Bankruptcy of Your Student Loans

Bankruptcy of Your Student Loans

Tuesday, February 20, 2018

D.O.E. ASKS FOR YOUR INPUT ABOUT UNDUE HARDSHIP DISCHARGES

SERIOUSLY? DEPARTMENT OF ED. WANTS MY OPINION ON UNDUE HARDSHIP?


I just read this article posted today by Steve Rhode, the "GET OUT OF DEBT GUY" SM

Steve titled his blog article..."Department of Education Seeks Input Regarding Student Loan Bankruptcy Discharge:"

"It sure feels ironic that the Department of Education is seeking feedback and input regarding their current policy of allowing for the elimination of student loan debt in bankruptcy. It’s not a process they even really adhere to now.
Since their infamous letter laying out how they would approve student loans for bankruptcy, they have fought discharges every step of the way. For example, there is the story of Kristin Price.
The Department of Education is under the misimpression those entities holding federal student loans actually agree to discharges, they regularly fight back." [re: Steve Rhode, Feb. 20, 2018]
“Department regulations currently require holders to evaluate each undue hardship claim to determine whether requiring repayment would constitute an undue hardship. If a holder determines that requiring repayment would impose an undue hardship, the holder must concede an undue hardship claim by the borrower in an adversary proceeding.
The Department’s current guidance to guarantors and educational institutions in defending bankruptcy proceedings is summarized in a July 7, 2015, Dear Colleague Letter (GEN-15-13
https://ifap.ed.gov/dpcletters/GEN1513.html) and provides for a two-step analysis when evaluating whether or not to object to a borrower’s claim of undue hardship. The Department follows the same two-step analysis when defending bankruptcy proceedings for Direct loans. After receiving input from this notice, we will consider whether that analysis is still appropriate.”News Alert: It’s not appropriate. Far too many debtors are being pushed into income-driven repayment programs at $0 per month only to leave them indebted rather than receive a discharge.
The Department of Education would like to hear from you. Here is the feedback they are requesting:
“The undue hardship standard established under either test requires a variety of factors to be evaluated when determining whether repaying a debt will cause a debtor and his or her dependents an undue hardship, such as, but not limited to, the debtor’s: medical, work, or family history; history of mental illness; level of educational attainment; future employment prospects; payment history, including a borrower’s willingness to avail himself or herself of all available repayment plans, including income-driven repayment plans; and necessary expenses in excess of ordinary unique to the debtor.
The Assistant Secretary for Postsecondary Education invites the public, including individuals, advocacy groups, and professional organizations, as well as other State or Federal agencies or components, to provide comment on, and offer information regarding: (1) factors to be considered in evaluating undue hardship claims; (2) weight to be given to any such factors; (3) whether the use of two tests results in inequities among borrowers; (4) circumstances under which loan holders should concede an undue hardship claim by the borrower; and (5) whether and how the 2015 Dear Colleague Letter should be amended. The Department will review the data collected to determine whether there is any need to modify how undue hardship claims by student loan borrowers in bankruptcy are evaluated.
You may provide comments in any convenient format (i.e., bullet points, charts, graphs, paragraphs, etc.) and may also provide relevant information that is not responsive to a particular question but may nevertheless be helpful.”
To submit comments and feedback go to Regulations.gov and search for [Docket ID ED-2017-OPE-0085] Request for Information on Evaluating Undue Hardship Claims in Adversary Actions Seeking Student Loan Discharge in Bankruptcy Proceedings.
Feedback should be allowed for submission after 2-21-2018."

THANK YOU STEVE FOR THIS GREAT ARTICLE!

TO ALL MY BLOG READERS

I wholeheartedly plan to send in my input!  I encourage all of my followers to do the same!

Any of my followers who have read my posts know that I was successful under the "Undue Hardship Clause" and won without a trial in Federal Bankruptcy Court and that I believe I won because I "cited" the July 7th, 2015 Department of Education Policy Letter as one of the key factors - asking the court "to prove how Plaintiff’s facts presented in this Adversary Proceeding DO NOT MEET the U.S. Department of Education policy directive, DCL ID: GEN15-13, dated July 7, 2015.   

THE JUDGE ASKED THE U.S. ATTORNEY FOR D.O.E. THIS QUESTION:
"Well, Mr. Coulter, what are you going to do about this letter?"

Coulter, the defending lawyer for the Dept. of Ed. stated: "Well your honor, we don't know!"

To this Judge Mayer stated: Mr. Coulter, you have until Friday to answer Mr. Precht's complaint!"

Now this was on a Tuesday morning.  On Friday afternoon at about 4PM I got a call from Mr. Coulter the U.S. Attorney for the Eastern District of Virginia, and he stated: "Mr. Precht, the Department has discharged your student loan debts!"

As I had written back on August 28, 2016: 

"My case was settled without a trial and to me that has only further exasperated the student loan crisis and continues the suffering for tens of thousands of student loan debtors!  Not having my trial resulted in no formal decision being recorded for others to cite as case law precedent!

"Why did they not take this case to trial? Well I have a theory as to why, and I wrote about those thoughts.  You can read my thoughts on this here": http://www.unduehardship-povertyrequired.com/2016/06/the-discharge-of-130000-was-settled.html  Here is part of that article:

"Consider this --- Had the DOE persisted on going to trial, and with the fact that I was challenging the DOE with their own July 7th policy directive, is it possible that the DOE and Coulter were reluctant to go to trial BECAUSE they were afraid that Judge Mayer would rule in my favor and write a decision brief that would be the key to opening a Pandora's Box for other courts to rule with?
By NOT writing an official public trial decision, there is not that much publicity or factual case information that gets posted to the legal networks.  Therefore the DOE continued to cover over the  results of my case, and in the process continued to avoid a landslide from taking place?
My case is not out there like (a mutual debtor who won his case - and wants to remain anonymous) or any of the others who's student loan cases went to trial and were decided upon, is there something to my theory?"

AGENTS OF CHANGE

At the end of the above article I concluded by saying: "There is a change coming!  I pray I have become one of the agents of change?  But there are thousands of people in crisis just like I was who need a "fresh start", please help me and others like me, get the word out that the current laws that prevent bankruptcy or forgiveness of inflated and corrupted student loan debt need to be changed."

Please join me in becoming AGENTS OF CHANGE! Let the Department of Education hear from you!

Here is your opportunity to tell them your situation and request that "something" be done to help the millions of student loan debtors who like I once did, had no way to ever pay off the ever increasing loan due to predatory interest and penalties adding to the balance each month.  Not to mention that my social security was being "garnished" every month by over $300.00 which did not even cover that interest!

YOUR INPUT CAN MAKE A DIFFERENCE!

Everyone who reads this can be a part of needed changes!  One more time here is the link for your input: To submit comments and feedback go to Regulations.gov and search for [Docket ID ED-2017-OPE-0085] Request for Information on Evaluating Undue Hardship Claims in Adversary Actions Seeking Student Loan Discharge in Bankruptcy Proceedings.
Feedback should be allowed for submission after 2-21-2018.

Thank you!
If you enjoy my posts here, please let me know.  And if you have any questions I will be happy to answer them. You can receive email notice of my latest posts by inserting your email information in the box on the upper right of this page. 

Sincerely, Richard Allan Precht



Tuesday, February 13, 2018

TPD Recipient Got a Second Miracle - IRS won't be Taxing Discharge of Student Debt

CONGRATULATIONS "AGAIN"


Last week my blog was giving congratulations to my friend Pam for the complete discharge of her Student Loans! My friend Pam in her mid 50's has three adult children, is divorced, and because of a stroke a few years ago, is unable to work and is living on SSDI on a monthly income of under $700.00! 


Pam's discharge of over $26,000.00 was nothing short of  "A MIRACLE". Pam was granted a Total and Permanent Disability (TPD) discharge of  her student loans and interest by the Department of Education on January 19, 2108.

Pam showed me her letter from nelnet (Nelnet assists the Department in administering the TPD discharge process). To summarize the letter: "Effective 01/19/2018, the Department has approved your application for discharge of the federal student loan or TEACH Grant service obligation identified below on the basis of your total and permanent disability.  We will notify you again when we have discharged your loan and/or TEACH Grant service obligation."

"SECOND MIRACLE"

In the post of last week, I talked about the 3-year monitoring period nelnet required by each person awarded a TPD discharge to comply with; I went on to discuss what I called "the caveat I disliked" about the TPD discharge --  The fact that after the 3-year monitoring period the IRS would potentially require a tax payment on the amount of discharged student loans and interest was what I disliked.  In other words my friend Pam would have to file a 1099-C and be subject to income tax on her $26,000.00 discharge!

Within a few days of writing last week's blog article, I received an email from a site I subscribe to, which provides great information about Student Loan Rights and Responsibilities for Borrowers and Advocates.  This organization is called: "The Student Loan Borrower Assistance Project (SLBA) and is a program of the National Consumer Law Center (NCLC).  I recommend my readers subscribe to this great source of news about student loan issues, and can provide great help to students.  

"Tax on Death and Disability Discharges Is Gone … For Now"

The 2nd Miracle jumped off the page of this February 8th publication from SLBA! Here is a part of the article that outlines the key information: 

  • "We here at NCLC have been arguing for years and years (and years!) that taxing disability and death discharges is grossly unfair to some of the most vulnerable student loan borrowers. 
  • Finally, after many years of advocacy, this tax has come to an end… for now (more on that later).  The tax bill passed at the end of 2017 does away with the tax on student loan discharges for death and disability." *SEE BELOW
What this means for Pam, my friend -- she has been given a second miracle bonus for her January 19th, 2018 Total and Permanent Disability discharge! She will NOT be subject to IRS Tax on her discharged loan and interest.

Let me just say, Pam is very blessed as she falls into a tiny window of eligibility to get this tax relief exception! NOT EVERYONE IS ELIGIBLE!  Please continue reading.

Consequences/Ramifications/Caveats

*WARNING: Very much like the caveats and rules contained within the parameters of being awarded a full discharge via the TPD, there are specific parameters, rules and qualifications which govern this TAX RELIEF.
  • NOT EVERYONE QUALIFIES! -- YOU MUST READ THE FULL DOCUMENT!
Leave it to the Government to want to make an attempt to help those who are disabled and stuck with student loans they cannot afford --- only to make it restricted and not for everyone! 

Rather than try and explain it all here, I will just post the article for you all to look at. The article describes who is eligible for this NO TAX "gift" and those who are not.  (Summation: Primarily it is based on when the TPD was awarded) 

Here is the link to the full article at the SLBA website. 


In Conclusion

When I learned of this article, I called my friend Pam and shared the good news.  I had to do that because I had previously told her she would probably have to pay the Tax to the IRS after the 3-year monitoring period based on what I had known about the consequences of the TPD discharge. As you may imagine, she was quite relieved.

She falls right in the exact window of qualifications set out in this recently passed law or Department of Education policy.  My heartbreak is that not ALL who have been awarded a TPD prior to 2018 will qualify and will most likely still owe the IRS.  

Here is what is said in the above mentioned article: "borrowers who received these cancellations in 2017, unfortunately, still have to deal with the tax consequences"

To me that seems so unfair!  The other thing that seems unfair to me, is that according to the article... "It is important to note that this change in the tax code will expire on December 31, 2025. This means that because of the three-year monitoring period, borrowers who have their initial discharge approved after December 31, 2022 and complete the three years of monitoring could be subject to the tax. The hope is, of course, that this law will be extended or become permanent before then."

Indeed... It is my hope also that the Department of Education (DOE) makes this a permanent ruling and gives ALL disabled student loan debtors this relief.  In fact, I pray that the DOE gets a "conscience" and begins to not only make the TPD award process simpler, but that they take serious steps toward removing the "undue hardship clause" within the U.S. Bankruptcy Code and take it back to the time when student loans were dischargeable just like any other form of personal debt!

 END


I would like to ask you to please comment on this post.  I would also like to say that if you are in need of help with your student loan debt I am willing to try and offer you some assistance.  I am not an attorney, I cannot give legal advice, but perhaps I can in some way offer you "keys" to dealing with your situation?  I have done so for others and as time permits I will offer the same to anyone who finds this blog insightful.

Thanks for reading -- be sure to add comments and I will reply as time permits.  Please subscribe with your email address and you will be notified of my blog posts.  Thank you again, God Bless, Richard P.






Wednesday, February 7, 2018

TPD (Total and Permanent Disability Discharge) "Awarded" to a personal friend of mine!

CONGRATULATIONS!

Congratulations to my friend Pam for the complete discharge of her Student Loans! My friend Pam in her mid 50's has three adult children, is divorced, and because of a stroke a few years ago, is unable to work and is living on SSDI on a monthly income of under $700.00!

Pam attended a now defunct college in an attempt to earn an associates degree in home health care. Her loan with Loan Servicer NAVIENT (formerly Sallie-Mae) showed an unpaid principal amount of $19,390.98 with unpaid interest owing at $6,642.12.  The loans were over 10 years old, and as her records indicated, she had never made a single payment.

Based on the fact Pam was disabled (under Social Security Disability Insurance) SSDI, she was not required to make payments towards these student loans. However, there is what I call a "maturity death trap" with SSDI deferments!

Let me explain --- One day Pam and I were talking and she happened to mention that she had attended "school" to get a home health care aid certificate (or degree).  I asked her if she owed any loans to anyone for this - because I knew of her financial situation.

She told me in fact she did owe a lot of money for school loans, and had no way to pay them off - and that since she was on "disability" she was not required to make payments.  Well I can relate to that from my own story (see my other articles - regarding my disability and loan discharge of $130,000.00).

I proceeded to share a bit of my story about my student loan debts and how I was able to win my case in Federal Bankruptcy Court in Virginia in 2016.  I told Pam how that while I was on SSDI I did not have to make any payments but that the interest still accrues and is added to the total debt.

I also told Pam that once I reached full retirement age (of 65), the Social Security Agency "switched" me off of SSDI and began to pay "straight" social security annuity. That meant I was no longer on SSDI and no longer under a "deferred" loan status for my student loans!  Suddenly I was receiving monthly billing statements for payments on those loans.  

Initially the statement was in the neighborhood of $80,000.00 and change!  But in the proceeding years that balance continued to climb -- while all the while, my small retirement annuities were being "GARNISHED" to the tune of over $300.00 a month!

What was striking was that the interest was accruing each month adding to the loan balance -- of which the $300.00 being 'garnished' from my retirement checks DID NOT even cover the interest due each payment!  Talk about a "DEATH TRAP"!

As I explained this conundrum to Pam, she was shocked.  She had no idea she would be taken off of SSDI when she reached the Social Security Age requirement, and she had no idea she would then have her meager annuity check 'garnished' for some amount --- Most likely the maximum currently allowed which is set at 15% of your gross social security payment!

I then proceeded to tell Pam about her options.  I gave her keys to websites with information about seeking "loan forgiveness" (which I do not believe is a real or viable possibility for most debtors! -- more on that in my other blog articles).  I pointed out that since she is 100% disabled she may want to try and apply for a TPD.

As I recall, this conversation I had with Pam was sometime late last summer or early fall. The other week when I was at her place to do some repair work on her home, she showed me a letter from nelnet  (The loan administrative branch of the Department of Education, D.O.E.) Education Planning and Finance Administration, D.O.E.

Note: If you need to see what you owe on your loans you can go online to nelnet here: https://www.nelnet.com/welcome

OK back to the story --- Pam showed me a letter dated January 19, 2018 from nelnet.
The letter states "The U.S. Department of Education (the Department) has completed review of your Total and Permanent Disability (TPD) discharge application requesting discharge of your William D. Ford Federal Direct Loan (Direct Loan) Program loan, Federal Family Education Loan (FFEL) Program loan, Federal Perkins Loan (Perkins Loan) Program loan, and/or your teacher Education Assistance for College and Higher Education (TEACH) Grant Program service obligation...."

"Nelnet assists the Department in administering the TPD discharge process, and we will communicate with you on behalf of the Department concerning your discharge request." 

"Effective 01/19/2018, the Department has approved your application for discharge of the federal student loan or TEACH Grant service obligation identified below on the basis of your total and permanent disability.  We will notify you again when we have discharged your loan and/or TEACH Grant service obligation."

There it is!  Pam has been granted a discharge of her debts under the TPD!

The nelnet letter goes on with information regarding return of any payments made or received after the "disability date" (SSDI notice of award date), and if should you question the loan amounts etc. you will need to inform the Department, or if you continue to receive bills from loan holders (and I assume loan servicers).

IMPORTANT NOTE REGARDING A TPD DISCHARGE! 
The 3-year post discharge monitoring period!

The letter goes on to state: "As stated above, the Department has approved your application for discharge on the basis of your total and permanent disability and your loan .... will be transferred to us to be discharged. You will be subject to a monitoring period that will end three years from 01/19/2018.  We will reinstate your obligation to repay your discharged loan ... if at any time during this monitoring period:
  • You have annual employment earnings that exceed the poverty Guideline amount for a family of two in your state, regardless of your actual family size (see www.disabilitydischarge.com for additional information);
  • You receive a new Direct Loan, Perkins Loan or TEACH Grant;
  • You are disbursed a Direct Loan, Perkins Loan, or TEACH Grant received before the discharge is made, and you do not return the full amount within 120 days of the disbursement date or;
  • You receive a notice from the SSA stating that you are no longer totally and permanently disabled, or that your disability review will no longer be the 5-year or 7-year review period indicated in your SSA notice of award for SSDI or SSI benefits. 
The disclaimers continue.... But you get the idea!  You have to follow and comply with ALL of the requirements and obligations laid out in this letter or you can end up OWING the full amount with the interest (however, they do state that while you will be required to pay the loan amount with the interest, any additional interest that could have accumulated during that period will not be owing).

Note: the full details of what is required post discharge of your loan and interest can be found here: https://www.disabilitydischarge.com/TPD-101

HERE IS THE ONE CAVEAT I DISLIKE ABOUT A TPD DISCHARGE!

While the TPD discharge removes the debt of the student loan and the accumulated interest on those loans, the one serious drawback is this --- At the end of the THREE YEAR MONITORING PERIOD -- You will be responsible for the INCOME TAX on the AMOUNT DISCHARGED! Yep!  The IRS will want the TAXES for the loan and interest amount that you received as a loan discharge!

Here is what is stated regarding the:
 TAX IMPLICATIONS AFTER APPROVAL & DISCHARGE OF YOUR LOAN BALANCES!

"The Department reports the discharge of any loan debt totaling $600.00 or more to the Internal Revenue Service (IRS) for the year that the loan was discharged. If your loans are discharged, we will send you an IRS Form 1099-C that will identify the total amount of your discharged debt. The amount of the discharged debt will be considered income for federal tax purposes and possibly for state tax purposes. You may want to consult with a tax professional to determine how this may affect your personal taxes."

So... what are my final thoughts on the TPD?

My final thoughts on the TPD are that it should be considered as one of the many options you as the debtor look long and hard at.  Bearing in mind it is based on your proving that you are permanently and totally disabled according to the criteria laid out in the application.  The TPD is based on legitimate documentation and verification in most cases from your assessment and award by the Social Security Administration (SSA) of what is known as SSI, SSDI (Social Security Disability Insurance).  Meaning you would first have to have been "awarded a claim" from SSA.

From the TPD webpage here is what is considered qualifying criteria for a TPD:


You can show that you are totally and permanently disabled in one of the following three ways:
1 – If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability;
2 – If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination; or
3 – You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that:
  • Can be expected to result in death;
  • Has lasted for a continuous period of not less than 60 months; or
  • Can be expected to last for a continuous period of not less than 60 months.

The requirements are quite extensive and in my case prior to going to the route of Bankruptcy with an Adversary Proceeding to prove Undue Hardship, I had applied for a TPD twice and was denied twice.  

My approach from that point forward was to investigate other means of discharge which included the so-called LOAN FORGIVENESS PLANS, INCOME BASED PAYMENT PLANS, the so-called ZERO DOLLAR 25-year PLAN and others!

What I soon discovered was that my one and only REAL DISCHARGE REMEDY was filing for Chapter 7 Bankruptcy followed immediately by the filing a what is called an ADVERSARY PROCEEDING (basically a lawsuit challenge to the "non-discharge" of student loans as part of a normal bankruptcy proceeding).  

The fact is that, yes, student loan debts can be discharged as part of a personal debt bankruptcy when you take the extra steps necessary using a "Complaint" by way of the Federal Law under USC 11 §523(a)(8) Undue Hardship Clause, "Exception to Discharge" ---  You see there is always an exception to the rules!

FINAL COMMENT

Student loan debts are not easy to deal with even when you are employed!  Being disabled and living on poverty level income and dealing with student debt is nothing short of a continuous nightmare!  For Pam the discharge of over $26,000.00 was nothing short of a dream come true. 

I would like to ask you to please comment on this post.  I would also like to say that if you are in need of help with your student loan debt I am willing to try and offer you some assistance.  I am not an attorney, I cannot give legal advice, but perhaps I can in some way offer you "keys" to dealing with your situation?  I have done so for others and as time permits I will offer the same to anyone who finds this blog insightful.

Thanks for reading -- be sure to add comments and I will reply as time permits.
,

Sunday, August 28, 2016

RIGHT WING, LEFT WING, CHICKEN WING CONSPIRACY THEORIES!

Corruption and "Pay for Play" at the Department of Education!


When I prevailed against the Department of Education and their legal representative, an assistant U.S. Attorney working for the U.S Department of Justice and I won a full discharge of nearly $130,000.00 in student loan debt, I believed that my successful bankruptcy under the undue hardship provision was in part due to the fact that I included as my defense, the July 7, 2015 Policy Letter written by Lynn Mahaffie, Deputy Assistant Secretary for Policy, Planning and Innovation Office of Post Secondary Education. 


The 23 page letter captioned as DCL ID: GEN-15-13, Subject: Undue Hardship Discharge of Title IV Loans in Bankruptcy Adversary Proceedings, in short, was written by the Department of Education as a directive to lenders and guarantee agencies to... and I quote: "protect the integrity of taxpayer dollars"....  


The letter describes the handling of adversary proceedings in undue hardship bankruptcy cases by stating "Department regulations currently allow loan holders the ability to consent to and/or not oppose a borrower's claim of undue hardship in appropriate cases if they follow a two-step analysis".

Step one of the analysis is the evaluation of the borrower's undue hardship claim.  If the lender decides that requiring the borrower to repay the loan(s) would be an undue hardship, then the lender can consent and not oppose the discharge of the loan(s).

The letter then makes the statement: "If, however, the holder (i.e. lender) determines that requiring the repayment would not impose an undue hardship, the holder must then evaluate the cost of objecting to the borrower's claim in court."  (emphasis added)

What is clear in the full context of this letter is that the Department of Education (DOE) is indicating that they are telling the loan holders (lenders and service agencies) that alarm bells are being sounded by some folks higher up on the food chain, and that too much money is being spent to try and disprove bankruptcy cases of student loan debt under the undue hardship provision of U.S.C. 11 §523(a)(8).

SO WHAT HAPPENED?  THE BELLS ARE SILENT NOW!


While I am very happy that my debt was discharged, the facts remain that there are tens of thousands of student loan debtors who continue to struggle as I was with the inability to pay their loans!  As I spent over a year preparing myself to go to court and file a chapter 7 bankruptcy that would include an Adversary Proceeding (AP) citing the Undue Hardship Provision, I became deeply aware of the injustices that occurred to thousands of people who in some instances were in much worse circumstances than I was.  

My win, which, as my friend Richard Fossey said, was a miracle... but that miracle was in part due to the fact, that just prior to my filing my case, I found the DOE's July 7th Policy Letter.  In fact, as I realized the potential significance of this letter, I immediately edited my Adversary Complaint to include the Policy Letter and made it a key defense within my AP.

At the time of my filing my AP I was living within 5 miles of Washington, D.C. and within 3 blocks of the U.S. District Courthouse, home of the U.S. Attorney for the United States of America, located on the same street adjacent to my apartment complex in Alexandria, Virginia.  So to put that in perspective I was in the enemy territory, and was feeling a bit outgunned at the time.

And yes, I did prevail, however... the outcome of my victory was not going to be the bell-ringing victory I had hoped it would be.  The reason I say that is even though my case was won using the DOE's own Policy Letter, they silenced the celebration through the actions of a quick discharge without a trial. The U.S. Attorney and the D.O.E. moved quickly to close this case, which got me to wondering why?  

Why did they not take this case to trial? Well I have a theory as to why, and I wrote about those thoughts.  You can read my thoughts on this here: http://www.unduehardship-povertyrequired.com/2016/06/the-discharge-of-130000-was-settled.html.  

My case was settled without a trial and to me that has only further exasperated the student loan crisis and continues the suffering for tens of thousands of student loan debtors!  Not having my trial resulted in no formal decision being recorded for others to cite as case law precedent!

What has happened is that predatory lawyers for the DOE lenders continue to run up huge legal tabs in pursuit of loan holders with the same veracity and aggressiveness as before!   

Take a look at what my friend Richard Fossey recently wrote in this article on his blog site:

"In a letter dated July 7, 2015, Lynn Mahaffie, a Department of Education bureaucrat, issued a letter advising creditors like ECMC not to oppose bankruptcy relief for student debtors if the cost of fighting a bankruptcy discharge did not make the effort worthwhile.

But that letter was just bullshit. The Department of Education and its loan collectors almost always oppose bankruptcy relief for student-loan debtors--whether or not it is cost effective to do so.  For example, in Acosta-Conniff v. Educational Credit Management Corporation, an Alabama bankruptcy judge discharged Alexandra Acosta-Conniff's student loan debt. Conniff was a single mother of two children working as a school teacher, and the court reasoned quite sensibly that Conniff would not be able to pay off her student loans.

ECMC dispatched six attorneys to appeal the bankruptcy court's decision: David Edwin Rains, Kristofer David Sodergren, Rachel Lavender Webber, Robert Allen Morgan, Margaret Hammond Manuel, and David Chip Schwartz. Six attorneys--and Conniff didn't even have a lawyer!

Not surprisingly, ECMC won its appeal.  Six lawyers against a single mother of two who can't afford an attorney--it was hardly a fair fight."  (emphasis added).  
All I can say is WTF.... 

There we have it, back to the same game... Pay-for-Play with DOE operatives like ECMC who continue making millions of dollars taking impoverished and in many cases disabled debtors through hell.  The corruption in our Government is so blatant.

The July 7th DOE Policy Letter might as well be left in the DOE restrooms....  At least it may get used for 'something' if it is left next to the toilets!

I have to quit here....  I am lost for words in my rage!



Feel free to comment, or ask a  question.... when I cool down I will try and address them.

God Help America, before there it is no more!

Richard Allan Precht












Saturday, August 20, 2016

2016 Presidential Candidate calls for student loan cancellation!


I heard somewhere the other day that Green Party candidate Dr. Jill Stein has advocated 'canceling student loan debt'?


On Wikipedia (under her political positions) the Subsection "EDUCATION" Presidential Candidate Dr. Stein has the following statement of her idea on dealing with student loans, and I quote:

"Stein has spoken in favor of cancelling all student debt, arguing that it could be done "using quantitative easing" and without raising taxes.[125][126] She says that quantitative easing "is a magic trick that basically people don't need to understand any more about than that it is a magic trick."[125] Stein says that her plan would be "the stimulus package of our dreams to put to work a whole generation of young people that's held hostage in debt".[126] She has said that her campaign will do for the "43 million young people trapped in predatory student loan debt" what "our mis-leaders saw fit to do for Wall Street when they bailed them out to the tune of 16 or 17 trillion dollars using so called quantitative easing".[125] She opposes school privatization.[127]. "


So...  As I am reading through this I asked myself, 1st of all what is "Quantitative Easing (QE)" ? and 2nd since she is saying QE "is a magic trick that basically people don't need to understand any more about than that it is a magic trick" and if she is saying no one needs to know what it is", how is that going to help anyone?

Student Debts = Financial Assets!


Next I did a look-up of Quantitative Easing.... WOW!  No wonder she says "people don't need to understand any(thing)" about it!  I sure could not!

In short... It sounds to me like that the Central Bank (i.e. The Fed) buys up the (student loan) debt, then floods the market by printing more electronic cash based on the so-called "financial assets". 

Wikipedia describes this so-called purchase of these assets like this: "A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply."

ECON 101 = "Magic Trick"



Now I will be honest.... I never learned too much in all of those "Econ" classes I had to take, but this for sure does not make anymore sense to me than ECON 101. 


No wonder Stein calls it a "magic trick" and that nobody would understand it!


That being said, I doubt very seriously if she could get that policy implemented if "and if" she could pull a rabbit out of her hat and win the Presidency in 2016. Meanwhile, we wait to hear any substantive solutions from either of the leading candidates.  


Cancel ALL student debt? Great idea -- or wait a second... 


Cancelling ALL student loans via a "bailout" like they did for Wall Street sounds great, the only problem is who's debts do you cancel.. everyone's? those in default?  those who's social security or wages are being garnished? Just who's debts do you cancel?

What about those currently enrolled?, what about those planning to start college this fall? or those future kids? Do you cancel just the Federal Loans?  What about the private loans?  And what about Parent Plus Loans?  Who decides which loans qualify and what would the qualifications be?  WOW that is a lot to figure out!


As for me... I think there is no quick solution to the education debt crisis. 

 

But if you ask me.... My "LEMON LAW" for student loans made a hell of a lot more sense than trying to convince the FED or Central Bank to buy up all of the debts.  You can read my "What We Need For College Loans Is A Lemon Law" and see what I propose.

And along with my Lemon Law, I would push for a top down review of salaries and benefits being dolled out to Administrators who act like more like Prima Donnas and self-proclaimed Kings and Queens!

Additionally, tuition and fee reviews would also need to be performed and made to be reasonable based on the quality of the education provided and the outcomes of actual job placements.  

It is time that colleges be held responsible for the failures graduates and non-completing students suffer due to the inflated and over-sold promises of success, enslaving those same students to a lifetime of debt with limited or in many cases, no benefits! 

Meanwhile, we wait to hear any substantive solutions from either of the leading candidates!

If you have any comments or questions, feel free to post them, I will be happy to address them.  Until next time, God Bless YOU and America, regards, Richard Allan Precht


Thursday, June 23, 2016

THE AMERICAN DREAM - OR THE AMERICAN NIGHTMARE?

The American Dream: graduate college, start your career, buy a house, start a family!

My friend and fellow student loan and education blogger, W. Richard Fossey wrote me an email this week which included a request to help a young woman who has realized that her college education debt of nearly $80,000.00 and growing everyday has become the "nightmare under her bed"!  That is how Alison Walton describes her dream of going to college, getting a degree and starting a career, which we have been led to believe is the ALL AMERICAN DREAM.

As I read her story which I am going to re-post in it's entirety here, I knew exactly what she felt; I had the same dreams and hopes when I returned to college at age 40.  What I ended up with was a Master's degree and upon graduation, I was not able to find a job in my field of study.  Twenty seven years later I found myself with a debt of close to $130,000.00, my life in dire financial shape - the answer for me was filing bankruptcy without an attorney and trying to prove Undue Hardship!  Fortunately I was successful.  My life's purpose now is to try and help others deal with student debt that has taken their dreams and turned them into nightmares! 

HERE IS ALISON'S STORY - A BROKEN DREAM!

My DeVry Experience
By Alison Walton

The American Dream: graduate college, start your career, buy a house, start a family. Most everyone has this vision for their lives, or something very similar. College is supposed to be that magic ingredient that will help you achieve your full potential in life. College is the gateway to put you ahead of the masses, helping you to stand out to employers and give you a solid foundation for your future. In my case, college is the beast that is holding me back. College is the nightmare under my bed, haunting my dreams. College has put me over $80,000 in debt.

High School is nothing I look back on with fond memories. I just wanted to do my time and move on. I never dreamed of furthering my education, all I wanted was to graduate and join the work force. My parents had a much different idea for my future, they wanted better. They wanted me to not have to know their struggles, so they pushed me towards higher education. Near the end of my senior year a recruiter from DeVry University visited my high school campus. This recruiter came promising the world on a silver platter: a Bachelor’s Degree in two and half years instead of four, a course schedule that consisted of degree specific classes, and a Career Center that helped place graduates in careers of their degree field. I called and scheduled a recruiter to meet with me and go over all the details of a DeVry education. This person came into my home, sat at my kitchen table, told my parents and I what a great choice I was making and how wonderful my future would be. The contract contained two totals for the degree program I entered into; the main contract stating a cost of $49,850 and a California Addendum for $55,365. Both of these figures were well outside my family’s means. When we questioned how we'd be able to afford it the recruiter assured us student loans would be no problem and I'd have my funding. I had recently turned 18, and my first big step as an adult was to sign the contract that would haunt me the rest of my foreseeable future.

I started DeVry University in Sherman Oaks, Ca (originally West Hills Campus) in August 2005. I graduated with my Bachelor’s of Science Business Administration Degree in June 2012. It took me seven years, as a part time student, to complete my degree program. The last two years of my education was by far the most difficult, not academically but emotionally. I found out in the summer of 2010 that I was officially maxed out on my FAFSA loans. I had no idea that was possible to do. Up until this point I had had very little interaction with the Financial Aid office. I would go in every semester, file my FAFSA and that was it. On occasion I was told I had a financial aid hold on my account. When I asked why I was told 'just pay $100 and the hold will get removed,' so I did. I had faith in the advisor that I was being looked after and directed in the right path. After being told I had no more funding I starting digging into the finer financial details of my education and what I learned floored me.  I learned that I was paying more per unit by maintaining only a part time status. DeVry had a unit ranking for their classes, as most colleges do. One class could be anywhere from 3 units to 4units, and on rare occasions 5 units. If I had carried a full load I would have had an out of pocket expense every semester, but part of that load would have been discounted. I had always taken two classes a semester (part time status, roughly 6 to 8 units), as that is what my financial aid would cover in full.

Both my parents worked full time jobs, and there was just enough money to keep the house running. Extra money for my education was not an option; it was just one example of why they pushed me to better myself. I worked mostly part time trying to support myself through school, but I did not make enough to cover full time status. At one point I got lucky enough to find a full time job paying me $12.00 an hour. Unfortunately this was just after the campus was moved 15 miles further away from home. I was already driving over 30 miles one way to get to campus. My new job would not allow me to alter my schedule so I could continue on-site classes, so I ended up having to quit and go back to part time work. At this time my Academic Adviser suggested online courses, which allowed me the freedom to do my classes around work and saved me a lot of money in gas. It wasn't until that Financial Aid meeting in 2010 that I learned the online courses were significantly more expensive than campus classes.

Sitting in the Financial Aid office that day I learned I would need roughly $20,000 to finish my education. How could this be happening? I had already completed so much of my degree program, and had incurred so much debt that there was no way I could start over at a different school. I was told I had to apply for a private loan and only after it was denied could I apply for a loan through the DeVry ECSI Program. I took one loan in May 2011, and a second in March 2012. In addition to the loan, I asked what other options I had to reduce the remaining cost. I was told I could submit an appeal to transfer credits from a community college. Again I was shocked. I was specifically told when I started at DeVry that credits were non-transferable, so I never tried pursing that course of action. Had I known that I could in fact transfer credits, I would have looked into this option much sooner as I live less than 5 miles from my community college. I filed the appeal and took four classes at Moorpark Community College. While I was relieved at this opportunity, I was heartbroken as well. Those four classes, with all the books and fees, cost me less than one unit credit at DeVry. This made me realize just how big of a mistake I made when I chose to pursue my education with DeVry University, and how much they took advantage of my lack of knowledge regarding the student loan process.

The appeal to transfer credits would not be my last. When I returned to DeVry after taking my community college courses, I would have to write two more appeal letters before I received my diploma. To get the funding for my final semester I had to apply for a second loan through the ECSI Program. In order to get the total amount needed I would have to overload my units, taking 2-3 units more than the maximum DeVry would allow. I wrote a very simple appeal letter, consisting of one paragraph that in short stated “please allow me to overload my course units, so I can apply for this loan as it is my only option to be able to afford to complete my education”. It was denied by the Dean of Students. When I inquired as to why my appeal was denied I was told the Dean ‘wanted to know how I was going to be successful’ if the request was allowed. During my time at DeVry I had the following against me: I had only taken two classes a semester, I had failed one class, and I had taken an entire semester off. My appeal then became a two page paper on my projected study habits and explanations of the above stated offenses. It was approved and I was able to get the loan to finish my course load. During my final class I received notification from the Administration Office that my application to walk in the graduation ceremony was denied, on the grounds I was missing 3 units of elective credits. I already had the Dean’s approval in writing to allow a course I had accidentally taken twice to count as this ‘missing’ elective. My Academic Adviser, who helped me schedule my classes, had not noticed I had already taken the course under the previous course code. I had to write yet another appeal to the Dean, which fortunately was approved with no hassle, so I could finally complete my education and receive my diploma.

One of the things that drew me to DeVry University was their promise of career placement. The school boasted their Career Center helped their graduating students find jobs in their new fields of education. Roughly six months after I graduated I was contacted by the Career Center with a prospective job opportunity. They had found me a 20 hour a week, $9.00 an hour position. That’s what seven years of study and tens of thousands of dollars in student loan debt got me, an offer for a position that was suited for a High School Junior or Senior. I turned the position down as I was currently working 40 hours a week, making $14.00 an hour with full benefits. I asked the Career Center to please let me know if they found anything meeting or exceeding my current situation. As I type this letter it has been three and a half years since I graduated, and I have not heard from the Career Center at DeVry University since.

In 2015 I had a consultation with a lawyer to see if I had any legal grounds to stand on, in terms of getting my loans reduced due what I saw as unethical and less than forthright business practices by DeVry University. I did not. The contract is so well written by DeVry that I would have been facing an even more expensive and most likely pointless legal battle if I went down that road.  It is now the start of 2016. I have worked my way up through a few different companies to become an Accounts Receivable Specialist. I work a full 40 hours a week at $21.00 an hour, have full benefits, and pay back almost $400 a month in student loan debt.

I consolidated my federal student loans in 2014, at which time the consolidated total was $72,460.73. When I consolidated I applied for, and was granted, an Income Based Repayment plan that I must re-qualify for every year. My monthly payment is $170; since 2014 I have paid $4,234.43 towards this loan. The current balance is now $75,822.85; my payment does not cover the interest I am accruing every month, so my loan balance has increased. Until such a time as I can pay off the accrued interest and make a substantially larger monthly payment, this balance will continue to grow. My loans through the DeVry ECSI Program totaled $13,260.41 and currently have a payoff balance of $8,949. I have paid back $5,815.20 in interest alone since 2011.


Every day I struggle with the financial position I am in due to my education. When I started college I looked forward to one day owning a home. That dream was the light that kept me going and made me never give up achieving my degree. Today that dream feels like an impossible task. I look at my student loans and wonder how my dream will ever become reality. My parents see me struggle and feel immense guilt, as it was their urging that put me on the path to DeVry. I want people to know my story so they can be fully aware of the potential situation they are entering in to. I want young high school graduates, like I was, to be spared the feeling of hopelessness that I now struggle with. Please help me stop DeVry University from robbing even one more person of the future they have stolen from me.

THANK YOU ALISON - YOU ARE NOT ALONE!

Alison's story is just one of tens of thousands!  While she found that DeVry University personally let her down, I have found that there are any number of colleges and universities that are just as guilty of "failing" enrollees and graduates!  The facts are overwhelming.  Colleges seem to have one goal in mind and that is the PROFIT they are bringing in, and "To Hell" with the student!


If you have any comments, questions, or suggestions for this blog, please let me know.  By choosing to follow my blog, you will be informed of my latest posts - just complete by posting your email in the form on the upper right of this page.

Until next time, God Bless America!
Richard Allen Precht