Navient Sued Over Failure to Help Borrowers
Student loan servicing company Navient is being sued by the Consumer Financial Protection Bureau over claims of failing to assist borrowers during the repayment period. Bureau Director Richard Cordray alleges that Navient makes it difficult for borrowers to pay back loans by incorrectly applying or allocating payments. Cordray believes the company often fails to fix errors unless a borrower is vigilant to have the problem resolved. In response to the lawsuit, Navient claims the allegations are unfounded and questions the timing of the lawsuit, as it was filed on the eve of a new presidential administration. More on the Navient lawsuit is available at Inside Higher Ed.
PLUS Loans in Financial Aid Packages
College admission counselors have raised concerns that some institutions are combining Federal PLUS Loans with other financial aid in students’ award packages. At last month’s National Association for College Admission Counseling (“NACAC”) meeting, financial aid professionals argued that including PLUS loans with award packages could make a family’s overall cost appear smaller. It may also mislead students into thinking they’re eligible for the loans, which are not guaranteed. A motion to exclude PLUS loans from an institution’s original financial aid letter was accepted last week, and will be presented to the NACAC’s Board of Directors in November. More on Federal PLUS Loans is available on Inside Higher Ed.
Loan Forgiveness Available for Qualified Student Loans
In case you missed it last year, the Internal Revenue Service (“IRS”) issued a revenue procedure (“Rev. Proc.”) that offers loan forgiveness to certain federal student loans. Rev. Proc. 2015-57 addresses tax implications for the discharge of student loans under the “closed school” and “defense to repayment” processes. Under the guidance, qualifying taxpayers can exclude from their income student loans discharged under either process. In addition, any prior-year deductions and/or tax credits a taxpayer receives under Rev. Proc. 2015-57 are not added back to the gross income and/or tax liability during the year the student loan is discharged. More on. Read More.
Student Loan Counseling Experiment Being Considered
Earlier this month, Under Secretary of Education Ted Mitchell said the Department of Education is considering an experiment allowing several colleges and universities to require additional student loan counseling. Selected institutions would have the power to increase their loan counseling requirements through the Education Department’s experimental sites authority. Mitchell believes the program would help his department gain a better sense of whether required loan counseling works, as well as what type of counseling is most effective to help counter over-borrowing. For more on the student loan counseling experiment , visit the Inside Higher Ed website.
States Take on Student Loan Crisis
With student loan debt projected to exceed the trillion-dollar mark, several states are taking action to address the issue. The Massachusetts Council of Human Service Providers, Inc., for instance, is pushing its state’s Legislature to enact a fund that helps low-paid employees pay off their student loans. Another example is Maryland Governor Larry Hogan’s recent approval of Montgomery County’s student debt refinance program. The County is permitted to use tax-free bonds to make available a system of financial assistance for residents seeking secondary education. Minnesota is also working on legislation that promotes awareness of the federal loan forgiveness program. The. Read More.
Topics: Student Loans
Lawmakers Turn Attention to Student Loans
In efforts to alleviate the burden of student loans, policymakers have recently taken steps to introduce new laws. As part of an executive order, President Obama issued a presidential memorandum that directs the secretary of education to allow five million student loan borrowers to limit their payments at 10 percent of their incomes. The memorandum also asks the secretary of education to provide more effective communication methods and increased loan counseling for borrowers. Separately, Senator Elizabeth Warren presented the Bank on Students Emergency Loan Refinancing Act (“S. 2432”). The bill would lower rates and the costs of new loans, and. Read More.