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☆ Student-loan borrowers are getting $100 million in payments after being 'cheated' out of lower bills by a major lender, a federal consumer watchdog says
▼ + stars: | 2024-09-12 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +3 min

Read previewA yearslong legal battle with a major student-loan company has finally come to an end, and borrowers are getting their money back. The settlement permanently bans Navient from servicing federal loans and prohibits the servicer from managing most loans within the Federal Family Education Loan program. It also requires Navient to pay a $20 million penalty to the CFPB, along with $100 million to impacted borrowers. Last year, for example, Navient agreed to a $198 million settlement with private student-loan borrowers who claimed the lender was collecting debts that should have been discharged in bankruptcy. Along with Navient, the CFPB recently filed a lawsuit against student-loan company PHEAA, accusing it of illegally collecting payments from borrowers who were discharged in bankruptcy.

Persons: —, servicer, Rohit Chopra, Eric Halperin, Navient Organizations: Service, Consumer Financial, Bureau, Business, Family Education, Democratic, PHEAA

☆ A major student-loan company has 'illegally' tried to collect payments from borrowers whose balances were already wiped out through bankruptcy, a federal watchdog alleges in a new lawsuit
▼ + stars: | 2024-05-31 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +4 min

Read previewA federal consumer watchdog just hit a major student-loan company with a new lawsuit. According to the press release, the CFPB accused PHEAA of illegally collecting payments from student-loan borrowers whose loans had already been discharged in bankruptcy and sending "false information" to credit reporting agencies. The lawsuit, filed in the US District Court for the Middle District of Pennsylvania, said that under the US bankruptcy code, some private student loans are not subject to the stringent standards that most student loans are when it comes to receiving relief through bankruptcy. Per the CFPB, American Education Services collected or tried to collect 7,934 private student loans after a bankruptcy proceeding between 2017 and 2021, and 177 of them were non-qualified education loans. AdvertisementThe CFPB has previously issued guidance over potential illegal collections of borrowers' payments after bankruptcy proceedings.

Persons: —, PHEAA, Rohit Chopra Organizations: Service, Consumer Financial, Bureau, Pennsylvania Higher Education Assistance Agency, American Education Services, Financial, Business, Court, Middle, Middle District of Locations: Middle District, Middle District of Pennsylvania

☆ Meet a man with $47,000 in student debt who's been trapped in a student-loan repayment 'bureaucracy nightmare' for nearly 3 decades without the debt cancellation he was promised
▼ + stars: | 2023-01-01 | by ( Ayelet Sheffey | ) www.businessinsider.com time to read: +6 min

He was promised loan forgiveness after 25 years, but he's still repaying the debt with nearly a decade to go. "We are literally crushed by this debt," Harmon, 53, told Insider. NPR obtained internal documents indicating that three student-loan companies — PHEAA, CornerStone, and MOHELA — weren't tracking payments borrowers made over the past two decades for their income-driven repayment plans. 'The government is not fulfilling its obligation'US lawmakers are aware of failures with income-driven repayment plans. It found that the department had approved just 157 loans for full forgiveness under income-driven repayment plans, with 7,700 more loans "potentially eligible" for forgiveness.

The student-loan forgiveness application is live on the federal student aid website. Over 8 million Americans applied for student-loan forgiveness using the beta version of the application, released on Friday, October 14. Can I still get student-loan forgiveness if I haven't filed my tax return? To receive a non-filing letter from the IRS, fill out Form 4506-T.Will the amount of student-loan forgiveness I receive get taxed? Parents whose children are also applying for student-loan forgiveness must file a separate application for debt relief for their Parent PLUS loans using the same application.

The federal student-loan forgiveness application is now open in beta-testing mode. Access the student-loan forgiveness application here. Here's what you'll need to have on hand to fill out the application and apply for student-loan forgiveness. Here's what the application looks like from a cell phone:The student-loan forgiveness application does not include income verification documents. If you received a Pell Grant, you are eligible for $20,000 in student-loan forgiveness.

You'll receive $10,000 in student-loan forgiveness if you meet the income requirements. You'll receive $20,000 in forgiveness if you received a Pell Grant and meet the income requirements. If you meet the income requirements above and did not receive a Pell Grant, you're eligible to receive $10,000 in student-loan forgiveness. Which loans qualify for student-loan forgiveness? studentaid.govThere is no partial student-loan forgiveness for people who do not meet the income requirementAt the time of this writing, student-loan forgiveness is not available for people who make more than the income requirements outlined in Biden's plan.

Perkins loans that aren't held by the US government do not qualify for Biden's new student-loan forgiveness. To qualify for up to $20,000 in forgiveness, you must consolidate your loans into Direct loans. This may not be the best option for everyone, since some Perkins loans are forgiven after five years. Unlike federal student loans, some Perkins loans are serviced by the school you attended, but the federal government pays for interest accrued while you're still in school. studentaid.govOnly consolidate loans that are not Direct loans.

Only loans held by the federal government are eligible for Biden's student-loan forgiveness. If you refinance your student loans with a private lender, those loans are no longer eligible. You must have the correct federal student loan type to be eligibleGenerally, only loans held by the federal government are eligible for Biden's forgiveness plan. If you refinance your student loans, you won't be eligible for Biden's forgiveness plan of up to $20,000. The long-term benefits of student-loan forgiveness and income-driven repayment plans outweigh the short-term benefits of refinancing with a private lender.

To qualify for forgiveness, FFEL and Perkins loan borrowers can consolidate into a Direct loan. Student loan expert Sonia Lewis, who has worked with over 20,000 clients to help them navigate their student loans via the Student Loan Doctor LLC, says most people don't know their loan type in the first place. studentaid.govHere's a list of all the different loan types, and whether or not they qualify for student loan forgiveness. If you have privately-held FFEL loans, you must consolidate your FFEL loans into a Direct loan to qualify for Biden's student-loan forgiveness plan. Additionally, if you refinanced your federal student loans with a private lender, those loans are no longer eligible for Biden's student-loan forgiveness plan.

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