Reboot Your LifeTampa Student Loan and Bankruptcy Attorney Blog

The Consumer Financial Protection Bureau just released a snapshot this week on the excess financial problems that student loan debt is causing our older population.  The CFPB reports that in 2015, nearly 40% of federal student loan borrowers age 60 and older were in default.  I’d venture to say that the number is even higher if we add in private student loans for which parents or grandparents co-signed for their children.  Three quarters of these loans were taken out for their children or grandchildren.  Older Americans are the fastest growing segment of student loan borrowers per the CFPB.

The CFPB reviewed the complaints it had received by these older borrowers and noted the following which I’d like to emphasize are potential violations of our national (FDCPA) and Florida (FCCPA) consumer collection laws:

• Delaying or prohibiting enrollment in income-driven payment plans:  Servicers are not advising some older borrowers that they may have their loan payment amounts reassessed under an income-driven plan when their income changes. Instead, some consumers on fixed or reduced incomes are being placed in plans designed for borrowers with growing incomes. Older borrowers in default report that their Social Security benefits are offset to repay a federal student loan—despite their right under federal law to cure their default and seek payment relief under an income-driven plan.

We are about to file a case in the Orlando Division this week based upon the recent discharge of private student loan debt for a non-accredited school that was not listed on the Federal Codes List.  We are relying upon a decision last Spring In re Decena, 549 B.R. 11 (Bankr. E.D. N.Y. 2016), where debts owed on private loans to attend a “for-profit” university not accredited by the United States fell within the exception to discharge of § 523(a)(8). See also In re: Meyer, Case No. 15-13193 (Bankr. N.D. Ohio 2016) and In re: Swenson, Case No. 16-00022 (Bankr. W.D. Wis. 2016).

Unfortunately, I just learned today that In re Decena was just reversed on other grounds on November 29, 2016 when it came to light that the service was improper.  We noted the zip code they used in their service was incorrect last week when we were putting the finishing touches on our Complaint.  Then today I read that the decision was overturned because the bank, Citizens Bank, was served by U.S. Mail rather than certified mail on an officer of the bank as required.

Fortunately, two other jurisdictions in Ohio and Wisconsin agreed with the analysis put forth in In re Decena and are good law.  It is not likely that the New York Judge in In re Decena will materially change his position after service is properly effectuated and the saga continues, but… you never know.

Recently I’ve been researching the student loan system and how things work in non-U.S. based medical schools.  Unbelievably there are three dozen island medical schools.  That’s a crazy high number, just how many islands are there in the Caribbean anyway?

Federal student loan aid is generally not available for these schools.  Although they are technically “accredited”, the accreditation itself is something unusual at best and regulated by the Islands themselves in large part.  And while the Department of Education recognizes ACCM (Accreditation Commission on Colleges of Medicine), many individual states do not.  So it’s a bit of buyer beware, there are success stories for those committing to the hard work to pass the various U.S. tests and are willing to limit their practice, internships, residencies and rotations to certain states, but there are also stories of high student loan debt with little to show for it.

So where does the bankruptcy relief come in?  Well for one, private student loans may be dischargeable in bankruptcy when the debt incurred is not for a qualified educational loan and/or an ineligible institution.  In a recent case, In re Decena, 549 B.R. 11 (Bankr. E.D. N.Y. 2016), debts owed on private loans, to attend a “for-profit” university, not accredited by the United States fell within the exception to discharge of § 523(a)(8).  We are looking to expand this ruling to Florida in a case we are planning on filing next month.