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CFPB files suit against Navient — hopefully the exposure of their shady practices will help our Florida clients!
Do you have Navient as your student loan servicer? Are you happy with them, do they do a good job? Most of our clients despise Navient, and much of what Navient does may actually be illegal. The CFPB filed a lawsuit against them yesterday alleging consumer law violations under the Fair Credit Reporting Act and the Fair Debt Collection Practices Act. We file similar cases against Navient for all kinds of violations: calling a cell phone without permission, providing incorrect information about repayment options, steering clients toward forbearance, providing erroneous information on collection letters, not providing information about discharge of federal loan program such as the new Defense to Repayment are some of the most common grounds we are seeing out there.
ABC Action News ran a story tonight about one of our client’s experiences with Navient. Click the story link or cut and paste the following in your browser to view: http://www.abcactionnews.com/news/region-tampa/lawsuit-filed-against-student-loan-servicer-navient-could-benefit-millions-of-borrowers. I am interviewed as well about how Navient steers people into forbearances only to leave them with more to pay later.
The short story is that this client has tried to pay her loans and has inquired repeatedly of Navient to send her information about the income based payment plan. Despite having spent hours on hold to confirm her address (triple checked), email and fax number, she’s still not received the info – since early last Summer. In the meantime, Navient is pushing forbearance. Forbearance sounds great, zero payments for a while, but the loan balance quickly goes up as interest is capitalized and the compounding effect of interest takes hold. Paying interest on interest is a quick way to bankruptcy. Although not in the case of student loans because it remains difficult to discharge student loans in bankruptcy. So indentured servitude is the more likely outcome.
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DeVry Settled Allegations it Oversold its Job Placement Rates – Claiming 90% – Impact on DTR Apps and Class Actions?
DeVry University just agreed last week to a $100 million settlement as reported by the FTC. We are seeing more of our Florida student loan clients start to question their education at DeVry and starting to understand why they haven’t been able to find employment that they were led to believe was likely upon graduation.
This settlement includes $50 million in debt relief—they’ve agreed to forgive all private unpaid student loans that DeVry issued to undergraduates between Sept. 2008 and Sept. 2015 ($30 million) and forgive an additional $20 million in past student debts for tuition, books and lab fees.
DeVry will pay $49 million to qualifying students who were harmed by DeVry’s deceptive ads. That raises the question: exactly who are these “qualifying students”? The FTC notice simply says that the $49 million will provide a partial refund to students who paid for DeVry classes. So if you are a former student of DeVry you may start receiving correspondence relating to these partial refunds.
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Happy Holidays from the Arkovich Ragtag Gang of Misfits!
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Hamp Loan Mod Expiration Dec 2016 and What It Means for Homeowners
One item not getting a lot of press but it probably should is the expiration of the Treasury Department’s Making Homes Affordable MHA HAMP program on December 30, 2016. More info can be found here. The good news is that the deadline won’t cancel any pending mod applications.
The general deadline for HAMP is that a borrower must submit an initial application by Dec. 30; and then the mod effective date must be by Sept. 1, 2017 (which means the trial plan would have to start no later than June 2017, if you work backwards – so it will be important to keep the pressure on servicers to get those applications completed and evaluated timely).
For Streamline HAMPs, the borrower is not required to submit an initial package, however, the modification effective date must be on or before December 1, 2017 (includes all of next year). Notwithstanding the foregoing, to be considered for a Streamline HAMP Offer after December 30, 2016, the borrower must have submitted at least one component of a Loss Mitigation Application on or before December 30, 2016 for which the servicer has not sent a Non-Approval Notice. The Modification Effective Date of the loan must be on or before December 1, 2017. Evidence of borrower submission must be provided by postmark or other independent indicator such as date and time stamp (electronic or otherwise).
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Telephone Consumer Protection Act (TCPA) – Auto-Dialer Uncertainty
Were you aware that when you tell a bill collector (including a student loan collector) to stop calling your cell phone, they must do so immediately? Well usually. It depends upon the type of telephone system the collector is using. If they are manually dialing the phone, then they can continue to call you. The reason is simple: there is a human being on the other side making a conscious decision to call you at a certain time and date seeking payment.
But what if it is a machine calling you? The Telephone Consumer Protection Act (TCPA) states that calls using an auto dialer or an ATDS must stop if you ask them to stop. The reason is clear here as well: a machine is capable of calling hundreds of thousands of people incessantly following a pre-determined script or campaign. It often seems that nothing can stop it. So a law was enacted to help protect people from a barrage of calls and save valuable minutes on their cell phone plans. I had a client just last week tell us that when she spoke with someone asking the calls to stop, she was told she was on an autodialer and the calls couldn’t be stopped. Really. Well that statement certainly made it into a Complaint we prepared for filing.
In the last couple years, the industry has attempted to change its equipment to get around the TCPA. They say that this equipment is TCPA compliant. The equipment uses some parts human and some parts machinery. So how much human intervention is enough to allow for the calls to continue? The industry has taken to using entire systems that as a whole appear to be an ATDS, but each component standing on its own may not independently be an ATDS. What capacity must the equipment have in order to fall under the TCPA’s protections? The answer I’m afraid is less than certain.
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The Witch is Dead!!! ACICS, the Accreditor for Both ITT and Corinthian Just had its Own Recognition Revoked!
This is great news!! Many of us have been complaining about the Accrediting Council for Independent Colleges and Schools (“ACICS”) for the past year. This is the accreditor for both Corinthian and ITT. Both Corinthian and ITT were accredited up until the very day they filed bankruptcy. What does that say about our for-profit accreditation process?
As CNN Money reported today, the fed pulled the plug on them finally. I only wish this had happened years earlier, the signs were certainly there.
“For far too long, this delinquent and derelict accreditor has rubber stamped the flow of federal dollars to colleges and universities that engaged in widespread fraud and abuse,” said Democrat Senator Richard Blumenthal in a statement.
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Transparency for Student Loans
Earlier this week I wrote about the transparency of costs of education and how private for-profit institutions are likely going to have to change their marketing to comply with stricter oversight by the CFPB and the accreditation agency for these for-profit private schools, ACICS.
Well today I received an emailed thank you for the “transparency and communication” when I took the time to explain the various options for a client regarding the differences of rehabilitation and consolidation and which payment plans apply and why. She made the decision that her credit was more important under one option than a slightly lower payment and reduced payment duration under another. But she had her reasons and fully understood the options once I explained them. Many people wouldn’t have had the opportunity to have this discourse, they wouldn’t even know there was a choice because the present student loan system is so anti-transparent.
While the government websites are good in telling you what payment plans are available presently, they are not good in explaining the differences between them so you can make an informed and wise decision that will impact 10-25 years of your life, nor the different ways to cure a default (with the advantages or disadvantages of each) or even mention that you can change your loan type for different results.
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Cost of Education — Interesting Transparency Development in Response to Recent CFPB and DOE’s investigations?
We’ve been getting very interested lately in how schools, particularly for-profit schools, are representing the cost of education at their institutions. At ITT for instance, we’re learning that students were for the most part simply left in the dark about what their education would cost. By the time they learned the true cost, it was too late and they were already committed. They were also told that any shortfall in tuition that was not covered by federal financial aid would be covered by “temporary credits”. Some of our clients are reporting to us that they didn’t know these were actually loans. Others were aware they were loans but were told they were 0% loans. Then nine months later, ITT demanded payment in full of the amount representing the “temporary credits”. When most student couldn’t pay all at once (95% or more most likely) they were provided with a private loan at 13-16% with a 10% origination fee. That’s 23-26% interest folks!! None of this was fully explained up front. This will be the basis for one of our claims in our Defense to Repayment cases.
Also this week the CFPB enforced an order whereby institutional student loans held by a western school were discharged and refunds ordered when a college misrepresented the low payment plans. Apparently they promised $25 payment plans or something to that effect. I haven’t had time to find and review the allegations behind the Order.
Today in the ABA Journal, I read that the University of Tulsa College of Law is reducing its tuition by 35%. They state that the reduction is to be “really transparent about the cost of legal education.” Interesting. Transparency. Were they less than transparent last year? Now I haven’t been following the University of Tulsa since my law practice is in Florida, either they are ahead of the curve and we can expect more of the same from other schools who want to avoid scrutiny or perhaps they are already under scrutiny.
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CFPB Orders the Discharge and Refund of Institutional Student Loans for Misrepresentations of the Costs of the Loans – WOW!
I don’t think we have any Florida clients from these schools, but I hope this is a sign of what we can expect going forward for other for-profit schools (read ITT and IADT among others here) that misrepresent the costs of education. Funny, I am evaluating this issue right now against ITT in order to raise this as one of MANY allegations of state law violations in a Defense for Repayment for federal loans under the new regs out on November 1, 2016. ITT allegedly had this little trick where they would issue Temporary Credits to cover tuition gaps at zero percent interest, but fail to tell its students that they had to be repaid in nine months with very expensive private student loans at 13-16% interest plus a 10% origination fee. This data comes from a CFPB complaint that is pending before a federal court now. Then when students couldn’t come with the money, they would be threatened with expulsion unless they agreed to these high interest, high cost private loans.
Anyway, here the results posted by the CFPB today! In this case, the CFBP found that Bridgepoint convinced students to take out private loans by falsely assuring them that the loans could be paid back with a lower repayment amount than was possible.
Today the CFPB ordered Bridgepoint Education Inc. (owner of Ashford University and University of the Rockies) to discharge all its outstanding institutional loans to students and refund loan payments already made, based on findings that the school misrepresented the cost of the loans to students. Total student relief will be about $23.5 million, and there are also injunctive-type terms and an $8 million penalty. Below is NCLC’s press release.