans and Direct Loans are eligible for IBR.  So a consolidation isn’t necessary for IBR.  If the government is discouraging Double Consolidation for Parent Plus loans, PAYE, ICR and the IDR Recount, there really isn’t a reason to consolidate older federal student loans under the FFEL system to the newer Direct loans.  Also the government has to pay the private originators of a FFEL loan upon its consolidation to a Direct loan.  It doesn’t want to do that.

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Christie_1A post on Theresa Sweet’s [Plaintiff in Sweet v. Cardona’s class action BDTR lawsuit] Facebook page says the majority of workers reviewing BDTR claims have been laid off and majority of Ombudsman staff have been fired.

For several months now, we have been of the opinion that while filing a Borrower Defense to Repayment application is free and available, we do not expect to see any discharges any time soon for new applications that are filed after the Cardona class action settlement.  You may expect to see a forbearance due to the filing, but use it more as a place marker to give you time to explore and take advantage of other ways to deal with your student loans.

Please see our last blog re: documents/downloads you should do now to keep track of your records.

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Much like the NASA moon landing, I have two very different powerpoints ready for a student loan presentation today at 2:00 p.m. for the National Association of Consumer Advocates (NACA)  And I might be checking X on my phone every few minutes to see if there is any new Executive Orders out about dismantling the Department of Education!

Really though, there are some things working and working really well re: student debt.  But it’s gonna look different.  A lot different.  If you’re an attorney, tune in!  I bet NACA records these things also.

Webinar_sizedb_107508

 

Bankrupty May Be the Best Choice for Student Loan Relief Post-Election

February 5, 2:00 p.m. ET–3:30 p.m. ET
Pricing
Members: Free

Nonmembers: $90

If you have not yet been approved to attend NACA webinars, please email training@consumeradvocates.org to be vetted to attend. Join NACA today to get this webinar and so many more benefits at no additional cost!
Have you been wondering how the new ED guidelines for discharging federal student loan debt in bankruptcy may help in your practice?  This webinar will explore potential relief for student loan debt in the next administration.

Please note that there will be a 30-minute online conversation following the webinar for those who want to stay on and chat about students loans and bankruptcy.
What You Will Learn
  • What is the new Attestation Process in bankruptcy?’
  • What do you need to do in advance of filing?
  • What can you expect after the election?
Speaker
Christie Arkovich has been an AV rated Florida licensed attorney for more than 25 years since graduation from Stetson College of Law in 1992 with honors. In addition to Law Review, Ms. Arkovich gained practical experience by an internship with the Hillsborough County State Attorney’s Office and a clerkship with the Florida Bar. Thereafter, she worked in commercial litigation for three years for private law firms until starting her own consumer practice in 1995. Whenever possible, Ms. Arkovich takes the opportunity to share her knowledge about student loans gained from prior work as trial counsel for Sallie Mae, ECMC and other student loan servicers or guarantors, and from her practice now on the consumer side of things. She recently served on the Student Loan Committee for the new Student Loan Management Program in the Bankruptcy Court for the Middle District of Florida.

 

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Christie_1Well, we are now midway into the second week of President Trump’s administration.  What can we expect and how can you deal with your federal student loan payments?

Importantly, there were no first day Executive Orders, and none so far other than the appointment of a new Secretary of Education.  I view that as good news.  That tells us that the new administration is not focused on student loans – at least not to the extent that it could have been.  We’ve seen orders withdrawing our country from WHO, and the Paris climate whatever, but nothing about PSLF, the IDR plans, or even the elimination of the Department of Education.

However, it’s coming.  There will be a week where student loans will be all the talk.  Do you wait until then to make decisions?  I don’t think that’s a good idea now.

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If you have debt issues and are in the Tampa Bay area, the Tampa Division of the Middle District of Florida is headquartered in downtown Tampa, Florida. It serves Hardee, Hernando, Hillsborough, Manatee, Pasco, Pinellas, Polk and Sarasota counties.

If you are in any of these counties, and are running into debt related problems, we may have a solution for you.  This includes pretty much every kind of debt, even including student loans.  There are solutions out there, and we try to avoid political minefields whenever possible – and look for real solutions available now!

We do charge for student loan related Strategy Conferences as we can often fix the problem right during the conference, and we have free consultations for other kinds of debt.  See what options exist.  Real options.  Consults are available by phone or Zoom.  While we have a physical office in Tampa, we find that most everyone finds it far more convenient and efficient to do these virtually.

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arkovich_law-narrowSo what exactly does a Chapter 13 do with regard to debt that is co-signed by someone who did not file bankruptcy?  What about debt that survives a bankruptcy such as many (but not all) student loans?

First off, a co-debtor stay is imposed immediately when a Chapter 13 is filed.  That means any collection action, including phone calls, are supposed to cease immediately for the co-borrower even though he or she did not file their own bankruptcy.

Second, a Chapter 13 bankruptcy plan payments appear to toll the statute of limitations whether or not the trustee makes the payments once a creditor files its proof of claim that survives any debtor objections.

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Christie_1A few things I was thinking of today.  First, we received notice from Nelnet of a client approval for Total and Permanent Disability.  This particular client was pretty healthy, but was of advanced age of 76.  I’m pretty sure no employer would be interested at age 76.  He’s been retired for 13 years from a defense contractor and the military prior to that.  Since he flew jets for the military, that was an easy sell for the TPD program.  The fact that the program he used to work on for the defense contractor has long since gone away, plus he no longer has a security clearance and the vast majority of his skills are likely outdated, we leaned on the SSI’s verbage for advanced age.

Under the Social Security Administration’s website at ssa.gov, the Code of Federal Regulations Section 404.1563 states under (e) that they consider that for a person of advanced age (age 55 or older), age will significantly impact a person’s ability to adjust to other work.

I’d rather not compare our client to an old dog, but you know that saying that an old dog can’t learn new tricks.  Well, it kind of applies here.  We sent some of these regs and arguments to our doctor and obtained the physician certification shortly thereafter.  Today, we received the official notice that our client’s six figure loan balance was forgiven.

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