The contracts are valued at up to $400 millionA company that once had financial ties to Education Secretary Betsy DeVos was one of two firms selected Thursday by the Education Department to help the agency collect overdue student loans. The deal could be worth hundreds of millions of dollars. The decision to award contracts to Windham Professionals and Performant Financial Corp. — a company DeVos invested in before becoming secretary — arrives a month after a federal judge ordered the department to complete its selection of a loan collector to put an end to a messy court battle. Windham and Performant beat out nearly 40 other bidders for contracts valued at up to $400 million, but their win may be short-lived if the losing companies fight the decision. “The selection of only two opens the door to protests from the unsuccessful bidders,” Michael Tarkan, senior research analyst at Compass Point, wrote in a research note on Performant. “Based on prior contract awards, we would not be surprised to see protests, lawsuits and appeals which could all delay the start date for the new contract.”Historically, the department has used as many as 17 companies to recoup past-due student loans. Earlier attempts to whittle down the number of firms have been met with resistance. Companies that lost out on a 2016 debt-collection contract have been embroiled in a lawsuit that has prevented the federal government from assigning new accounts.... Read the entire piece at The Washington Post...

Twenty states suspend people's professional or driver's licenses if they fall behind on loan payments Fall behind on your student loan payments, lose your job. Few people realize that the loans they take out to pay for their education could eventually derail their careers. But in 19 states, government agencies can seize state-issued professional licenses from residents who default on their educational debts. Another state, South Dakota, suspends driver’s licenses, making it nearly impossible for people to get to work. As debt levels rise, creditors are taking increasingly tough actions to chase people who fall behind on student loans. Going after professional licenses stands out as especially punitive. Firefighters, nurses, teachers, lawyers, massage therapists, barbers, psychologists and real estate brokers have all had their credentials suspended or revoked. Determining the number of people who have lost their licenses is impossible because many state agencies and licensing boards don’t track the information. Public records requests by The New York Times identified at least 8,700 cases in which licenses were taken away or put at risk of suspension in recent years, although that tally almost certainly understates the true number. With student debt levels soaring — the loans are now the largest source of household debt outside of mortgages — so are defaults. Lenders have always pursued delinquent borrowers: by filing lawsuits, garnishing their wages, putting liens on their property and seizing tax refunds. Blocking licenses is a more aggressive weapon, and states are using it on behalf of themselves and the federal government... Read the entire piece at The New York Times...

The potential consequence for professional license holders already facing financial hardship is outrageous.ATLANTA - Registered nurse Debra Curry was shocked when she received a letter November 2014 from the Department of Justice notifying her she was violating Georgia law by not paying for a federal education loan, and the board of nursing would suspend her license if she did not pay.  “I have numerous loans, they’re hard to keep up with,” Curry said.  Curry pays more than $1,700 a month toward multiple loans, but the DOJ letter was the first time she learned one of her loans was in default.  “That’s alarming. It got my attention,” Curry said. Curry was confronted with what many describe as a little-known law that’s on the books in more than a dozen states. When student borrowers don’t pay back federal loans they risk a lower credit score, garnished wages, and in Georgia, losing their job. Now, a bill in the General Assembly could change the rules when it comes to professional boards suspending state licenses for nonpayment of student loans. Currently professional licenses through the Secretary of State and the Medical Composite Boards must be suspended if the licensees’ federal student loans are in nonpayment or default. Republican State Rep. Jason Spencer of Woodbine filled HB 653 in January. The bill would tweak the language of the current law, allowing individual boards to decide if suspension is appropriate. “The way this law is written it essentially makes the state of Georgia a collection agency for the federal government,” Spencer said. Sallie Mae sued Curry over the loan in 2008. Court records reveal Curry never filed defensive pleadings in the case, and a Henry County Superior Court judge ordered her to pay the principle on the education loan, 7 percent interest, and more than $3,000 in attorney’s fees.  “I know I owe the money. I’m paying the money back, but it’s like it never gets lower,” she said. Curry took out student loans in the '90s, going to school to be a registered nurse, then a forensic pathologist. Curry said work took a back seat to her growing family, and money was tight.  Law intended to prevent default  State Representative Carolyn Hugley (D) of Columbus said “getting borrowers' attention” was the reason she sponsored the original law to suspend state licenses in 2001. “If we allow students to default and not encourage them to be responsible borrowers we’re adversely affecting others,” Hugley said. She said lawmakers were concerned default rates would keep future students from getting loans. While there's no way to know how effective the threat of suspension is, the law does not appear to be used often. An open record request from the Secretary of State showed nine professional licenses have been threatened with suspension since 2012, and two of those are currently suspended for nonpayment. The Georgia Medical Composite Board also suspends licenses, but the interim executive director told Channel 2 Action News by email they don't track suspensions, and only recalled a few licensees ever being threatened with suspension.  Student borrower rights group Student Debt Crisis’ founder and Director Natalia Abrams said though the law is unpopular, the potential consequence for professional license holders already facing financial hardship is outrageous.  “There are plenty of disincentives already, we don’t need to further create a negative atmosphere between the borrower and their servicer,” Abrams said. “Over 22 states passed these laws; however, we have now seen many states rescind the laws and they’re no longer in use.”  Abrams said if these laws were supposed to discourage student loan default, it didn’t work. According to the U.S. Department of Education, more than one million student loans went into default in 2016. The federal reserve reported student loan debt is nearly one and a half trillion dollars. State Board Reaction Cosmetology and Barber Board Chair Kay Kendrick said she likes the idea of each board deciding suspensions on a case-by-case basis. She said the more than 40 professional boards across the state are “boots on the ground” when it comes to the needs of the industries they govern. “I realize there’s got to be some accountability for loans and defaulting on loans, but I also realize when you suspend a licensee from working you stop them from working,” Kendrick said. Kendrick said if nonpayment of loans is the result of a licensee’s financial hardship, current state law is putting them at an even greater disadvantage. “You generally are pushing them into working illegally without a license,” she said. Spencer is also getting some bipartisan support for his bill. Hugley is a co-sponsor of HB 653. Hugley said she doesn’t have a problem letting the individual boards choose whether to suspend. She said getting students educated before they take out loans should be the priority. “More than anything I’m concerned our students are not getting proper financial advice before they’re taking on loans,” Hugley said.  The Department of Justice declined Channel 2 Action News’ request for comment on license revocation laws like Georgia’s. In the case of Curry, the threat of losing her nursing license worked. She set up a payment plan with the DOJ after receiving their letter. Another $50 a month goes towards her previously delinquent payment. But the letter and the threat of suspension are now a public record, and she said it’s a permanent mark on her work history. “Nobody wants to have attached to their license this negative thing,” Curry said. “I feel like they’re criminalizing me. Read the entire piece at WSB-TV...

This piece was originally published at CNN.com What if the government wiped away everyone's student debt? Researchers at the Levy Economics Institute of Bard College say it's a proposal worth considering. It's a "radical solution to the student debt crisis, but one that deserves serious attention, given the radical scope of the problem," wrote Marshall Steinbaum, one of the authors of the report, in a blog post. There is currently $1.4 trillion of outstanding student loan debt in the US, held by about 44 million people.The researchers looked at what would happen if the government canceled all federal loans (the majority of student debt) and paid off all privately owned loans -— as a one-time policy. Read the entire piece at CNN Money

Future Forum Unveils Manifesto to Make Higher Education More Affordable and Accessible.WASHINGTON, DC – Rep. Eric Swalwell (CA-15), the founder and chairman of Future Forum, and other members of that group on Wednesday unveiled a policy paper entitled “Future For Us: Higher Ed” – a plan for making higher education more accessible and affordable. Future Forum, founded in April 2015, is a group of 27 young House Democrats focused upon listening to and acting upon the needs of millennials – America’s largest, most-diverse, and best-educated generation. Swalwell and other Future Forum members have visited with millennials in almost 50 U.S. cities to hear their concerns. “Future For Us: Higher Ed” crystalizes what they learned on a subject of top importance to millennials: the high cost of a college education and the crushing burden of student loan debt. “The future of our economy and our society rely on a well-educated population unburdened by decades of debt,” Swalwell said. “Congress must act to help Americans make these dreams real and not roll them back. It’s a strategy for our nation’s long-term stability and security, and it should start now.”Priorities outlined in “Future for Us: Higher Ed” are targeted to put more money in more pockets while building a better, fairer higher education system that works for all Americans, not just the economically fortunate. Policy recommendations include strengthening on-campus child care for young parents; community college for all; more efficient encouragement of public service in exchange for loan forgiveness; a smarter Pell Grant program; interest-free federal loans, and more. It also includes preserving and expanding the student loan interest tax deduction, which is claimed by about 12 million taxpayers every year. The Republican tax plan now under consideration would abolish this tax deduction; Swalwell’s H.R. 3048, introduced in June, would double it. Click here to read the full text of “Future For Us: Higher Ed.” https://swalwell.house.gov/sites/swalwell.house.gov/files/Future%20For%20Us%20Higher%20Ed%20Policy%20Paper%20FINAL.pdf ###

Continue Reading at The Washington Post...

Student loan servicers have mishandled the process for many borrowers Nurses, teachers and other public-sector workers expecting their outstanding student loans to soon disappear under a U.S. debt-forgiveness program could be in for a surprise, with a government report on Thursday showing loan servicers may have mishandled the process for many borrowers. President Donald Trump has called for eliminating the Public Service Loan Forgiveness program, where the loans of borrowers working for government, non-profits or the military are wiped out after 10 years of consistent payments. The program started in 2007, making this the first year of forgiveness for many loans. The report from the Consumer Financial Protection Bureau (CFPB) found cases where servicers did not provide information or gave wrong or confusing information, leading borrowers to believe they would receive forgiveness when in truth they were not eligible. Some borrowers were not told their loans were not part of the program, their repayment plans were wrong, or their employers were not considered a public service, according to the CFPB. Also, some servicers under-recorded qualifying payments or did not tell borrowers that loan consolidations wipe out payment histories, pushing forgiveness farther into the future... Continue Reading at Reuters...

The lawsuits accuse DeVos of illegally delaying the regulations aimed at predatory colleges Eighteen states and the District of Columbia filed suit against Education Secretary Betsy DeVos on Thursday over her delay of regulations meant to protect federal student loan borrowers defrauded by their schools. The lawsuit filed in Federal District Court in D.C., led by Massachusetts and joined by 18 other Democratic attorneys general, accuses DeVos of illegally delaying the regulations aimed at predatory colleges, which were finalized by the Obama administration and had been set to take effect on July 1. Read the Entire Article at Politico...

'They actually paid someone to come out and serve me papers on a Saturday afternoon' On Adriene McNally's 49th birthday in January, she heard a knock on the door of her modest row-home in Northeast Philadelphia. She was being served. "They actually paid someone to come out and serve me papers on a Saturday afternoon," she says. The papers were from a government lawsuit that represents something more than just an unwelcome birthday gift — it's an example of a program the federal government has brought to 19 cities around the country including Brooklyn, Detroit, Miami and Philadelphia: suing to recover unpaid student loans, like the ones McNally owes. Every day, 3,000 people default on their federal student loans — and those lack of payments amount to an unpaid bill of $137 billion for the federal government. For decades, the government has tried to get borrowers to pay up by hiring debt collection agencies to call and send letters. But now the government is trying this new lawsuit strategy. Continue Reading at NPR...

0 out of 15,000 applications for student loan forgiveness in cases of fraud have been processed since Trump and DeVos took power. Since Trump took office, student loan forgiveness in cases of possible fraud has come to a screeching halt, according to Department of Education records released to Sen. Dick Durbin on Wednesday. The records show that nearly 15,000 people applied for loan forgiveness from January 20 to July 5, claiming their colleges and universities defrauded them. None of those applications have been approved. This inaction isn’t the only time Trump's Department of Education has halted student loan forgiveness. In June, the department also announced its decision to delay and rewrite the borrower defense to repayment rule, an Obama-era rule that would have made it easier for students to have their loans forgiven if they were deceived by their schools. That rule was set to go into effect July 1, but it was indefinitely postponed. Sen. Durbin condemned the Department of Education for both actions (or rather, inactions). “This response shows that while the Department of Education has illegally delayed the new borrower defense rule, it has also stopped processing federal student loan relief under current regulations for tens of thousands of defrauded borrowers,” he said in a statement in the Chicago Tribune. “The department can’t ignore these borrowers any longer.”... Continue Reading at Refinery 29...

'Even gambling addicts have more protections' than student-loan borrowers Borrowers who default on their student loans are pursued aggressively by the Department of Education and private debt collectors, facing garnished wages, withheld IRS tax returns, and decreased Social Security payments, Reuters reported."We treat struggling student-loan borrowers the same as deadbeat parents and tax cheats," Seth Frotman, a senior member of the Consumer Financial Protection Bureau (CFPB), told Reuters. "Even gambling addicts have more protections." Read the Entire Article at Business Insider...