Loan debt – Gaoodgle Tue, 10 Aug 2021 21:12:26 +0000 en-US hourly 1 Loan debt – Gaoodgle 32 32 Student loan companies spend millions on lobbying for extended moratorium on loans • OpenSecrets Tue, 10 Aug 2021 21:05:24 +0000
(Photo by Drew Angerer / Getty Images)

Student loan companies have spent more than $ 6 million on lobbying in the past year and a half as lawmakers continue to try to ease the student debt crisis.

President Joe Biden announced on Friday that the government would extend a hiatus on the moratorium on student loans until January 31. Although the Biden and Trump administrations have changed the end date of the moratorium several times, the president has said it will be the final extension.

The Trump administration issued the moratorium, which suspended federal student loan payments and suspended debt collection efforts, at the start of the pandemic. The policy affects more than 36 million Americans, with collective debt of about $ 1.3 trillion, the Associated Press reported.

But several of the top companies that handle federal loans spent more than $ 4 million in 2020 and have already spent more than $ 2.4 million this year on lobbying. These companies profit from getting federal contracts and earn a commission on every loan they service.

Navient Corp, one of the nation’s largest student loan companies, spent more than $ 1.7 million on lobbying efforts in 2020 and has already spent more than $ 970,000 in 2021. The Delaware-based company has also spent more than any other student loan group since 2015..

The student loan company lobbied against the Equity in Student Loan Relief Act, legislation that initially suspended loans and debt collection, in 2020. It also reported lobbying conversations on issues related to the COVID-19 loan relief this year.

Navient has come under scrutiny in recent years for misconduct regarding student loan payments. In March, the company lost a multi-year lawsuit with the Consumer Financial Protection Bureau, which claimed Navient had cost students hundreds of thousands of dollars by directing them to more expensive payment plans that benefited the company.

In the same year as the CFPB lawsuit, Pennsylvania Attorney General Josh Shapiro sued Navient for “engaging in unfair and deceptive loans and failing to come up with proper repayment plans for students.” Navient filed a motion to dismiss the case, but the United States Court of Appeals for the Third Circuit dismissed it last July.

Sallie Mae Corp, a financial institution that offers private student loans, has also spent a lot of money lobbying over the past year and a half. The company, which launched Navient as a separate entity in 2014, spent nearly $ 1.4 million on lobbying last year and has already spent $ 960,000 in 2021.

The company reported lobbying conversations about the Coronavirus Aid, Relief and Security Act, which suspended payments on federal student loans, as well as issues with federal student loan programs as well as private student loans. Sallie Mae has also been involved in lawsuits accusing the company of misconduct in handling loans.

NelNet Inc, another firm that manages federal student loans, has also lobbied against the extension of the student loan moratorium, reporting conversations about the “scope and implementation” of the CARES Act related to debt relief. student loans in 2020 and 2021. The company spent $ 230,000 in 2020 and has spent $ 110,000 so far this year.

Navient, Sallie Mae and NelNet also spent thousands of dollars in campaign contributions. The companies were among the industry’s top five contributors last year, spending a combined total of nearly $ 400,000 on campaign contributions to Democrats and Republicans.

But several Democrats, including Senate Majority Leader Chuck Schumer (DN.Y.), Senator Elizabeth Warren (D-Mass.) And Rep. Ayanna Pressley (D-Mass.), Are using the moratorium to pressure Biden for more changes to student loans. The three politicians issued a statement Friday calling on Biden to use the end of the moratorium as a deadline to write off much of the student debt in the United States, which reached $ 1.6 trillion in 2020.

“While this temporary relief is welcome, it doesn’t go far enough. Our broken student loan system continues to exacerbate racial wealth gaps and dampen our entire economy, ”the three politicians said in the statement. “Canceling student debt is one of the most important actions President Biden can take right now to build a fairer economy and fight racial inequality.”

Although Biden has expressed support for the student loan cancellation, he has made it clear that he has no intention of forgiving it entirely. In February, House and Senate Democrats pushed Biden to write off up to $ 50,000 in student debt by executive order, but the president said he would only excuse $ 10,000 and preferred Congress draft the legislation.

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‘The Debt Trap’ on US $ 1.6 Trillion Student Debt Crisis Mon, 09 Aug 2021 13:36:36 +0000
  • In “The Debt Trap: How Student Loans Became a National Catastrophe,” journalist Josh Mitchell explains very well how student debt became the US $ 1.6 trillion problem.
  • But while Mitchell does a good job of shedding light on the causes of the student loan crisis, his policy solutions are not enough.
  • Jonathan A. Knee is Professor of Professional Practice at Columbia Business School and Senior Advisor at Evercore.
  • This is an opinion column. The thoughts expressed are those of the author.

If your gut feeling is that there must be a good story behind how Americans collectively racked up $ 1.6 trillion in college debt – much of it will never be paid off and with taxpayers holding the sack – the reporter from the Wall Street Journal Josh Mitchell “The Debt Trap: How Student Loans Became a National Disaster” will strongly confirm your suspicions.

It’s not just the sheer volume of bonds that takes your breath away – more than an outstanding credit card or auto debt – but the extent of who is involved in the debt. Over 20% of adults still owe something, and that’s not just limited to current and former students. Over the years, various programs have grown to allow parents, other family members, and even friends of aspiring college students to get stuck with the bill.

The road from the first modest loan program adopted in the 1950s to the uncontrollable beast of today is paved with a combination of good intentions and sinister motives. Mitchell is an entertaining guide along this route, introducing us to the colorful personalities who have proven to be influential in the expansion of student debt and the real borrowers who have been crushed by the very programs that were meant to lift them up.

Although “The Debt Trap” tends to overestimate to a dramatic effect – claiming for example that with a 27% market share, Sallie Mae “controlled the student loan industry like few companies dominated an industry” – Mitchell typically delivers the goods by getting some of the most blatant baddies in the business to officially talk to him.

A failure of solutions

While journalism is stellar, where “The Debt Trap” ultimately collapses is in its political analysis. The three pages the book devotes to half a dozen policy proposals aimed at “fixing” the systemic problems behind the student debt bubble in some cases seem designed to repeat the same mistakes of the current system, and in others, ignore Mitchell’s excellent report on what worked and what didn’t.

Take Mitchell’s proposal to go ahead and make the community college completely free. The major problem with the loan program that the book identifies is that by simply guaranteeing repayment, the government tricked schools and lenders into pushing students into programs they weren’t suitable for and out of business. expanding programs without considering outcomes for students – while constantly raising tuition prices. Mitchell notes that most community college students are currently dropping out and suggests a number of reasons for this other than the most obvious – many colleges are doing a terrible job, both in providing essential support to students and in ensuring that this is so. that their programs are of adequate quality and closely linked to employment opportunities.

Indeed, the unchecked growth of for-profit schools that Mitchell rightly criticizes elsewhere has been aided in part by these obvious and well-known failures of community colleges to prioritize the interests of students over faculty and administrators. Making these schools free for students will obviously reduce their debt load, but transfer that obligation to the government’s ledger. More importantly, making community colleges the beneficiaries of a vast new eligibility program without addressing their current shortcomings will create a whole new set of perverse incentives that could make matters worse.

In contrast, Mitchell proposes to eliminate entirely all grants, through loans or otherwise, for graduate studies. It repeatedly brings together all master’s, doctorate, medicine and law and MBA degrees, which makes little sense from a political point of view.

More importantly, one of the few real success stories highlighted in reports where the loan program clearly made a positive difference is the case of the for-profit Florida Coastal School of Law. The loan program was essential for the innovative school to break the traditional law school cartel and effectively serve a predominantly black and Hispanic cohort of students with below average LSAT scores – in 2004, with 900 students, 80% of its graduates have passed the bar. exam, more than any other Florida law school except one. The story took a dark turn once the business was bought by a private equity firm and ‘evolved’ faster than necessary, but its initial success demonstrated the potential of entrepreneurial approaches in targeted areas with the government support as long as there is oversight.

A careful eye is necessary

The broader conclusion of the decades of attempts to “fix” public funding for higher education so clearly detailed in “The Debt Trap” is that none will succeed without addressing a particularly American conceit about regulation.

Businesses and individuals are happy to receive government largesse or protection, but are outraged if it comes with conditions. For my money, there are few phenomena less attractive than the exploitation of regulatory arbitrage for corporate or personal financial gain by those who complain about the oppressive yoke of regulatory oversight. But time and time again in the history of the loan program, such lamentations, disguised as lofty political arguments, have allowed banks and schools to profit from government loans with little control over how that money is spent and for who.

So Sallie Mae, an independent private company originally created as an accounting trick to ensure that student loans were not counted against the government deficit, was allowed to aggressively market the government guarantee that all debt students would be reimbursed. For a while, wealthy families were able to take soft loans that they didn’t need just to reinvest the money and profit from the spread at taxpayer expense. If the government tells schools and banks that they will guarantee any benefit regardless of performance and tells students they can use it anywhere, regardless of the suitability of their skills or job opportunities , the results seem predictable.

Lyndon Johnson, as a senator, was a driving force behind the original student loan program. He had only been able to attend Southwest Texas State Teachers College because a local bank had concluded that he had demonstrated the “honesty, character, industry and ability” necessary to obtain a loan – that he was in fact able to repay. This is an extremely high threshold to reach and Johnson saw an important additional role for the federal government to play in meeting society’s needs for specific skills and the ability of individual citizens to realize their full potential.

But if the next wave of “reforms” fails to put in place real standards and control over the schools, students and any other institutions that participate in the program, we shouldn’t be surprised if we are once again educated. on the seriousness of the unintended consequences of well-intentioned legislation.

Jonathan A. Knee is Professor of Professional Practice at Columbia Business School and Senior Advisor at Evercore. His next book, “The Platform Delusion: Who Wins and Who Loses in the Age of Tech Titans”, will be released in September on Portfolio.

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Biden administration extends pandemic student loan debt relief until January 31, 2022 Fri, 06 Aug 2021 21:45:00 +0000

The administration says this is the “final extension”.

The Biden administration has announced that it is extending the pandemic relief for student loan repayments, interest and collections until Jan.31, 2022, calling it a “final” extension.

The hiatus has been in effect since former President Donald Trump signed the CARES Act in March 2020 and was extended by him and President Joe Biden. It was recently due to expire on September 30.

“As our country’s economy continues to recover from a deep hole, this latest extension will give students and borrowers the time they need to plan for the restart and ensure a smooth return to repayment,” said Education Secretary Miguel Cardona in a statement. “The ministry’s priority is to support students and borrowers during this transition and to ensure they have the resources they need to access affordable, high-quality higher education. “

The Education Ministry says the extension will give borrowers time to plan for resuming payments and reduce the risk of default and default.

Senate Majority Leader Chuck Schumer, Senator Elizabeth Warren and Representative Ayanna Pressley applauded the move in a joint statement Friday afternoon.

“We are delighted that the Biden administration has responded to our call to extend the pause on student loan payments held by the federal government, offering tremendous relief to millions of borrowers facing a dire financial cliff,” he said. they stated. “The payment break has saved the average borrower hundreds of dollars a month, allowing them to invest in their future and support their family.”

Yet the group of lawmakers want the president to go further and use executive action to write off $ 50,000 in student debt.

“Canceling student debt is one of the most important actions President Biden can take right now to build a fairer economy and fight racial inequality,” the statement said.

House Speaker Nancy Pelosi, however, said last month that the president does not have the power to write off student debt and only Congress has that power.

“He can postpone, he can delay, but he doesn’t have that power,” she said at a press conference.

Borrowers will be notified of the new extension “in the next few days” and the education department is expected to provide information on how to plan for the resumption of payments.

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An accident permanently damaged his hands, but allowed him to free himself from his debts: “This money changed my life” Fri, 06 Aug 2021 16:37:37 +0000

An accident with a broken shower door permanently damaged his hands, but a graduate from the State University of New York at Albany made the most of a bad situation and used an insurance settlement to put it on the path to financial stability.

A Business Insider report allowed Kiersten Conway to share the story of how she handled her finances after graduating from college and the wise decision she made that changed her life after the unfortunate accident .

When Conway graduated with her bachelor’s degree in May 2018, her first concern was how she was going to pay off her student loans, Business Insider reported. She found a job, earning $ 35,000, and was living at home with her grandparents. She said she treated the money she earned or saved as if it wasn’t her own and spent “every penny available” on her student loan debt.

A life changing accident

In September 2019, while visiting her boyfriend in Manhattan, Conway was injured when the bottom wheel of a shower door popped out and the shower door shattered, cutting off both of her hands. ” wide open ”, according to the story.

The injury, which required stitches, x-rays, a consultation with a neurologist, a meeting with an occupational therapist and several follow-up appointments, left her with nerve damage to her right thumb and permanent scarring, Conway said. .

Conway urged her boyfriend to file a claim with his tenant’s insurance to help cover his medical bills. She eventually settled with the insurance company for $ 23,250 – “just a few hundred dollars less” than her student loan balances.

“This money has changed my life,” said Conway.

She’s been building her net worth ever since.

After using the settlement money to immediately pay off her student loans, Conway said she started putting her available money into savings and investments “to build my net worth,” she said.

Since telling Business Insider US, she has saved around $ 50,000, opened a 401 (k) and Roth individual retirement account, and is now able to put money aside for the future.

“My goal is to maximize my Roth IRA each year so that I can have a chance to retire,” Conway said.

She is debt-free at 25 and has said her credit score, which continues to rise, is 793.

Conway said being student loan debt free at 25 was worth “all the pain and suffering, plus the permanent scarring and nerve damage.”


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State is tired of waiting for Biden to forgive student loan debt Tue, 03 Aug 2021 13:33:40 +0000

Key point: Since taking office as president, Joe Biden has been asked to forgo a certain amount of student loans.

The president has adopted debt relief, in connection with some shady universities that have actively defrauded students.

Biden has been urged by activists to unilaterally write off $ 50,000 in federal student loans per borrower under the Higher Education Act, although the administration has asked the Department of Education to conduct a legal review for determine whether such an action would be permitted. It is not known what the status of this exam is. Meanwhile, the Biden administration has not made any major legislative proposals regarding the cancellation of student loans.

However, one state announced a student loan forgiveness plan.

New York Governor Andrew Cuomo announced the CUNY Return Program, which applies to people who attended New York City University’s System School during the pandemic. The program’s goal is “to wipe out up to $ 125 million in unpaid debt for at least 50,000 students who attended CUNY and suffered financial hardship during the COVID-19 pandemic.”

Announcement calls it “one of the largest student debt remissions in the country [plans] of its kind. ”

“The COVID-19 pandemic has caused hardship in the lives of so many New Yorkers, and our students have been among the hardest hit,” Cuomo said in the announcement. “This historic new program eliminates millions of dollars in unpaid debt, providing much-needed relief to tens of thousands of CUNY students as they work to recover from the pandemic and plan for their future.”

The pardon will be funded by money allocated to CUNY from New York’s award of the American Rescue Plan Act.

“CUNY students have shown their great resilience in the face of the immeasurable hardships they have faced over the past 16 months, from loss of jobs and income to food and housing insecurity, in the midst of a crisis. unprecedented health care that has caused disease and tragedy to thousands of New York families, ”CUNY Chancellor Félix V. Matos Rodríguez said in the announcement.

“This compassionate action will enable CUNY students and recent graduates to move forward in the pursuit of their educational and professional goals without the specter of tuition fees and unpaid fees. This historic step will also strengthen CUNY’s important contributions to New York’s economic recovery. ”

The CUNY board approved the use of $ 125 million at a July 6 meeting. The university system estimates that 50,000 students will benefit from this advantage. Students are eligible if they were enrolled in CUNY between March 13, 2020 and the spring semester 2021, if they are “determined to have trouble” and those who have a certain outstanding balance per semester.

Stephen Silver, Technology Writer for The National Interest, is a journalist, essayist, and film critic who also contributes to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Revue de rue and splice today. Co-founder of the Philadelphia Film Critics Circle, Stephen lives in the suburbs of Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters.

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Biden administration launches investigation into civil service loan forgiveness issues Fri, 23 Jul 2021 16:36:55 +0000

The Biden administration has launched a process to potentially correct the struggling Public Service Loan Forgiveness Program (PSLF).

“Unfortunately, for too many public service workers, the [PSLF] program did not work out as they hoped, ”Julie Margetta Morgan, senior advisor and acting deputy secretary of the Office of the Under-Secretary of Education said in a statement. “Fixing the PSLF program has been a priority for the Biden-Harris administration from day one. While we have identified many opportunities for improvement by speaking with experts and borrowers and reviewing our procedures, we also want to hear from you. This is why, today, we are launching an Information Request on the PSLF.

The Inquiry is a formal process for obtaining public comments on the PSLF program. The Education Ministry said it was specifically looking for information on the features of the PSLF that are most difficult for borrowers to navigate; barriers that prevent public service workers from pursuing the PSLF or receiving a student loan forgiveness under the PSLF; and the experiences of borrowers participating in the PSLF.

Public Service Loan Forgiveness is a popular federal student loan program whereby some borrowers can request their federal student loan forgiveness after working as a full-time employee for government entities or non-profit organizations 501 ( c) (3) for 10 years or more. The program, however, has complicated eligibility criteria, which limit relief to borrowers who have specific types of federal student loans over specific types of repayment plans. These requirements have not always been well communicated to student borrowers.

A recent report from the Consumer Financial Protection Bureau (CFPB) concluded that the PSLF program has been riddled with problems. The CFPB “uncovered a number of ways in which student loan officers were giving borrowers incorrect information” about the PSLF requirements, resulting in “missteps that could cost consumers thousands of dollars.” The CFPB also reported widespread issues with service agents failing to properly certify PSLF eligible jobs, incorrectly distribute monthly payments, and incorrectly calculate payment amounts. The CFPB concluded that many of these practices “caused or were likely to cause significant harm” to student loan borrowers.

In large part because of these problems, the PSLF program suffers from catastrophic approval rates. When student loan borrowers were first eligible to apply for a waiver under the program in 2017, the PSLF had an approval rate of just 1%. The latest statistics suggest only marginal improvement, with a current approval rating of just 2%. The Ministry of Education also faced a substantial backlog of PSLF applications, resulting in processing delays of six months or more.

Meanwhile, the Pennsylvania Higher Education Assistance Authority (PHEAA), which manages FedLoan Servicing – the only Department of Education contracted service provider responsible for administering the Public Service Loan Forgiveness program – has announced that it will not renew not his contract with the US Department of Education. As a result, more than 8 million student loan borrowers, many of whom are on track for eventual PSLF student loan forgiveness, will have their accounts transferred to new loan managers. These transfers have historically been quite messy.

Advocates for student loan borrowers have praised the Department of Education for its announcement. “Today’s action by the Department of Education offers hope to public service workers who have been disappointed and deceived by the promised debt relief,” said the executive director of the Student Borrower Protection Center , Seth Frotman, in a statement. “For the first time, the federal government is asking those who depend on the program to help decide what to do next. U.S. public service workers must take this opportunity to tell President Biden and Secretary Cardona that the PSLF is broken and that only sweeping debt relief action can undo a decade of wrongs committed by the Department of Education and the student loan industry. Civil service workers have done their part – now is the time for the Biden administration to keep the PSLF promise. “

Earlier this year, a coalition of more than 100 civil rights and consumer protection organizations sent a letter to Education Secretary Miguel Cardona, calling on him to use emergency legal authority to audit the PSLF program and to cancel the student loan debt of all student loan borrowers who have completed ten or more years of public service, regardless of their specific compliance with the complex PSLF program eligibility criteria.

The Department’s announcement today follows the launch of a long negotiated rule-making process to review and potentially revise key federal student loan programs, including public service loan forgiveness. The review could result in substantial changes to the PSLF, although permanent changes are still likely years away.

Borrowers who wish to submit comments to the Ministry of Education regarding the PSLF can do so here starting July 26.

Further reading

Huge upheaval in student loan management: this important loan manager terminates his contract

How Will Changes to the Student Loan Service Affect the Delivery of Public Service Loans

Your student loan manager is changing: 7 steps to protect yourself now

New Federal Report: Student Loan Managers Often Hate Borrowers Who Request Forgiveness Of Public Service Loan

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How to save on your personal loan and pay off your debt faster Wed, 21 Jul 2021 18:16:41 +0000

If your personal loan has a high interest rate or a long repayment term, it may cost you more than you think. Read these tips to save money and pay off your loan faster. (iStock)

Nearly 43 million Americans have personal loan debt in 2020, with an average balance of $ 16,458, according to an Experian credit bureau report. Without a clear strategy for repaying this debt, many consumers will be forced to pay thousands of interest while they repay their loans.

But the good news for personal loan borrowers is that it may be possible to pay off your debt faster and save money over the life of your loan. There are a few strategies to achieve this, such as those outlined below:

  1. Refinance a loan with a lower interest rate
  2. Work on improving your credit score
  3. See if you qualify for an APR rebate
  4. Put the cash flow on the balance

Read on to learn more about savings on a personal loan in the analysis below. If you choose to refinance your personal loan, you can compare interest rates on Credible without affecting your credit score.


1. Refinance a loan with a lower interest rate

Whether you’ve just taken out a personal loan or looking for a new loan with a lower interest rate, it’s worth shopping around.

Personal loan rates vary widely – Credible partners offer rates between 2.49% and 35.99% APR. The rate you receive is based on a number of factors including your credit score as well as the amount and term of the loan.

If you already have personal loan debt, you may be eligible for a lower rate than what you are currently paying. See how the monthly payment and total interest could change for a borrower with a 3-year $ 15,000 personal loan if they got a new rate:

  • 12% APR: Monthly payment of $ 498, $ 2,936 total interest
  • 10% APR: Monthly payment of $ 484, $ 2,424 total interest
  • 8% APR: Monthly payment of $ 470, $ 1,922 in total interest

Check your loan agreement to find your current rate and visit Credible to compare personal loan interest rates from several lenders for free in just 2 minutes. Once you have a good idea of ​​your estimated interest rate, use a personal loan repayment calculator to figure out your savings and see if taking out a new personal loan to pay off your current debt is worth it.


2. Work on improving your credit score

Since personal loans are unsecured and do not require collateral, banks and lenders rely on your credit history to determine your likelihood of repaying the loan, as well as the interest rates you are offered. So even though you may get a slightly lower interest rate just by shopping, improving your credit score and then reapplying for the lowest possible rate will save you even more money in the long run.

Before shopping for a new personal loan, try to achieve a good or better credit score, defined by the FICO scoring model as a score of 670 or higher. But the best personal loan interest rates are reserved for borrowers with an outstanding credit score of 800 or higher.

You can get your credit score and credit monitoring services for free on Credible.


3. See if you qualify for an APR discount

Some personal lenders offer a discount if you allow direct debits from your bank account.

If you haven’t set up a direct debit yet, contact your personal lender to see if you’re eligible for a discount.


4. Put the cash receipts in the balance

Cash earnings, like a tax refund or a stimulus check, can be used to help you pay off your personal loan balance faster and save you money on interest in the long run. Just be sure to read your loan terms before doing so, as some personal lenders charge a prepayment penalty if the loan is prepaid.

However, prepayment penalties are not very common, and many lenders offer no-charge personal loans. You can visit Credible to compare personal loans, some of which do not charge a fee like a prepayment penalty.


Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at and your question could be answered by Credible in our Money Expert column.

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Opinion of Interest – In Re Homaidan: Not All Private Student Loans Are Deemed Ineligible In Bankruptcy – Insolvency / Bankruptcy / Restructuring Wed, 21 Jul 2021 08:55:16 +0000 To print this article, simply register or connect to

With over $ 1.7 trillion in overdue student debt in the United States, student borrowers sometimes try to turn to bankruptcy courts for relief, often unsuccessfully due to the fact that most student loans are presumed non-releasable.1In its decision of July 15, 2021 in A re Homaidan,2 the Second Circuit Court of Appeal considered one aspect of this issue – whether certain private student loans made directly to a borrower are automatically presumed non-dischargeable as “educational benefits” under section 523 (a) ( 8) of the Bankruptcy Code. The Second Circuit found that they are not, ruling against the appealing student loan lender.

By virtue of the facts at issue in Homaidan, when the debtor was attending university between 2003 and 2007, he obtained two “direct-to-consumer tuition response loans”. The debtor alleged that these loans were made independently of the debtor’s college financial aid office, were deposited directly into his bank account, and exceeded the cost of his tuition. After graduating, the debtor filed for Chapter 7 bankruptcy and was discharged without ever making a plea as to whether these student loans were dischargeable or, in fact, discharged. After the bankruptcy case was closed, the debtor’s student lender continued to collect the loans and the debtor, believing the loans to be still valid and enforceable, paid them back in full.

In 2017, the debtor decided to reopen his bankruptcy case in order to obtain a decision that the loans were in fact paid. He then brought an action against the lender alleging, among other things, that the lender had violated his rights by collecting the released student loans. The lender requested rejection on the grounds that the loans in question fell under the “educational benefit” exception to be released. The bankruptcy court disagreed and dismissed the lender’s motion to dismiss. In agreement with the bankruptcy court, the second circuit concluded that the loans in question were potentially dischargeable—that is to say, there was no general rule that not all private student loans were dischargeable — based on his view that the “education benefits” exception in section 523 (a) (8 ) has a fairly limited scope.

Specifically, the Second Circuit noted that Section 523 (a) (8) includes three categories of non-dischargeable educational debt: (1) loans issued or insured by the government; (2) obligations to repay funds received as an “educational benefit, scholarship or allowance”; and (3) “any other educational loan” that meets the Internal Revenue Code definition of a “qualifying educational loan”.3 The lender’s appeal only claimed that the student loans in issue fell within the category of “education, bursary or allowance”,4 and he did not argue that the loan was a “scholarship” or an “allowance”. Thus, the only question was whether the loan was in fact an “obligation to repay funds received as an educational benefit”.

The Second Circuit concluded that this was not the case, relying on various statutory interpretation tools. The court first noted that the ordinary meaning of Section 523 (a) (8) (A) (ii) reference to an “obligation to repay funds received as an educational benefit” could not just be synonymous with student loans, because Congress would not have referred to student loans “in such stilted terms.” The court also considered the context of section 523 (a) (8) (A) (ii) – insisting that the preceding and following categories of student debt use the word “loans”, so that the omission of this word from the “study category benefits category” suggested that it did not include loans. Also apply the canon against surplus (that is to say, interpreting a law so that none of its terms are superfluous), the court observed that interpreting the “education benefit” as including loans would swallow up the first and third categories in their entirety (since the second category already include the same loans also covered by the first and third categories) making these separate provisions unduly meaningless. Finally, the court applied the
noscitur a sociis cannon (that is to say, that the meaning of an ambiguous term can be taken from the context of the words surrounding it), noting that “scholarships” and “allowances” under section 523 (a) (8) ( A) (ii) refer to grant payments which, unlike a loan generally would not need to be repaid and, therefore, the term “education allowance” should be interpreted in the same way.

Thus, the court concluded that the “education benefit” except the discharge under section 523 (a) (8) (A) (ii) is best interpreted to refer to similar conditional grant payments. scholarships and stipends, such as when an organization pays an individual’s tuition fees in exchange for the individual’s promise of some sort of future performance, rather than a student loan. When the individual, after having received the benefit of the tuition fees, breaks his promise of return, he incurs an “obligation to reimburse” the funds paid for his tuition fees, and therefore has an obligation which is presumed not releasable under of Section 523 (a) (8) (A) (ii).

While Homaidan is likely to be a somewhat important decision in the further development of student loan bankruptcy case law, it should be noted that the decision was relatively limited in scope, dealing only with the category of ‘education benefits, scholarships or allowances ”of education-related debts in Section 523 (a) (8) (A) (ii) of the Bankruptcy Code. Many, if not most, private student loans will still be considered “any other education loans” that are presumed non-dischargeable under section 523 (a) (8) (B) of the Bankruptcy Code, provided they otherwise meet the criteria for qualified educational loans under the Internal Revenue Code. In these cases, either the
Brunner or the test of all the circumstances will still determine whether the debtor can obtain a student loan discharge.


1 Most of these cases involve the application of either Brunneror the “all the circumstances” criteria for determining whether the presumption of non-discharge can be rebutted on the basis of undue hardship on the debtor. See, for example, Thomas Affair, 931 F.3d 449, 452 (5th Cir. 2019) (applying the Brunner test rather than the test of the “nebulous” set of circumstances).

Homaidan v. Sallie Mae, Inc. (In re Homaidan), n ° 20-1981, 2021WL 2964271 (2d Cir. July 15, 2021) (op. sheet).

3 11 USC § 523 (a) (8).

See 11 USC § 523 (a) (8) (A) (ii).

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Entain refinances its long-term corporate debt Tue, 20 Jul 2021 12:34:53 +0000

EntainThe board of directors secured a senior term loan, valued at $ 1.12 billion, to refinance the long-term debt of the company.

Gaming group FTSE100 will use the proceeds of its new loan to refinance its outstanding debt, which currently stands at $ 774 million and is due to mature on March 29, 2024.

The transaction sees Entain extend its loan maturity rates until March 29, 2027, to the price of the London Interbank Offered Rate plus 250 basis points, or 2.5%.

The outstanding $ 350 million loan will be made available to Entain in order to accelerate the development of the business, including merger and acquisition activities.

The rights carried by the loan will be maintained by the subsidiaries of Entain Holdings Gibraltar and GVC Finance SA, the transaction to be finalized by the end of July.

Ahead of releasing interim business results on August 12, Entain raised its full-year profit forecast to £ 850 million to £ 900million after better than expected first half results driven by significant growth of its sports betting verticals.

Further developments of the company saw Entain announce that it would double its investments and staff to accelerate the development of its new in-house games studio during this year.

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Iowa Colleges and Universities Prepare Students for End of Student Loan Freeze Sun, 18 Jul 2021 15:04:18 +0000

With the coming end of the federal student loan freeze, universities and colleges in Iowa are educating their students on the next steps to repay their loans.

The US Department of Education suspended federal student loan payments in March 2020. Former President Donald Trump and President Joe Biden have repeatedly extended forbearance amid the COVID-19 pandemic. Without further extension, the freeze is expected to end on September 30.

While loan departments are responsible for contacting graduates, the University of Northern Iowa has been working with current students and recent graduates to understand what the end of the freeze means for them, said the director of the financial aid, Tim Bakula.

“I think ending the freeze is a priority for many people who have had their loans during this forbearance period over the past 16 months,” he said. “As a university in this area, we want to make sure our borrowers understand their options and help them avoid default by making the right decisions for themselves. “

Iowans owe $ 12.8 billion in student loans, while the total amount owed by Americans is over $ 1.7 trillion. Iowa College Aid estimated in 2019 average debt at graduation at private nonprofit colleges and universities in Iowa was $ 34,199, and 74% of students graduated with some debt. At the universities of the state regents, it was $ 27,502, with 55% of graduates leaving in debt.

It’s time to reassess

With two and a half months of the end of the freeze, students still have time to reassess their debt repayment plans, said Elizabeth Keest Sedrel of Iowa College Aid.

“For anyone whose circumstances have changed or for anyone who has just taken the default options, this is a golden opportunity to look at the options and decide what would make sense,” she said. . “Whether it’s a fixed plan with the same monthly payments, a progressive plan where payments increase over time, or an income-based plan, now is the perfect time to reassess. “

Keest Sedrel said now is the time for recent graduates to check with loan services and make sure they have the best option for them before payments start again in October.

University of Iowa director of financial literacy Kelsey Ryder said students should take the time to better understand federal loans in general.

“Because they’ve been on hiatus for so long, I really think it’s important for students who have or haven’t experienced repayment to understand the basics of repaying loans,” he said. she declared. “They need to know their loan officers and update their contact details with the entity.”

Students who graduated during the pandemic or who are graduating this academic year should know if they have a subsidized or unsubsidized loan to plan their next steps, she said.

One of Bakula’s fears is that uninformed students will default on their loans. He said this is one of the reasons his department is striving to continue educating students about forbearance.

“Students who have not paid since the start of the pandemic may be at greater risk of defaulting simply because they have become used to not having to make payment,” he said. “It is essential that we get them back on track. “

Potential extensions

Biden’s last abstention extension came on his first day as president. However, the Department of Education and the House and Senate education committees urge Biden to continue to defer payments.

US Representative Robert Scott, D-Virginia, and US Senator Patty Murray, D-Washington, sent a letter to Biden suggesting an extension until “early 2022”. Their plan also suggested involving “several proven methods of contacting borrowers” to ensure graduates understand their repayment dates.

Institutions in Iowa are struggling to ensure their students are not confused about the impending end of forbearance. Drake University’s director of financial aid Ryan Zantingh said his department was reluctant to send reminders in case the date changed.

“Part of the reason we haven’t been more proactive with our students is that we don’t know if it will be extended,” he said. “If the date is pushed back again, it only adds to the uncertainty and confusion for the students.”

At the University of Northern Iowa, Bakula said his office continues to educate students about the extensions, but that can be confusing. Withdrawing information due to extensions only increased confusion among students, he said.

Ryder said the University of Iowa’s financial aid department is used to things changing frequently, but it’s difficult to inform students without knowing whether or not there will be an extension. gel.

“Since the payments depend on what student loan managers decide, we don’t want to create additional confusion over who they pay, when or how much,” she said. “We don’t want to misinform them about the dates either.”

In addition to not knowing whether the forbearance will be extended in the future, the Department of Education and loan managers have not given a clear plan to onboard the thousands of new graduates who will start paying off their loans in the future. October alongside people who have been paying for years – something Bakula said he is concerned about.

“If you think about the magnitude of this (situation), it’s not as simple as flipping a switch,” he said. “I think a lot of things at the federal level are still being resolved before colleges or students get more information, so that will also be something to watch out for over the next few weeks.”

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