Bankruptcy of Your Student Loans

Bankruptcy of Your Student Loans

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




Saturday, June 4, 2016

THE DISCHARGE OF $130,000 WAS SETTLED WITHOUT A TRIAL! HERE IS MY THEORY OF WHY!

AT A MOTION HEARING, THE DEPT. OF ED. MOVED TO STRIKE MY COMPLAINT. 
BY COUNTERING THAT MOTION, THE DEPT. OF ED. SAW I WAS NOT GOING TO FOLD!

THE JUDGE GAVE THE DEPT. OF ED. JUST THREE DAYS TO ANSWER MY COMPLAINT. WHAT THE DEPT. OF ED. DID NEXT LEFT ME THINKING WHY DIDN'T THEY WANT A TRIAL?


I HAVE A THEORY! 

Ever since I won a full discharge of my student loan debt in February of this year, I have had this recurrent thought "why did the Department of Education (D.O.E.) agree to discharge my $130,000 loan debt without going to trial?"  Why was it that the D.O.E. could possibly be so eager to end my Adversary Proceeding here at the Bankruptcy Court in Alexandria Virginia?

Let me begin by sharing a brief overview of my situation.  At 67, retired, disabled unemployed, living on social security and a small federal pension, (both of which were being "garnished" by the D.O.E.), I was living with my youngest child and her husband on just $1,200.00 a month.  My income was being offset by the U.S. Treasury in an attempt to pay the interest on my consolidated and defaulted 27-year old student loan.  A debt which originally was $55,000.00 borrowed when I returned to earn a bachelors degree when I was 40 years old.

Of that debt, I had paid back nearly $14,000.00 in spite of the fact that from 2002 until I turned full retirement age, the Social Security Administration was deferring my loan due to my being awarded SSDI (Social Security Disability Insurance/Income).  Once I reached what was described as "full-retirement status" my SSDI was changed over to "a straight social security annuity".  Then I was notified that my student loan was now due in full and had grown to nearly $130,000.00.  And then I was notified that my monthly annuities were going to be garnished.  The reality is that the 15% they are allowed to garnish was not enough to cover the interest, that keep growing adding to the principal each and every day!

IN ANSWERING THAT QUESTION ---- I PROPOSED MY THEORY

Sometimes when we have an idea or in this case a theory, it helps to share those thoughts with a friend and get an opinion.  So I wrote my friend W. Richard Fossey an email and proposed my theory to him as follows:

"Richard,

Something that has come into my thoughts on more than one occasion is the fact that the DOE moved so quickly in my particular case to settle without a protracted trial.  I have a theory, perhaps you can consider this idea that I keep having and provide your thoughts?

OK... As you know, my preparation made a huge difference.  And the fact that I had all of my documents and exhibits ahead of the discovery phase and filed the AP in a very timely and methodical way, also made a huge difference (in my opinion).

But what has peaked my curiosity as I think back on this, is why did Coulter and the DOE move to settle without seeking a "trial judgement" or "decision" from Judge Mayer?  Here is my theory....

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? 

What are your thoughts?"  Richard P.

My friend's reply....

Hi, Richard.

I think you are exactly right. Your thorough preparation was definitely a factor, and when DOE received that opposition to their motion to strike, Coulter knew you were ready to fight for as long as it would take.


But your other hypothesis is a big part of it as well. I agree that Coulter was afraid of a written decision that could be published in the Bankruptcy Reporter that would alert everyone in a similar position that the July 7th letter could be a huge asset.  DOE couldn't risk it. So your victory doesn't go down in the records like (our mutual friend's) did.


(Our mutual friend) thinks that the combination of the Roth decision and your victory means that anyone whose Social Security checks are being garnished can win an adversary proceeding.  In other words, your victory could apply to about 155,000 people!  In other words, all these people would have to do is to follow the template you laid out and they would almost certainly win.


That's why I would like to see your victory publicized as widely as possible and why I think your blog is so important.

And although I am not certain, I also think your case might have been a factor in DOE's decision to forgive student loans for everyone who is categorized as disabled.  They too would fit under the July 7 letter.

I'm thinking someone considered your case and could see that disabled people could do just what you did. To avoid the publicity and the court precedent that would surely come, DOE got pro-active and signaled it would forgive loans by all disabled people. As I recall, that is almost 380,000 people--people who may have gotten relief because of what you did with that letter.

You are kind of the Rosa Parks for the student-debtor class!"



In her autobiography, My Story (Rosa Parks) said:

People always say that I didn't give up my seat because I was tired, but that isn't true. I was not tired physically, or no more tired than I usually was at the end of a working day. I was not old, although some people have an image of me as being old then. I was forty-two. No, the only tired I was, was tired of giving in! (emphasis added)
Me.... the Rosa Parks for the student-debtor class!

Well I have actually been in the bus that Rosa Parks made famous, it was in the Henry Ford Museum in Dearborn, Michigan, and I can tell you that it was a somber experience.  


For my friend to compare me to Rosa Parks is a great compliment.  It would be a great honor to know that others find hope and answers to their personal student loan "crisis" by something I have shared!  If you are struggling with a student loan that will never be paid off in your lifetime, there is a glimmer of hope. When I nearly despaired and was ready to quit, I was encouraged by my friends to press on.  I decided I was not going to "move to the back of the bus" and I was not going to be intimidated by the unfair laws that were against me.

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.  Feel free to pass my writings along.  



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. 

Thank you!  Sincerely, Richard Allan Precht