• Теги
    • избранные теги
    • Компании157
      • Показать ещё
      Люди11
      Международные организации3
      Разное44
      • Показать ещё
      Показатели4
      Формат3
      Страны / Регионы8
      • Показать ещё
Выбор редакции
14 ноября, 21:01

Nelnet downgraded to neutral from outperform at Credit Suisse

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.

Выбор редакции
Выбор редакции
09 августа, 02:03

Why A Special Circle Of Student Loan Hell Is Reserved For College Dropouts

Just in case it wasn't already bad enough to be a recent Millennial college graduate in the US with tens of thousands in student debt (recall that of those lucky enough to have a job after graduation, roughly half live paycheck to paycheck; as for those without a job, well... our condolences), it turns out there is a special circle in student loan hell reserved for those who never manage to graduate. Because as Bloomberg reports, when it comes to collecting on student loans, the U.S. Department of Education treats college dropouts the same as Ivy League graduates: They just want the money back. But that's only part of the bad news. It will come as no surprise that when it comes to wage potential, dropouts are in a category of their own. The dead last category. Unlike peers who earn degrees, dropouts generally don't command higher wages after leaving school, making it harder for them to repay their student debt. The typical college dropout experienced a steep fall in wealth from 2010 to 2013, figures from the Federal Reserve in Washington show, and an 11 percent drop in income—the sharpest decline among any group in America. Worse, dropouts who took out loans to finance the degrees they ultimately didn't obtain often end up worse off for attending college. It should therefore, as Bloomberg writes, come as no surprise that half of federal student loan borrowers who dropped out of school within the past three years are late on their payments, according to Education Department figures provided to Bloomberg. More than half of those delinquent borrowers are at least 91 days behind. By comparison, just 7.2 percent of recent college graduates are more than three months late on their debt. There are two immediate takeaways from the figures, according to the author.  The first is that higher education experts eager to put families at ease about the increasing cost of college are likely to conclude that whatever crisis exists in student loans is concentrated among college dropouts, so graduates needn't worry. This is largely how the Education Department and the White House view the issue. The department recently focused its efforts on improving graduation rates, hoping it will lead to fewer loan defaults. But it's unlikely that approach will yield benefits soon. Graduation rates have increased by less than five percentage points over the past dozen years, federal data show. The problem with this approach is that even the NY Fed recently admitted that it is not just the dropouts who are impacted as student loans are the primary culprit for record wealth inequality in the US: a demographic that is far broader than just the narrow dropout subset. The second takeaway is that it's time for the Education Department and its loan contractors to pay special attention to the groups of borrowers most likely to struggle with their debt. The Education Department outsources the work of collecting payments and counseling borrowers on their repayment options to loan contractors such as Navient Corp. and Nelnet Inc. The government pays these contractors about six times more for accounts that are current rather than seriously delinquent, regardless of the costs the companies incur to help borrowers resolve their delinquency. Loan companies say they simply don't get paid enough to help the neediest borrowers. As such, the segment of the US population most in need of counseling, and outright help, is least likely to get it. And this is happening under an 8-year progressive agenda. Bloomberg adds that the Education Department has known for years that the typical borrower who defaults on her debt didn't graduate with a credential, federal records show. Yet its Federal Student Aid office—the somewhat independent unit that runs the government's student loan program—doesn't mandate special procedures for its contractors' dealings with borrowers most at risk of default. Instead, FSA gives its loan contractors "broad latitude" to handle borrowers' accounts. And while the conclusion of the original piece is admirable, namely that the government should intervene on behalf of the borrowers and negotiate with the loan contractors to ease terms of the loan, adding that last month, the department directed FSA to structure its next round of contracts in a way that guarantees that dropouts would quickly get help with their loans from specially trained customer service representatives, the real story here is a simple one, and one we have repeated for a long time: the government should admit that the current higher learning paradigm is flawed, where as a result of ultra low rates, college tuition is soaring, but due to the unprecedented ease in attaining student debt, few find college costs to be a gating factor no matter how bleak the practical outcomes of a college education may be for loan repayment or future income potential. As such what the government should do is overhaul the entire process of setting college tuition, which in recent years has exploded at a rate that is orders of magnitude higher than that of core inflation. And since ultimately this is not a government decision but one driven by simple monetary dynamics, and blessed by a low cost of money, the real culprit here is the Fed (the same Fed which ironically just last week found that student loans are the cause behind America's wealth divide) which by keeping the rates at zero, assures that problems faced by both college grads - and dropouts - will only get worse. And yes, as even the Fed will now admit, the wealth divide in the US will only get more profound as the populist tensions revealed not only by Brexit but by the ongoing summer of rage in the US hit a breaking point at which point the Fed's decision will finally be taken out of its hands.

Выбор редакции
17 июня, 22:40

Nelnet tries to stave off student loan ABS downgrades

NEW YORK (IFR) - Student loan servicer Nelnet is trying to stave off downgrades on US$3.25bn of its debt, and wants investors to help by agreeing to extend the maturity date of its bonds.

23 декабря 2015, 20:07

When You Weren't Paying Attention Congress Shook Up The Student Loan Market

Some 42 million Americans could become less likely to fall behind on their student loans -- and get better customer service -- thanks to a new measure the Republican-led Congress forced on the U.S. Department of Education this month. The government's four largest student loan contractors have the worst track record when it comes to preventing late payments. Despite this, the Education Department funnels the bulk of new loans to those four contractors. But 50 words tucked into an 887-page spending bill President Barack Obama signed into law Friday will change that by directing the Education Department to treat its largest and smallest loan contractors equally. The department currently favors its four largest contractors, which include publicly-traded companies such as Navient Corp. and Nelnet Inc., by sending them 74 percent of borrowers who have recently left school and have to begin repaying the government. The department's six smaller contractors fight over the remaining 26 percent of borrowers. That occurs even though borrowers are about three times as likely to fall behind on their student loans if they're serviced by the four big loan contractors compared to the department's six smaller contractors, federal data show. At the best-performing large contractor, Great Lakes Higher Education Corp. & Affiliates, about 25 percent of borrowers are late on their required payments, according to the most recent figures from the Education Department. The delinquency rate at Mohela is about one-third of that, or less than 9 percent. The firm, also known as the Missouri Higher Education Loan Authority, is the best-performing small contractor. Roughly 36 percent of Nelnet's borrowers are delinquent -- giving it the highest delinquency rate of any department contractor. At the worst-performing small contractor, Oklahoma Student Loan Authority, 15 percent of borrowers are behind on their obligations. By directing more accounts to smaller loan contractors, representatives of those firms say, both taxpayers and student borrowers stand to benefit because borrowers at risk of falling behind will get the attention and service they need to make good on their obligations and avoid defaulting on their debts. The threat of losing future business could push the department's biggest loan servicers, such as Navient and Nelnet, to improve their own performance and reduce their borrowers' delinquency rates. "This provision is a win for student loan borrowers, ensuring that they receive effective, personalized loan servicing that guides them through their repayment period successfully, and for taxpayers, who deserve a system that maximizes existing and proven resources," Debra Chromy, president of the Education Finance Council, a Washington trade association, said in a statement. "This provision is a win for student loan borrowers." --Debra Chromy, president of the Education Finance Council The Education Department has until March 1 to implement the change. Starting next month, the department is expected to solicit a new round of contracts from loan servicers hoping to either join or remain part of the federal student loan program. It can take a few years of negotiation until the new contracts are finalized. In the meantime, by forcing the Education Department to allocate new loans based purely on measures such as delinquency rates and customer satisfaction surveys, smaller loan contractors could get close to 75 percent of all new loans, according to calculations by Ben Miller, who helps lead higher education policy for the Center for American Progress, a Washington advocacy group with close ties to the Obama administration. The Education Department has previously defended its arrangement with its loan servicers by claiming that smaller contractors have been mostly dealing with allegedly more reliable borrowers to begin with, which arguably makes it easier for smaller contractors like Mohela to achieve low delinquency rates. Companies such as Navient and Nelnet, which stand to gain fewer new accounts as a result of the change, could be among the biggest losers. Shares in Navient have fallen about 5 percent since Congress unveiled its plan on Dec. 16, bringing its total year-to-date drop to about 45 percent. Nelnet's stock has been flat since Dec. 16, though it's down about 30 percent this year. Total student debt, including private loans, has doubled since 2008 to about $1.3 trillion, according to the Federal Reserve. Americans collectively owe more on their student loans than they owe on their credit cards or auto loans, making student debt the second-largest source of household debt after home mortgages.  The Consumer Financial Protection Bureau estimates that nearly 8 million Americans, or about 1 in 5 with a higher education loan, are in default on their student loans. Millions more are delinquent or otherwise delaying payments due to financial hardship, allowing their burdens to grow as the accumulating interest is added to the balance.   Nearly 8 million Americans -- 1 in 5 of those with a higher education loan -- are in default on their student loans.   The White House has repeatedly directed the Education Department to aid struggling borrowers -- even enlisting the expertise of officials at the consumer bureau and the Treasury Department -- in a bid to reduce loan delinquencies and prevent defaults. But defaults have continued to increase in recent years, despite the fact that nearly every American with a federal student loan is eligible to make payments based on their monthly earnings. Federal student loans aren't in default until borrowers have gone 270 days, or nine months, without making payments. Americans are more likely to be at least 90 days late on their student loans than any other type of loan, according to the Federal Reserve Bank of New York. Borrower advocates and officials at the Treasury Department and federal consumer bureau suspect sloppy loan servicing practices are to blame for much of the rise in student loan distress. Servicers collect borrowers' monthly payments and counsel them on their repayment options. In March, in response to concerns about servicers' allegedly rampant mistreatment of debtors, Obama announced that "every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans." Months later, in September, the consumer bureau declared that the industry was riddled with "widespread failures" after a review found many borrowers were unable to obtain basic information about their accounts, were frequently misled, surprised with unexpected late fees and often pushed into default. About 90 percent of all student loans are either owned or backed by the Education Department. That arguably makes Obama's and the CFPB's declarations an indictment of Education Secretary Arne Duncan's management of the federal student loan program. Miller, a former Education Department official, predicted that the department is likely to miss Congress's March 1 deadline. "Something that Congress always gets wrong is how long it takes to do things in the executive branch," he said. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

23 декабря 2015, 20:07

When You Weren't Paying Attention Congress Shook Up The Student Loan Market

Some 42 million Americans could become less likely to fall behind on their student loans -- and get better customer service -- thanks to a new measure the Republican-led Congress forced on the U.S. Department of Education this month. The government's four largest student loan contractors have the worst track record when it comes to preventing late payments. Despite this, the Education Department funnels the bulk of new loans to those four contractors. But 50 words tucked into an 887-page spending bill President Barack Obama signed into law Friday will change that by directing the Education Department to treat its largest and smallest loan contractors equally. The department currently favors its four largest contractors, which include publicly-traded companies such as Navient Corp. and Nelnet Inc., by sending them 74 percent of borrowers who have recently left school and have to begin repaying the government. The department's six smaller contractors fight over the remaining 26 percent of borrowers. That occurs even though borrowers are about three times as likely to fall behind on their student loans if they're serviced by the four big loan contractors compared to the department's six smaller contractors, federal data show. At the best-performing large contractor, Great Lakes Higher Education Corp. & Affiliates, about 25 percent of borrowers are late on their required payments, according to the most recent figures from the Education Department. The delinquency rate at Mohela is about one-third of that, or less than 9 percent. The firm, also known as the Missouri Higher Education Loan Authority, is the best-performing small contractor. Roughly 36 percent of Nelnet's borrowers are delinquent -- giving it the highest delinquency rate of any department contractor. At the worst-performing small contractor, Oklahoma Student Loan Authority, 15 percent of borrowers are behind on their obligations. By directing more accounts to smaller loan contractors, representatives of those firms say, both taxpayers and student borrowers stand to benefit because borrowers at risk of falling behind will get the attention and service they need to make good on their obligations and avoid defaulting on their debts. The threat of losing future business could push the department's biggest loan servicers, such as Navient and Nelnet, to improve their own performance and reduce their borrowers' delinquency rates. "This provision is a win for student loan borrowers, ensuring that they receive effective, personalized loan servicing that guides them through their repayment period successfully, and for taxpayers, who deserve a system that maximizes existing and proven resources," Debra Chromy, president of the Education Finance Council, a Washington trade association, said in a statement. "This provision is a win for student loan borrowers." --Debra Chromy, president of the Education Finance Council The Education Department has until March 1 to implement the change. Starting next month, the department is expected to solicit a new round of contracts from loan servicers hoping to either join or remain part of the federal student loan program. It can take a few years of negotiation until the new contracts are finalized. In the meantime, by forcing the Education Department to allocate new loans based purely on measures such as delinquency rates and customer satisfaction surveys, smaller loan contractors could get close to 75 percent of all new loans, according to calculations by Ben Miller, who helps lead higher education policy for the Center for American Progress, a Washington advocacy group with close ties to the Obama administration. The Education Department has previously defended its arrangement with its loan servicers by claiming that smaller contractors have been mostly dealing with allegedly more reliable borrowers to begin with, which arguably makes it easier for smaller contractors like Mohela to achieve low delinquency rates. Companies such as Navient and Nelnet, which stand to gain fewer new accounts as a result of the change, could be among the biggest losers. Shares in Navient have fallen about 5 percent since Congress unveiled its plan on Dec. 16, bringing its total year-to-date drop to about 45 percent. Nelnet's stock has been flat since Dec. 16, though it's down about 30 percent this year. Total student debt, including private loans, has doubled since 2008 to about $1.3 trillion, according to the Federal Reserve. Americans collectively owe more on their student loans than they owe on their credit cards or auto loans, making student debt the second-largest source of household debt after home mortgages.  The Consumer Financial Protection Bureau estimates that nearly 8 million Americans, or about 1 in 5 with a higher education loan, are in default on their student loans. Millions more are delinquent or otherwise delaying payments due to financial hardship, allowing their burdens to grow as the accumulating interest is added to the balance.   Nearly 8 million Americans -- 1 in 5 of those with a higher education loan -- are in default on their student loans.   The White House has repeatedly directed the Education Department to aid struggling borrowers -- even enlisting the expertise of officials at the consumer bureau and the Treasury Department -- in a bid to reduce loan delinquencies and prevent defaults. But defaults have continued to increase in recent years, despite the fact that nearly every American with a federal student loan is eligible to make payments based on their monthly earnings. Federal student loans aren't in default until borrowers have gone 270 days, or nine months, without making payments. Americans are more likely to be at least 90 days late on their student loans than any other type of loan, according to the Federal Reserve Bank of New York. Borrower advocates and officials at the Treasury Department and federal consumer bureau suspect sloppy loan servicing practices are to blame for much of the rise in student loan distress. Servicers collect borrowers' monthly payments and counsel them on their repayment options. In March, in response to concerns about servicers' allegedly rampant mistreatment of debtors, Obama announced that "every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans." Months later, in September, the consumer bureau declared that the industry was riddled with "widespread failures" after a review found many borrowers were unable to obtain basic information about their accounts, were frequently misled, surprised with unexpected late fees and often pushed into default. About 90 percent of all student loans are either owned or backed by the Education Department. That arguably makes Obama's and the CFPB's declarations an indictment of Education Secretary Arne Duncan's management of the federal student loan program. Miller, a former Education Department official, predicted that the department is likely to miss Congress's March 1 deadline. "Something that Congress always gets wrong is how long it takes to do things in the executive branch," he said. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

04 декабря 2015, 20:02

Pay Down Student Loans and Save for Retirement: You Can Have It All

You might think it's impossible to save for retirement while you pay down student loans. Think again. Saving for retirement in your 20s is crucial; put away even a small amount now, and it will have decades to grow into a strong foundation for when you retire. Keep in mind that while you're addressing other areas of your financial health, it's vital to stay current on your loans and to send the minimum required payment to your student loan servicer every month. The right student loan repayment plan will keep your payments affordable. Follow these simple steps to prepare for retirement while you pay down your loans. Get the employer match on your 401(k) No matter how much student loan debt you have, take full advantage of a company match on your retirement plan contributions. When your company offers a match, it puts its own money into your employee-sponsored retirement account, depending on how much you contribute. The most common employer-sponsored accounts are 401(k) plans (available at for-profit companies) and 403(b) plans (offered by nonprofits, schools and hospitals). Say your human resources representative tells you at orientation that your company offers a 3% match toward your 401(k). That means if you elect to redirect 3% of your paycheck to a retirement account each pay period, your company will put in the same amount. So an amount equal to 6% of your pretax, biweekly pay will show up in your account, even though you contributed only half. You'll pay taxes on that money when you withdraw it during retirement. While the company will match your contributions if you put in 1% or 2% instead, you'd lose out on free money if you went that route. Get the full match and you'll be glad later when you have more in your account than you could have saved on your own. Don't have access to an employer-sponsored retirement plan? Set aside what you can spare in a Roth IRA, an individual retirement account. You can put up to $5,500 a year in a Roth IRA if you earn an annual income of $116,000 or less. You contribute to a Roth IRA after taxes have been taken out of your income, so you won't be taxed on that amount when you withdraw it at retirement. Prioritize paying down high-interest loans The decision whether to invest beyond your 401(k) match will come down to how much you pay in interest on your loans. It's best to pay off loans that carry interest of 7% or more before you put additional funds toward retirement. That will free up money you'd otherwise pay in interest in the future. Once your high-interest loans are paid off, continue to pay the minimum on low-interest loans while you invest. Or you could use the following rule of thumb when deciding which loans to pay off. The expected average return on long-term stock investments for retirement -- meaning the amount an investor's stocks will increase in value -- is about 7% a year (though that can vary widely year to year based on market conditions). So you can assume that's what you'll earn on average when you invest mostly in stocks as a 20-something with a 401(k) or a Roth IRA. Pay off a loan with a 4.29% interest rate, for instance, and you'll earn 4.29% of your loan's value each year it's paid off. That's less than the 7% you'd earn by investing in stocks for retirement. If your loans have low interest rates, you could make more money if you invest instead, perhaps in a Roth IRA after you've maxed out your employer match in a 401(k). What's next? If you're ready to pay extra toward your loans: Call your student loan servicer and find out how to make a larger payment. In most cases, it's easiest to log in to your online account and pick the loan or loan group you want to apply your additional payment to. Check out NerdWallet's tips on how to work with these four loan servicers: FedLoan Servicing Great Lakes Navient Nelnet Private lenders, including Wells Fargo, Citibank and Discover, have their own systems for applying extra payments toward your loans. Contact your lender to make sure your money goes where you want it to. If you're ready to put extra toward retirement: Increase your contributions to your company's retirement plan beyond the employer match. Consider additional 1% increases to your contributions whenever you get a raise or at the start of each year. NerdWallet's resources can also help you pick a Roth IRA account provider if you don't have a 401(k), don't get an employer match or have the means to save extra. Make sure to choose a plan with low fees, and with a small or $0 initial account minimum if you don't have much to put in the account to start. Most importantly, congratulate yourself for thinking critically about how to spend the money you're earning now that you've graduated. It's not easy to choose saving for retirement or paying off your loans over vacations or dinners out. But once you're on the right track with your savings, you'll feel empowered knowing your future self is taken care of. Brianna McGurran is a staff writer at NerdWallet. Email: [email protected] Twitter: @briannamcscribe. Photo credit: COD Newsroom/Flickr. Sign up for NerdWallet Grad's weekly newsletter to get career and money advice delivered right to your inbox. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

02 декабря 2015, 00:40

The Obama Administration Wants To Bypass Student Loan Servicers

The Department of Education soon will allow Americans with federal student loans to bypass the department's contractors and make payments directly to the government, avoiding loan servicers accused of routinely mistreating and misleading borrowers. Officials "will implement a single Department of Education student loan portal for all borrowers ... hoping to make things clearer, simpler and less confusing for every borrower," according to Undersecretary of Education Ted Mitchell, who addressed college financial aid administrators in Las Vegas on Tuesday. The audience can be heard applauding his announcement in a video recording. Colleges, their financial aid employees, and state and federal regulators routinely complain about the level of customer service student borrowers receive from the Education Department's loan contractors.  In March, President Barack Obama directed the department to create a website after consumer advocates accused his administration of failing to help borrowers who were being abused. The Consumer Financial Protection Bureau said in September that student loan servicing, or the business of collecting borrowers' monthly payments and counseling them on their repayment options, was riddled with "widespread failures." Borrowers often can't get basic information from their servicers, the bureau said, and they're regularly pushed into default. Mitchell told financial aid counselors that the centralized portal was coming "in response to your feedback." He didn't say when the new website would be available. (function(){var src_url="https://spshared.5min.com/Scripts/PlayerSeed.js?playList=518156348&height=&width=100&sid=577&origin=SOLR&videoGroupID=155847&relatedNumOfResults=100&responsive=true&ratio=wide&align=center&relatedMode=2&relatedBottomHeight=60&companionPos=&hasCompanion=false&autoStart=false&colorPallet=%23FFEB00&videoControlDisplayColor=%23191919&shuffle=0&isAP=1&pgType=cmsPlugin&pgTypeId=addToPost-top&onVideoDataLoaded=track5min.DL&onTimeUpdate=track5min.TC&onVideoDataLoaded=HPTrack.Vid.DL&onTimeUpdate=HPTrack.Vid.TC";if (typeof(commercial_video) == "object") {src_url += "&siteSection="+commercial_video.site_and_category;if (commercial_video.package) {src_url += "&sponsorship="+commercial_video.package;}}var script = document.createElement("script");script.src = src_url;script.async = true;var placeholder = document.querySelector(".js-fivemin-script");placeholder.parentElement.replaceChild(script, placeholder);})(); The website potentially threatens Education Department loan contractors such as Navient Corporation and Nelnet Inc., who are currently waiting to negotiate their contracts with the Education Department. The department was supposed to begin renegotiating its loan servicing contracts this year, but has pushed negotiations into 2016.  Under the present system, borrowers have to go through companies like Navient to repay their loans. While borrowers can check the Education Department's National Student Loan Data System to learn how much money in student loans they've taken out or begin the process of enrolling in plans that enable them to make smaller payments based on their monthly earnings, they can't see a history of their payments. Navient warned investors in its latest annual report that changes to its Education Department contract "could have a material adverse effect on Navient’s revenues, cash flows, profitability and business outlook, and, as a result, could materially adversely affect its business, financial condition and results of operations." The Education Department expects to pay its loan servicers $804 million this year, Dorie Nolt, a department spokeswoman, said in August. Patricia Christel, a Navient spokeswoman, didn't immediately respond to a request for comment. Earlier this year, the Obama administration said a single consumer-facing website for federal student loan borrowers -- where they could access their account information, learn about various repayment options and make monthly payments -- could "improve the borrower experience." Borrowers surveyed by the Education Department routinely rate the department's loan contractors as below average. Requiring loan contractors to use a single system also could "reduce the burdens associated with coordinating consistent student loan servicing contractor behavior, reduce the challenges of transferring loans between contractors, and provide reporting and system integration benefits to the Department of Education," the administration said. Some consumer advocates have been pushing the Education Department to bring its loan servicing operations in-house, arguing that the federal government is wasting money on loan contractors that provide minimal service. In response, the Treasury Department recently launched a pilot program in which federal employees are tasked with collecting payments from severely delinquent borrowers.  Also on HuffPost: -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

02 декабря 2015, 00:40

The Obama Administration Wants To Bypass Student Loan Servicers

The Department of Education soon will allow Americans with federal student loans to bypass the department's contractors and make payments directly to the government, avoiding loan servicers accused of routinely mistreating and misleading borrowers. Officials "will implement a single Department of Education student loan portal for all borrowers ... hoping to make things clearer, simpler and less confusing for every borrower," according to Undersecretary of Education Ted Mitchell, who addressed college financial aid administrators in Las Vegas on Tuesday. The audience can be heard applauding his announcement in a video recording. Colleges, their financial aid employees, and state and federal regulators routinely complain about the level of customer service student borrowers receive from the Education Department's loan contractors.  In March, President Barack Obama directed the department to create a website after consumer advocates accused his administration of failing to help borrowers who were being abused. The Consumer Financial Protection Bureau said in September that student loan servicing, or the business of collecting borrowers' monthly payments and counseling them on their repayment options, was riddled with "widespread failures." Borrowers often can't get basic information from their servicers, the bureau said, and they're regularly pushed into default. Mitchell told financial aid counselors that the centralized portal was coming "in response to your feedback." He didn't say when the new website would be available. (function(){var src_url="https://spshared.5min.com/Scripts/PlayerSeed.js?playList=518156348&height=&width=100&sid=577&origin=SOLR&videoGroupID=155847&relatedNumOfResults=100&responsive=true&ratio=wide&align=center&relatedMode=2&relatedBottomHeight=60&companionPos=&hasCompanion=false&autoStart=false&colorPallet=%23FFEB00&videoControlDisplayColor=%23191919&shuffle=0&isAP=1&pgType=cmsPlugin&pgTypeId=addToPost-top&onVideoDataLoaded=track5min.DL&onTimeUpdate=track5min.TC&onVideoDataLoaded=HPTrack.Vid.DL&onTimeUpdate=HPTrack.Vid.TC";if (typeof(commercial_video) == "object") {src_url += "&siteSection="+commercial_video.site_and_category;if (commercial_video.package) {src_url += "&sponsorship="+commercial_video.package;}}var script = document.createElement("script");script.src = src_url;script.async = true;var placeholder = document.querySelector(".js-fivemin-script");placeholder.parentElement.replaceChild(script, placeholder);})(); The website potentially threatens Education Department loan contractors such as Navient Corporation and Nelnet Inc., who are currently waiting to negotiate their contracts with the Education Department. The department was supposed to begin renegotiating its loan servicing contracts this year, but has pushed negotiations into 2016.  Under the present system, borrowers have to go through companies like Navient to repay their loans. While borrowers can check the Education Department's National Student Loan Data System to learn how much money in student loans they've taken out or begin the process of enrolling in plans that enable them to make smaller payments based on their monthly earnings, they can't see a history of their payments. Navient warned investors in its latest annual report that changes to its Education Department contract "could have a material adverse effect on Navient’s revenues, cash flows, profitability and business outlook, and, as a result, could materially adversely affect its business, financial condition and results of operations." The Education Department expects to pay its loan servicers $804 million this year, Dorie Nolt, a department spokeswoman, said in August. Patricia Christel, a Navient spokeswoman, didn't immediately respond to a request for comment. Earlier this year, the Obama administration said a single consumer-facing website for federal student loan borrowers -- where they could access their account information, learn about various repayment options and make monthly payments -- could "improve the borrower experience." Borrowers surveyed by the Education Department routinely rate the department's loan contractors as below average. Requiring loan contractors to use a single system also could "reduce the burdens associated with coordinating consistent student loan servicing contractor behavior, reduce the challenges of transferring loans between contractors, and provide reporting and system integration benefits to the Department of Education," the administration said. Some consumer advocates have been pushing the Education Department to bring its loan servicing operations in-house, arguing that the federal government is wasting money on loan contractors that provide minimal service. In response, the Treasury Department recently launched a pilot program in which federal employees are tasked with collecting payments from severely delinquent borrowers.  Also on HuffPost: -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

16 октября 2015, 01:25

Robocalls Emerge As Latest Fix For Nation's Student Loan Crisis

The Obama administration and the student loan industry reckon they know how to fix America’s student debt crisis: Bombard Americans’ cell phones with robocalls and text messages telling them to pay up. With total student debt nearing $1.3 trillion and 1 in 4 borrowers either delinquent or in default, according to the Federal Reserve and the Consumer Financial Protection Bureau, policymakers are grasping for proposals that would stop the relentless rise in late payments and distress that’s afflicting the nation’s more than 40 million student loan borrowers.  While the Great Recession and the subsequent lackluster economic recovery play a role, the CFPB and consumer groups claim that sloppy loan servicing practices have exacerbated the situation by depriving borrowers of their right to make affordable monthly payments on their federal loans. More than 90 percent of all student loans are either owned or backed by the Department of Education and the department’s loan contractors have a business incentive to cut costs and minimize the amount of time they spend on the phone with borrowers seeking help, consumer advocates have told the CFPB. Instead of cracking down on alleged abuses, the Education Department wants to give its loan contractors more power. In doing so, the department is aiding their quest to maintain profitability -- its four largest loan servicers have generated at least $5 billion in combined income over the last three years -- at a time when consumer groups argue the loan companies need to hire more workers and better train them. In several notices filed over the past year with the Federal Communications Commission, trade associations representing loan specialists, debt collectors, college administrators and financial aid counselors have tried to persuade the agency to exempt federal student loans from typical consumer protections. They reason that “millions” of loan defaults could be averted if contractors working for the Education Department were permitted to use computerized auto-dialers to call and text borrowers on their cell phones.  Since cell phone owners are charged for calls and texts they receive, the FCC has generally not permitted companies to auto-dial consumers when they haven't given consent. Nearly half of American households eschewed land lines to rely solely on cell phones, according to a recent survey by the National Center for Health Statistics. In April, one of the Education Department’s main contractors -- Nelnet Inc. -- told the FCC that borrowers they were able to auto-dial were less likely than others to fall behind on their payments or default and were more likely to resolve delinquencies. The Education Department agrees, and told the White House in an Oct. 1 report that Congress should change the Telephone Consumer Protection Act to allow the department’s loan contractors to contact borrowers “and help them get into the right repayment plan and avoid the consequences of default or resolve their default.” With so many Americans, particularly young ones, relying solely on cell phones, President Barack Obama has long sought to allow the government's loan servicers to auto-dial them, and included the provision in his last several annual budget requests to Congress. In 2010, the Education Department told the FCC that taxpayers and colleges would benefit from a change because loan servicers can place many more calls using auto-dialers than when their employees manually dial, increasing their ability to prevent defaults, according to a written summary of the meeting. Neither Congress nor the FCC have agreed to the White House’s requests. The problem, according to consumer advocates and regulators, is that there’s little evidence that opening up borrowers’ cell phones to relentless calls and text messages would help. The White House estimates the proposal, if enacted into law, would generate just $12 million annually in additional government revenue -- a far cry from industry claims that it would let close to 12 million borrowers avoid default over the next decade and help another 8 million correct their defaults. A federal consumer bureau analysis of borrowers’ complaints suggests that even when borrowers get on the phone with their loan servicer they often receive wrong information or otherwise aren’t properly informed of all their options to avoid distress, such as federal plans that allow them to make monthly payments based on their income. Borrowers are so misinformed that Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice, has led seminars in more than a dozen cities with hundreds of borrowers in an effort to tell them about repayment plans that could cut their required monthly payments by hundreds of dollars. Robocalls are among the most frequent sources of consumer complaints, according to the Federal Trade Commission and the FCC. In July, the CFPB accused Discover Financial Services of placing more than 150,000 calls demanding payment to private student loan borrowers' cell phones at inconvenient times, such as before 8 a.m. or after 9 p.m. The bank agreed to a settlement, though it neither admitted to nor denied the allegations. Consumer advocates’ arguments haven’t persuaded the Education Department, which has gone around Congress and the FCC by simply requiring borrowers to consent to auto-dialed calls and messages at the time they sign their paperwork to take out federal student loans. Dorie Nolt, an Education Department spokeswoman, didn’t respond to a request for comment. Since at least August 2009, borrowers have agreed to be contacted via auto-dialers on any present or future numbers they provide to their colleges, the Education Department or their contractors when signing the Education Department’s master promissory note at the time they take out loans. Borrowers have taken out at least $602 billion in federal student loans that has required them to consent to receive calls, texts or pre-recorded messages via auto-dialers. That amount represents more than half of all outstanding federal student loans, according to Education Department data. The Education Department has further expanded the pool of borrowers that have given consent by including the provision in forms borrowers have to fill out in order to receive key benefits, such as the right to make monthly payments based on their earnings. The department also wants military members to grant consent when filling out applications to reduce the interest rate on their loans when they enter active duty, a right under the Servicemembers Civil Relief Act. But the pool of borrowers that can be contacted via auto-dialers remains small, said Michele Streeter, communications manager at the Education Finance Council, a Washington group that represents some student loan companies. Older federal loans’ master promissory notes didn’t include the auto-dial provision, Streeter said, and the consent that borrowers have given only applies to phone numbers they’ve provided. If a borrower changes phone numbers and doesn’t share the number with a loan company, his former school or the Education Department, loan specialists aren’t legally allowed to contact them using auto-dialers. Furthermore, Streeter said, with so many young Americans changing their phone numbers, loan companies fear that if they auto-dial the wrong cell phone the recipient could sue them for damages under the Telephone Consumer Protection Act. The Education Finance Council and the National Council of Higher Education Resources -- trade associations that represent student loan companies -- have been lobbying Congress to change the law and increase their members’ ability to use auto-dialers to contact borrowers’ cell phones, arguing it would allow them to help distressed borrowers. “The cost of inaction is simply too high -- for borrowers and taxpayers alike,” they said in documents they’ve circulated on Capitol Hill. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

16 октября 2015, 01:25

Robocalls Emerge As Latest Fix For Nation's Student Loan Crisis

The Obama administration and the student loan industry reckon they know how to fix America’s student debt crisis: Bombard Americans’ cell phones with robocalls and text messages telling them to pay up. With total student debt nearing $1.3 trillion and 1 in 4 borrowers either delinquent or in default, according to the Federal Reserve and the Consumer Financial Protection Bureau, policymakers are grasping for proposals that would stop the relentless rise in late payments and distress that’s afflicting the nation’s more than 40 million student loan borrowers.  While the Great Recession and the subsequent lackluster economic recovery play a role, the CFPB and consumer groups claim that sloppy loan servicing practices have exacerbated the situation by depriving borrowers of their right to make affordable monthly payments on their federal loans. More than 90 percent of all student loans are either owned or backed by the Department of Education and the department’s loan contractors have a business incentive to cut costs and minimize the amount of time they spend on the phone with borrowers seeking help, consumer advocates have told the CFPB. Instead of cracking down on alleged abuses, the Education Department wants to give its loan contractors more power. In doing so, the department is aiding their quest to maintain profitability -- its four largest loan servicers have generated at least $5 billion in combined income over the last three years -- at a time when consumer groups argue the loan companies need to hire more workers and better train them. In several notices filed over the past year with the Federal Communications Commission, trade associations representing loan specialists, debt collectors, college administrators and financial aid counselors have tried to persuade the agency to exempt federal student loans from typical consumer protections. They reason that “millions” of loan defaults could be averted if contractors working for the Education Department were permitted to use computerized auto-dialers to call and text borrowers on their cell phones.  Since cell phone owners are charged for calls and texts they receive, the FCC has generally not permitted companies to auto-dial consumers when they haven't given consent. Nearly half of American households eschewed land lines to rely solely on cell phones, according to a recent survey by the National Center for Health Statistics. In April, one of the Education Department’s main contractors -- Nelnet Inc. -- told the FCC that borrowers they were able to auto-dial were less likely than others to fall behind on their payments or default and were more likely to resolve delinquencies. The Education Department agrees, and told the White House in an Oct. 1 report that Congress should change the Telephone Consumer Protection Act to allow the department’s loan contractors to contact borrowers “and help them get into the right repayment plan and avoid the consequences of default or resolve their default.” With so many Americans, particularly young ones, relying solely on cell phones, President Barack Obama has long sought to allow the government's loan servicers to auto-dial them, and included the provision in his last several annual budget requests to Congress. In 2010, the Education Department told the FCC that taxpayers and colleges would benefit from a change because loan servicers can place many more calls using auto-dialers than when their employees manually dial, increasing their ability to prevent defaults, according to a written summary of the meeting. Neither Congress nor the FCC have agreed to the White House’s requests. The problem, according to consumer advocates and regulators, is that there’s little evidence that opening up borrowers’ cell phones to relentless calls and text messages would help. The White House estimates the proposal, if enacted into law, would generate just $12 million annually in additional government revenue -- a far cry from industry claims that it would let close to 12 million borrowers avoid default over the next decade and help another 8 million correct their defaults. A federal consumer bureau analysis of borrowers’ complaints suggests that even when borrowers get on the phone with their loan servicer they often receive wrong information or otherwise aren’t properly informed of all their options to avoid distress, such as federal plans that allow them to make monthly payments based on their income. Borrowers are so misinformed that Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice, has led seminars in more than a dozen cities with hundreds of borrowers in an effort to tell them about repayment plans that could cut their required monthly payments by hundreds of dollars. Robocalls are among the most frequent sources of consumer complaints, according to the Federal Trade Commission and the FCC. In July, the CFPB accused Discover Financial Services of placing more than 150,000 calls demanding payment to private student loan borrowers' cell phones at inconvenient times, such as before 8 a.m. or after 9 p.m. The bank agreed to a settlement, though it neither admitted to nor denied the allegations. Consumer advocates’ arguments haven’t persuaded the Education Department, which has gone around Congress and the FCC by simply requiring borrowers to consent to auto-dialed calls and messages at the time they sign their paperwork to take out federal student loans. Dorie Nolt, an Education Department spokeswoman, didn’t respond to a request for comment. Since at least August 2009, borrowers have agreed to be contacted via auto-dialers on any present or future numbers they provide to their colleges, the Education Department or their contractors when signing the Education Department’s master promissory note at the time they take out loans. Borrowers have taken out at least $602 billion in federal student loans that has required them to consent to receive calls, texts or pre-recorded messages via auto-dialers. That amount represents more than half of all outstanding federal student loans, according to Education Department data. The Education Department has further expanded the pool of borrowers that have given consent by including the provision in forms borrowers have to fill out in order to receive key benefits, such as the right to make monthly payments based on their earnings. The department also wants military members to grant consent when filling out applications to reduce the interest rate on their loans when they enter active duty, a right under the Servicemembers Civil Relief Act. But the pool of borrowers that can be contacted via auto-dialers remains small, said Michele Streeter, communications manager at the Education Finance Council, a Washington group that represents some student loan companies. Older federal loans’ master promissory notes didn’t include the auto-dial provision, Streeter said, and the consent that borrowers have given only applies to phone numbers they’ve provided. If a borrower changes phone numbers and doesn’t share the number with a loan company, his former school or the Education Department, loan specialists aren’t legally allowed to contact them using auto-dialers. Furthermore, Streeter said, with so many young Americans changing their phone numbers, loan companies fear that if they auto-dial the wrong cell phone the recipient could sue them for damages under the Telephone Consumer Protection Act. The Education Finance Council and the National Council of Higher Education Resources -- trade associations that represent student loan companies -- have been lobbying Congress to change the law and increase their members’ ability to use auto-dialers to contact borrowers’ cell phones, arguing it would allow them to help distressed borrowers. “The cost of inaction is simply too high -- for borrowers and taxpayers alike,” they said in documents they’ve circulated on Capitol Hill. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

18 сентября 2015, 13:00

Struggling Borrowers At Higher Risk Of Default As Education Department Resists Recommendations

Millions of Americans are more likely to default on their federal student loans because the Education Department refuses to tell them they’re eligible to make lower monthly payments, according to a blistering report released Thursday by the Government Accountability Office. The report comes as borrowers with loans directly from the Education Department are increasingly falling behind on their debts, risking a lifetime of wage garnishments and ruined credit profiles as a result. Consumer advocates blame the department’s loan contractors, which collect monthly payments and counsel borrowers on repayment, for failing to inform borrowers of their options. In fact, according to the GAO, in 2012 the Treasury Department found that about 70 percent of borrowers in default on their federal student loans qualified for plans that enabled them to make payments based on their earnings. Many of those borrowers probably qualified for the plans before they defaulted, providing evidence for a concern voiced by Deputy Treasury Secretary Sarah Bloom Raskin in April of last year, when she challenged the Education Department and its loan servicers for high rates of borrower defaults given the existence of generous repayment plans. With nearly 41 million Americans collectively owing nearly $1.2 trillion on their federal student loans, according to Education Department data, concerns are mounting in Washington that those debts risk slowing economic growth as borrowers delay purchases and investments in order to repay Uncle Sam, or instead default on the loans after failing to secure jobs that would enable them to make good on their obligations. The GAO, Congress’s in-house watchdog, recommended that the Education Department and its contracted loan servicers proactively tell borrowers on a regular basis that they could be eligible to annually save thousands of dollars on their loan payments. The office determined too many eligible borrowers didn’t know about the plans as a result of ineffective outreach efforts by the department and inconsistent communications from the department’s loan contractors. A top department official, James Runcie, rejected the recommendation in his written response to the report, claiming that it could lead to “imprudent” decisions by borrowers. Enrollment in income plans has more than doubled over the past two years to 3.9 million borrowers, but the GAO cited 2012 estimates by the Treasury Department, and its own interviews with borrowers, to argue that many borrowers are unaware of this option. The watchdog’s report, the result of a nearly two-year audit, lays bare what many borrower advocates have been arguing for years: The Education Department, led by Secretary Arne Duncan, is simply unwilling to take necessary steps to help distressed student loan borrowers. “The Department of Education and its student loan servicers aren't doing enough to help struggling borrowers. It's that simple,” said Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice. “If the department continues this inaction and refuses to hold its servicers to a higher standard, millions will suffer, and working people won't be able to make ends meet. This is the legacy that Secretary Duncan is leaving behind.” Instead of heeding calls from President Barack Obama to ensure that eligible borrowers know about plans enabling them to make monthly payments based on their earnings, “borrowers must actively seek information” about them, the GAO said. Just three of the 14 borrowers interviewed by the congressional watchdog either had a good understanding of the income plans or had been told about them by their loan servicer. Runcie, the Education Department official, said the report overstated the degree to which borrowers are unaware of the income plans. The report, which largely relies on data available as of last September, also doesn’t reflect recent efforts by the department, he said. Furthermore, Runcie added, it wasn’t clear that telling all borrowers about all their options would be the “most efficient or effective way” to help borrowers manage their debts. Obama has repeatedly chided the Education Department for borrowers’ general lack of awareness about the income plans. He’s written at least two memorandums to Duncan urging him to do more. The department expects to pay its loan servicers $804 million this year, in part to help borrowers pick repayment plans best suited for their financial circumstances. But the Education Department hasn’t been regularly notifying borrowers whose loans have come due about the income plans, according to the GAO. It also hasn’t examined the effectiveness of its outreach efforts to borrowers. One of the department’s loan contractors, which services nearly a quarter of the department’s loans, representing more than 5 million borrower accounts, doesn’t tell borrowers about an existing plan that enables those working in public service to have their debts forgiven tax-free after 10 years of payments. Borrowers first have to request the information. As a result, eligible borrowers could be paying extra on their loans, are at greater risk of missing payments, and could be forgoing thousands of dollars in eventual loan forgiveness. Borrowers enrolled in income plans generally make little money. About three-quarters of borrowers in the two most popular plans, Income Based Repayment and Pay As You Earn, earn less than $20,000, according to the report. The vast majority of borrowers in the income plans also are repaying only undergraduate loans, echoing previous findings. The findings refute hypothetical scenarios offered by researchers at the Brookings Institution and the New America Foundation that well-off borrowers or those with graduate degrees are taking advantage of the plans. Department officials told the GAO they haven’t targeted borrowers eligible for the Public Service Loan Forgiveness plan because they can’t identify them based on existing information. In its report, the GAO said that made it even more important for the department and its loan contractors to proactively remind all borrowers about this option. About 4 million borrowers with loans directly from the Education Department may be employed in public service, the GAO estimated in its report. But only about 147,000 were enrolled in the public service plan. “The gap between participation and eligibility and [the department’s] own assessment of borrower feedback suggests that borrowers are not receiving sufficient information about income-driven repayment plans,” according to the report. For the public service plan, the Education Department “has little assurance that borrowers know about the program, given that it has not assessed its efforts to raise awareness and relatively few borrowers” are enrolled. The Education Department’s failings could be causing otherwise avoidable defaults. “Increasing enrollment in income-driven repayment plans is a potent weapon to tame the student loan default crisis,” said Rohit Chopra, formerly the top student loan official at the federal Consumer Financial Protection Bureau. The report, he added, “provides further evidence that servicers may be hiding the ball to protect their bottom line.” Borrowers in Income Based Repayment and Pay As You Earn rarely default, according to the report. For those whose loans came due between 2010 and 2014, less than 1 percent had defaulted. Borrowers making payments based on the amount they owe defaulted at a 14 percent clip. Spokespeople for the Education Department’s four major loan servicers -- Navient Corp., Nelnet Inc., Great Lakes Higher Education Corp. & Affiliates, and Pennsylvania Higher Education Assistance Agency, which is more commonly known as FedLoan Servicing -- either didn’t respond to requests for comment or referred inquiries to the Education Department. Education Department officials “appear unable or unwilling to provide the direction needed to servicers,” said Maura Dundon, senior policy counsel at the Center for Responsible Lending. “We can’t allow defaults and delinquencies caused by poor servicing to continue. In this age of increasing tuitions, increased need for a college degree, decreasing real wages, and increased costs for basics like childcare and houses, students need to know that they have safety net if they attempt a college degree.” -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

18 сентября 2015, 13:00

Struggling Borrowers At Higher Risk Of Default As Education Department Resists Recommendations

Millions of Americans are more likely to default on their federal student loans because the Education Department refuses to tell them they’re eligible to make lower monthly payments, according to a blistering report released Thursday by the Government Accountability Office. The report comes as borrowers with loans directly from the Education Department are increasingly falling behind on their debts, risking a lifetime of wage garnishments and ruined credit profiles as a result. Consumer advocates blame the department’s loan contractors, which collect monthly payments and counsel borrowers on repayment, for failing to inform borrowers of their options. In fact, according to the GAO, in 2012 the Treasury Department found that about 70 percent of borrowers in default on their federal student loans qualified for plans that enabled them to make payments based on their earnings. Many of those borrowers probably qualified for the plans before they defaulted, providing evidence for a concern voiced by Deputy Treasury Secretary Sarah Bloom Raskin in April of last year, when she challenged the Education Department and its loan servicers for high rates of borrower defaults given the existence of generous repayment plans. With nearly 41 million Americans collectively owing nearly $1.2 trillion on their federal student loans, according to Education Department data, concerns are mounting in Washington that those debts risk slowing economic growth as borrowers delay purchases and investments in order to repay Uncle Sam, or instead default on the loans after failing to secure jobs that would enable them to make good on their obligations. The GAO, Congress’s in-house watchdog, recommended that the Education Department and its contracted loan servicers proactively tell borrowers on a regular basis that they could be eligible to annually save thousands of dollars on their loan payments. The office determined too many eligible borrowers didn’t know about the plans as a result of ineffective outreach efforts by the department and inconsistent communications from the department’s loan contractors. A top department official, James Runcie, rejected the recommendation in his written response to the report, claiming that it could lead to “imprudent” decisions by borrowers. Enrollment in income plans has more than doubled over the past two years to 3.9 million borrowers, but the GAO cited 2012 estimates by the Treasury Department, and its own interviews with borrowers, to argue that many borrowers are unaware of this option. The watchdog’s report, the result of a nearly two-year audit, lays bare what many borrower advocates have been arguing for years: The Education Department, led by Secretary Arne Duncan, is simply unwilling to take necessary steps to help distressed student loan borrowers. “The Department of Education and its student loan servicers aren't doing enough to help struggling borrowers. It's that simple,” said Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice. “If the department continues this inaction and refuses to hold its servicers to a higher standard, millions will suffer, and working people won't be able to make ends meet. This is the legacy that Secretary Duncan is leaving behind.” Instead of heeding calls from President Barack Obama to ensure that eligible borrowers know about plans enabling them to make monthly payments based on their earnings, “borrowers must actively seek information” about them, the GAO said. Just three of the 14 borrowers interviewed by the congressional watchdog either had a good understanding of the income plans or had been told about them by their loan servicer. Runcie, the Education Department official, said the report overstated the degree to which borrowers are unaware of the income plans. The report, which largely relies on data available as of last September, also doesn’t reflect recent efforts by the department, he said. Furthermore, Runcie added, it wasn’t clear that telling all borrowers about all their options would be the “most efficient or effective way” to help borrowers manage their debts. Obama has repeatedly chided the Education Department for borrowers’ general lack of awareness about the income plans. He’s written at least two memorandums to Duncan urging him to do more. The department expects to pay its loan servicers $804 million this year, in part to help borrowers pick repayment plans best suited for their financial circumstances. But the Education Department hasn’t been regularly notifying borrowers whose loans have come due about the income plans, according to the GAO. It also hasn’t examined the effectiveness of its outreach efforts to borrowers. One of the department’s loan contractors, which services nearly a quarter of the department’s loans, representing more than 5 million borrower accounts, doesn’t tell borrowers about an existing plan that enables those working in public service to have their debts forgiven tax-free after 10 years of payments. Borrowers first have to request the information. As a result, eligible borrowers could be paying extra on their loans, are at greater risk of missing payments, and could be forgoing thousands of dollars in eventual loan forgiveness. Borrowers enrolled in income plans generally make little money. About three-quarters of borrowers in the two most popular plans, Income Based Repayment and Pay As You Earn, earn less than $20,000, according to the report. The vast majority of borrowers in the income plans also are repaying only undergraduate loans, echoing previous findings. The findings refute hypothetical scenarios offered by researchers at the Brookings Institution and the New America Foundation that well-off borrowers or those with graduate degrees are taking advantage of the plans. Department officials told the GAO they haven’t targeted borrowers eligible for the Public Service Loan Forgiveness plan because they can’t identify them based on existing information. In its report, the GAO said that made it even more important for the department and its loan contractors to proactively remind all borrowers about this option. About 4 million borrowers with loans directly from the Education Department may be employed in public service, the GAO estimated in its report. But only about 147,000 were enrolled in the public service plan. “The gap between participation and eligibility and [the department’s] own assessment of borrower feedback suggests that borrowers are not receiving sufficient information about income-driven repayment plans,” according to the report. For the public service plan, the Education Department “has little assurance that borrowers know about the program, given that it has not assessed its efforts to raise awareness and relatively few borrowers” are enrolled. The Education Department’s failings could be causing otherwise avoidable defaults. “Increasing enrollment in income-driven repayment plans is a potent weapon to tame the student loan default crisis,” said Rohit Chopra, formerly the top student loan official at the federal Consumer Financial Protection Bureau. The report, he added, “provides further evidence that servicers may be hiding the ball to protect their bottom line.” Borrowers in Income Based Repayment and Pay As You Earn rarely default, according to the report. For those whose loans came due between 2010 and 2014, less than 1 percent had defaulted. Borrowers making payments based on the amount they owe defaulted at a 14 percent clip. Spokespeople for the Education Department’s four major loan servicers -- Navient Corp., Nelnet Inc., Great Lakes Higher Education Corp. & Affiliates, and Pennsylvania Higher Education Assistance Agency, which is more commonly known as FedLoan Servicing -- either didn’t respond to requests for comment or referred inquiries to the Education Department. Education Department officials “appear unable or unwilling to provide the direction needed to servicers,” said Maura Dundon, senior policy counsel at the Center for Responsible Lending. “We can’t allow defaults and delinquencies caused by poor servicing to continue. In this age of increasing tuitions, increased need for a college degree, decreasing real wages, and increased costs for basics like childcare and houses, students need to know that they have safety net if they attempt a college degree.” -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

17 сентября 2015, 19:01

More Americans Falling Behind On Student Loans As Obama Administration Fixes Fail To Deliver

America’s student debt crisis is getting worse. More Americans with student loans directly from the Department of Education fell seriously behind on their payments in the past year, according to quarterly figures the department released in August. The figures defy widely held expectations that generous borrower protections and a significant increase in the number of borrowers making payments based on their earnings would reduce borrower distress. Nearly 5.1 million borrowers were at least three months late on payments or had defaulted on so-called Direct Loans, according to a Huffington Post analysis of the department data through June 30. Severely delinquent borrowers now make up about 21.5 percent of all borrowers with Direct Loans, after excluding borrowers who are still in school or are in a temporary grace period on loans that have not yet come due -- the highest recorded figure since the department began releasing quarterly data in 2013. That’s a notable increase from June 2014, when 20.4 percent of borrowers -- or 4.3 million people -- were in serious delinquency or in default. The increase of an additional 800,000 troubled borrowers, which hasn’t been previously reported, comes despite an improving U.S. economy that has added jobs, modestly increased workers’ wages and boosted household wealth. Those trends have led to a decrease in delinquency in other forms of consumer debt, such as home mortgages. The new figures add to mounting concerns in Washington that the nation’s roughly $1.3 trillion student loan tab could depress U.S. economic growth in the years to come, as overly-indebted households cut back on spending and investments. “The federal government has abdicated its responsibility to properly serve student loan borrowers,” said Paul Combe, chief executive of the nonprofit American Student Assistance. Matt Lehrich, an Education Department spokesman, disputed HuffPost's analysis showing rising serious delinquency rates. Because the department rarely charges off defaulted debt, “comparing the number of borrowers in default as a percentage of the total number of borrowers year over year is not a meaningful way to measure whether things are improving or getting worse."   “While much work remains, there are signs of progress,” Lehrich added, pointing to increased enrollment in income plans, lower rates of borrowers defaulting within the first three years their loans come due, and overall lower delinquency rates for borrowers expected to make payments. *** The new data don't include private loans or those made under the since-discontinued bank-based Federal Family Education Loan program. Neither type of debt offers borrowers the kind of protections against default -- such as the ability to make monthly payments that are equivalent to 10 percent of discretionary income -- available to those in the Direct Loan program. The government has not released delinquency data on these two types of debt.  Experts inside and outside the government haven’t settled on the reason why borrowers with the most generous type of student loan are increasingly falling behind on their payments. They pointed to a variety of factors, such as the recent spike in the number of low-income borrowers attending U.S. colleges, expiring provisions meant to hold schools accountable for their students’ loan defaults, and sloppy loan servicing. Take the jump in new students from low-income neighborhoods. About 3.1 million Americans from low-income areas took out student loans each year between 2009 and 2012, according to the Federal Reserve Bank of New York. The regional bank defined low-income areas as ZIP codes where the average annual household income in 2010 was less than $40,000. An average of more than 3 million Americans taking out student loans was a 31 percent jump from 2004, and the increase among people from poor areas was the largest among all income groups. The rise in new borrowers came after millions of Americans either lost their jobs or failed to secure one after completing their education in the aftermath of the Great Recession, leading many to seek further schooling in order to attain new skills or credentials in hopes of landing a new or better-paying job. Students from low-income areas flocked to for-profit colleges, where programs can be completed in as little as six months. Nearly three in five students from households with annual incomes below $40,000 were enrolled in for-profit colleges in 2012, according to the most recent federal data analyzed in a February report from the Pell Institute for the Study of Opportunity in Higher Education. But the education low-income students received hasn’t yet paid off. Some 70 percent of borrowers from low-income communities whose student loan bills first came due in 2009 defaulted, were at some point at least four months late on their payments, or experienced an increase in their loan balances by the end of 2014, according to the New York Fed. As a group they managed to pay down just 3 percent of their combined student loan balance five years after leaving school, data show. For-profit college supporters argue that their schools welcome students that public and nonprofit colleges traditionally shun and those who are unable to take classes at underresourced community colleges. Many of the borrowers now in distress on their federal loans could be these former for-profit college students who enrolled in the aftermath of the Great Recession. Students at for-profit colleges in the U.S. have taken out more than $90 billion in federal student loans over the last five academic years, according to a previous HuffPost analysis of Education Department data. Federal rules penalize colleges whose students subsequently default at high rates within the first roughly three years of their loans coming due. A 2012 U.S. Senate investigation revealed that for-profit colleges frequently paid firms -- some of them owned by Education Department loan contractors -- to relentlessly cajole borrowers into enrolling in federal plans that delayed their required payments until after the default window had passed. But because colleges aren’t held accountable for defaults incurred by students after that three-year period has passed, there’s little impetus for schools to provide better servicing now for students who left school before 2013. Experts contend that the rise in hardship could worsen in the coming years as these borrowers are no longer pitched specialized plans that would help them avert default. “There’s nobody actively calling them up trying to put them in forbearance or deferment plans,” said Elizabeth Baylor, director of postsecondary education at the Center for American Progress, a D.C.-based policy organization with close ties to the Obama administration. *** Poor loan servicing deserves much of the blame, according to consumer advocates. Borrowers and their advocates say the Education Department’s loan servicers continue to give borrowers faulty information, lose their paperwork when they apply to make payments based on their earnings, and fail to inform borrowers of the myriad options to avoid distress. That, in turn, is causing borrowers to fall behind on their debts. “Instead of supporting higher education, the present student loan servicing system makes it more difficult for borrowers to realize the promise of their investment,” groups including the American Association of State Colleges and Universities, Center for Responsible Lending, and Consumer Federation of America said in July in a joint letter to the federal Consumer Financial Protection Bureau. “Far too many student loan borrowers face distress and default because of student loan servicers’ failure to help them access relief.” In response to concerns, the Education Department has tried to push its loan servicers to further counsel borrowers on their options. They’ve also introduced bonus pay for loan servicers, and the Obama administration has promised to consider imposing new rules on student loans similar to those enacted in the wake of the financial crisis that cleaned up the credit card and home mortgage markets. Last September, William Leith, a senior Education Department official, pledged to “reset” how the department pays servicers if there wasn’t “significant improvement” by June of this year. He didn’t provide details of what that might entail. But the data suggest that servicing hasn’t improved so far; rather, the situation seems to be getting worse. During the three-month period that ended in June, borrowers lodged 12 percent more complaints with the CFPB regarding how companies serviced their private student loans compared to the same period last year, which has raised red flags for advocacy groups. Many servicers use similar systems when collecting payments on both private and federal student loans. The White House has touted federal plans that allow borrowers to make payments based on their earnings as one form of relief designed to ease borrower distress. After repeated White House efforts to push the Education Department to more aggressively target troubled borrowers, enrollment in income plans has more than doubled in the last two years, to 3.9 million borrowers. Under the income plans, known as Income Based Repayment and Pay As You Earn, an enrolled borrower with no earnings could make payments as low as $0 and still remain current on their debts. Virtually all borrowers with Direct Loans are eligible for the plans, depending on their annual income. But the rise in student-loan distress over the past year occurred despite a 55 percent increase in the number of borrowers enrolled in these programs, and critics say that’s because of the ongoing problems with how loans are serviced. For example, borrowers are often dropped from those plans, which deprives them of their benefits. Debtors complain that they are routinely kicked out of the program when their loan servicers fail to notify them of annual deadlines to recertify their income information or process their paperwork in time. Just four in five borrowers enrolled in the plans are actually making payments based on their earnings; the rest are paying based on the amount they owe. Education Department data suggest that nearly one in three borrowers who were in the two popular income plans last year weren’t able to recertify their information by June 30 of this year in order to keep paying based on their earnings. The department disputed the figure, though it didn’t state the correct number or explain how HuffPost’s figure is wrong. The CFPB launched an industry-wide investigation last month to determine why borrowers are being kicked out of the Education Department’s income-driven repayment plans. The consumer regulator has found that borrowers who are unexpectedly dropped from these programs face surprise overdraft fees, thousands of dollars in extra payments and interest, and "payment shocks" that are so high they cause borrowers to miss payments. Problems in ensuring borrowers’ paperwork is processed by their annual deadlines are widespread. A Education Department study from April found that 57 percent of borrowers, or 696,000 people, didn't recertify their earnings information by the annual deadline. The department, which pays its loan servicers in part to remind borrowers about the deadlines, couldn’t say why that was the case. Borrowers who fall out of income-based plans are especially at risk of falling behind on their loans, said Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice. That’s because when borrowers receive the income plans’ full benefits, they rarely fall behind on their payments. The government’s Income Based Repayment and Pay As You Earn plans have the lowest delinquency rates of any federal repayment plan, according to Education Department data released in December. Over the last five years, three of the Education Department’s four primary loan servicers have failed to earn even average customer satisfaction scores from borrowers surveyed by the department. In two of those years, borrowers rated Great Lakes Higher Education Corp. & Affiliates as above average, department records show. The Education Department’s survey administrator encourages companies to attain scores in the low 80s. Borrowers haven’t rated any of the department’s main loan servicers above 77.2. “Is the federal government providing the quality of service that borrowers need? No, I don’t think it does, and that ripples down to the servicers,” said Combe, the American Student Assistance chief executive. “Usually the borrower gets the right information six months too late.” The Education Department expects to pay its loan servicers $804 million this year, Dorie Nolt, a department spokeswoman, said Aug. 6. *** The Education Department has faced relentless criticism from consumer advocates, Senate Democrats and its own inspector general for its lackluster oversight of loan contractors. In one recent example, its inspector general said in an Aug. 24 report that the department failed to hold one of its contractors, Xerox Education Solutions, accountable for widespread problems in its system to track defaulted student loans. Another problematic contractor is Navient, the student loan giant formerly known as Sallie Mae. Federal prosecutors last year accused the company of intentionally cheating tens of thousands of active-duty troops on their private and federal student loans, a charge the company settled without admitting wrongdoing. The CFPB is prepping a possible lawsuit against the company for allegedly mistreating student loan borrowers. But as other government agencies attempt to penalize Navient for allegedly faulty servicing practices, the Education Department continues to send the company new accounts. It also has yet to recoup $22 million in alleged overpayments to Navient under the FFEL program, despite a 2009 recommendation from its inspector general that it recover the money. The department and Navient are in settlement negotiations, Nolt said early this month. Navient has repeatedly insisted it hasn’t violated any rules, and it is hoping to convince the CFPB not to penalize it for allegedly violating consumer protection laws, the company told investors last month. To date, the Department of Education hasn’t brought any public enforcement actions against Navient over its loan servicing practices. Nor have they taken action against the other three main loan servicers -- Nelnet Inc., Great Lakes, and Pennsylvania Higher Education Assistance Agency (PHEAA), which is more commonly known as FedLoan Servicing -- despite allegations that all four routinely mistreat and mislead student loan borrowers.  “We recognize that we’re not all the way there, and too many students are struggling to repay their loans,” Lehrich, of the Education Department, said. “We will not rest in our efforts to ensure that borrowers are successfully managing their debt and more and more Americans are getting an affordable college education that leaves them with a meaningful degree and the job prospects to repay their loans and get ahead.” Consumer groups and some federal officials said that many of the problems in student loan servicing stem from servicers’ inadequate spending on their systems and training for their employees, despite the fact that the four loan servicers have generated billions of dollars in profit over the last three years, according to their annual reports. From 2012 to 2014, Navient recorded $3.5 billion in combined net income while Nelnet recorded $788.3 million in profit. PHEAA, a quasi-government agency, generated $660.1 million in combined income before grants and financial aid during the three-year period. Great Lakes, a nonprofit that hasn’t yet disclosed its 2014 figures, recorded combined income of $286.4 million in 2012 and 2013. Spokespeople for Nelnet, Great Lakes, Navient and PHEAA did not respond to requests for comment. In March, President Barack Obama issued a memorandum calling for a “student aid bill of rights” that, if all the measures were enacted, would significantly improve how servicers treat borrowers. In response, the administration last month recommended that the Education Department make numerous changes to how its loan servicers interact with borrowers. Some of the proposals amounted to bypassing servicers altogether, such as creating a new government website where borrowers could check their account information, make payments and learn about various repayment options. The Obama administration has publicly touted its efforts to go around loan servicers to directly reach at-risk borrowers, such as through email campaigns and a partnership with Intuit’s TurboTax platform. But at the same time the administration has asked Congress for more money to pay its servicers -- the White House this year requested an additional 18.5 percent for the 2016 fiscal year -- leading some federal officials to question why the administration has continued to boost pay for servicers as it also takes on some of their responsibilities. Other Obama administration recommendations included more stringent oversight of servicers by the Education Department; developing new customer-focused metrics to grade servicers’ performance, such as measuring the amount of time it takes servicers to answer phone calls or respond to borrower complaints; withholding pay when servicers fail to meet expectations; using the results of department audits when allocating new accounts; and forcing servicers to proactively tell borrowers how much they could be saving if they made monthly payments based on their earnings. Borrower complaints led the Education Department to adjust its contracts with loan servicers in 2014. The department decreased how much it would pay its loan servicers for delinquent and nonpaying accounts, and increased the weight given to borrower surveys when determining how many new accounts it annually sends to its contractors. Under the revamped 2014 contracts, the department agreed to pay its servicers quarterly bonuses if they slightly decreased or maintained the same delinquency rates they had prior to the August signing of the contracts. The White House, which has been pushing the department to reduce student loan distress, praised the move. The department has since doled out $1.8 million in quarterly bonuses, Nolt said last month, with Great Lakes receiving $1.2 million in bonuses and Navient getting $600,000 -- even though serious delinquencies and defaults in general have risen over the past year. But the department’s loan servicers don’t like aspects of the new contract, and have told policymakers in Washington that reducing the amount they’re paid on delinquent accounts could lead them to devote fewer resources to helping delinquent borrowers get back on track. They’ve also disputed allegations that they’re mistreating borrowers, and they’ve argued that when they get in touch with borrowers they help them avoid default. Jack Remondi, Navient’s chief executive, has said that “nine times out of 10 when we can reach past due customers, we can identify a solution to help them avoid default.” Other servicers have made similar claims. *** The lack of meaningful changes to how loans are serviced, despite ever-increasing delinquency rates and growing complaints from student loan borrowers and legal aid lawyers, has some current and former federal officials worrying that millions of Americans could fall victim to preventable defaults. Default data compiled by the New York Fed suggests that distress is widespread among all types of borrowers, from drop-outs to those with advanced degrees. For example, about one in five borrowers who entered repayment in 2009 with at least $100,000 in student debt defaulted within five years. The regional Fed defined defaults as being at least nine months past due, similar to the government’s definition for federal student loans. Widespread borrower distress is drawing comparisons to the housing crisis that began in 2007 before eventually rippling throughout the U.S. economy. Defaults ruin borrowers’ credit profiles, limiting their ability to buy homes and cars. And in many states where licenses are needed for certain jobs, state governments will revoke a borrower’s occupational license for defaulting on a federal student loan -- all of which bodes ill for the 5.1 million people currently in distress on loans directly from the Education Department. “The loan portfolio is increasingly taking on characteristics of subprime loans, which would -- along with the [Education] Department's servicing issues -- explain why its performance is deteriorating despite an improving economy,” said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities. Others drew similar comparisons. “Regulators uncovered foul play in the mortgage servicing industry that led to too many unnecessary and avoidable foreclosures,” said Rohit Chopra, formerly the top student loan official at the CFPB. “There is a spooky similarity to the problems we are seeing with student loan servicers.” “If the student loan industry is failing to keep serious delinquencies under control,” he added,“this can have consequences for the broader economy.” -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

17 сентября 2015, 19:01

More Americans Falling Behind On Student Loans As Obama Administration Fixes Fail To Deliver

America’s student debt crisis is getting worse. More Americans with student loans directly from the Department of Education fell seriously behind on their payments in the past year, according to quarterly figures the department released in August. The figures defy widely held expectations that generous borrower protections and a significant increase in the number of borrowers making payments based on their earnings would reduce borrower distress. Nearly 5.1 million borrowers were at least three months late on payments or had defaulted on so-called Direct Loans, according to a Huffington Post analysis of the department data through June 30. Severely delinquent borrowers now make up about 21.5 percent of all borrowers with Direct Loans, after excluding borrowers who are still in school or are in a temporary grace period on loans that have not yet come due -- the highest recorded figure since the department began releasing quarterly data in 2013. That’s a notable increase from June 2014, when 20.4 percent of borrowers -- or 4.3 million people -- were in serious delinquency or in default. The increase of an additional 800,000 troubled borrowers, which hasn’t been previously reported, comes despite an improving U.S. economy that has added jobs, modestly increased workers’ wages and boosted household wealth. Those trends have led to a decrease in delinquency in other forms of consumer debt, such as home mortgages. The new figures add to mounting concerns in Washington that the nation’s roughly $1.3 trillion student loan tab could depress U.S. economic growth in the years to come, as overly-indebted households cut back on spending and investments. “The federal government has abdicated its responsibility to properly serve student loan borrowers,” said Paul Combe, chief executive of the nonprofit American Student Assistance. Matt Lehrich, an Education Department spokesman, disputed HuffPost's analysis showing rising serious delinquency rates. Because the department rarely charges off defaulted debt, “comparing the number of borrowers in default as a percentage of the total number of borrowers year over year is not a meaningful way to measure whether things are improving or getting worse."   “While much work remains, there are signs of progress,” Lehrich added, pointing to increased enrollment in income plans, lower rates of borrowers defaulting within the first three years their loans come due, and overall lower delinquency rates for borrowers expected to make payments. *** The new data don't include private loans or those made under the since-discontinued bank-based Federal Family Education Loan program. Neither type of debt offers borrowers the kind of protections against default -- such as the ability to make monthly payments that are equivalent to 10 percent of discretionary income -- available to those in the Direct Loan program. The government has not released delinquency data on these two types of debt.  Experts inside and outside the government haven’t settled on the reason why borrowers with the most generous type of student loan are increasingly falling behind on their payments. They pointed to a variety of factors, such as the recent spike in the number of low-income borrowers attending U.S. colleges, expiring provisions meant to hold schools accountable for their students’ loan defaults, and sloppy loan servicing. Take the jump in new students from low-income neighborhoods. About 3.1 million Americans from low-income areas took out student loans each year between 2009 and 2012, according to the Federal Reserve Bank of New York. The regional bank defined low-income areas as ZIP codes where the average annual household income in 2010 was less than $40,000. An average of more than 3 million Americans taking out student loans was a 31 percent jump from 2004, and the increase among people from poor areas was the largest among all income groups. The rise in new borrowers came after millions of Americans either lost their jobs or failed to secure one after completing their education in the aftermath of the Great Recession, leading many to seek further schooling in order to attain new skills or credentials in hopes of landing a new or better-paying job. Students from low-income areas flocked to for-profit colleges, where programs can be completed in as little as six months. Nearly three in five students from households with annual incomes below $40,000 were enrolled in for-profit colleges in 2012, according to the most recent federal data analyzed in a February report from the Pell Institute for the Study of Opportunity in Higher Education. But the education low-income students received hasn’t yet paid off. Some 70 percent of borrowers from low-income communities whose student loan bills first came due in 2009 defaulted, were at some point at least four months late on their payments, or experienced an increase in their loan balances by the end of 2014, according to the New York Fed. As a group they managed to pay down just 3 percent of their combined student loan balance five years after leaving school, data show. For-profit college supporters argue that their schools welcome students that public and nonprofit colleges traditionally shun and those who are unable to take classes at underresourced community colleges. Many of the borrowers now in distress on their federal loans could be these former for-profit college students who enrolled in the aftermath of the Great Recession. Students at for-profit colleges in the U.S. have taken out more than $90 billion in federal student loans over the last five academic years, according to a previous HuffPost analysis of Education Department data. Federal rules penalize colleges whose students subsequently default at high rates within the first roughly three years of their loans coming due. A 2012 U.S. Senate investigation revealed that for-profit colleges frequently paid firms -- some of them owned by Education Department loan contractors -- to relentlessly cajole borrowers into enrolling in federal plans that delayed their required payments until after the default window had passed. But because colleges aren’t held accountable for defaults incurred by students after that three-year period has passed, there’s little impetus for schools to provide better servicing now for students who left school before 2013. Experts contend that the rise in hardship could worsen in the coming years as these borrowers are no longer pitched specialized plans that would help them avert default. “There’s nobody actively calling them up trying to put them in forbearance or deferment plans,” said Elizabeth Baylor, director of postsecondary education at the Center for American Progress, a D.C.-based policy organization with close ties to the Obama administration. *** Poor loan servicing deserves much of the blame, according to consumer advocates. Borrowers and their advocates say the Education Department’s loan servicers continue to give borrowers faulty information, lose their paperwork when they apply to make payments based on their earnings, and fail to inform borrowers of the myriad options to avoid distress. That, in turn, is causing borrowers to fall behind on their debts. “Instead of supporting higher education, the present student loan servicing system makes it more difficult for borrowers to realize the promise of their investment,” groups including the American Association of State Colleges and Universities, Center for Responsible Lending, and Consumer Federation of America said in July in a joint letter to the federal Consumer Financial Protection Bureau. “Far too many student loan borrowers face distress and default because of student loan servicers’ failure to help them access relief.” In response to concerns, the Education Department has tried to push its loan servicers to further counsel borrowers on their options. They’ve also introduced bonus pay for loan servicers, and the Obama administration has promised to consider imposing new rules on student loans similar to those enacted in the wake of the financial crisis that cleaned up the credit card and home mortgage markets. Last September, William Leith, a senior Education Department official, pledged to “reset” how the department pays servicers if there wasn’t “significant improvement” by June of this year. He didn’t provide details of what that might entail. But the data suggest that servicing hasn’t improved so far; rather, the situation seems to be getting worse. During the three-month period that ended in June, borrowers lodged 12 percent more complaints with the CFPB regarding how companies serviced their private student loans compared to the same period last year, which has raised red flags for advocacy groups. Many servicers use similar systems when collecting payments on both private and federal student loans. The White House has touted federal plans that allow borrowers to make payments based on their earnings as one form of relief designed to ease borrower distress. After repeated White House efforts to push the Education Department to more aggressively target troubled borrowers, enrollment in income plans has more than doubled in the last two years, to 3.9 million borrowers. Under the income plans, known as Income Based Repayment and Pay As You Earn, an enrolled borrower with no earnings could make payments as low as $0 and still remain current on their debts. Virtually all borrowers with Direct Loans are eligible for the plans, depending on their annual income. But the rise in student-loan distress over the past year occurred despite a 55 percent increase in the number of borrowers enrolled in these programs, and critics say that’s because of the ongoing problems with how loans are serviced. For example, borrowers are often dropped from those plans, which deprives them of their benefits. Debtors complain that they are routinely kicked out of the program when their loan servicers fail to notify them of annual deadlines to recertify their income information or process their paperwork in time. Just four in five borrowers enrolled in the plans are actually making payments based on their earnings; the rest are paying based on the amount they owe. Education Department data suggest that nearly one in three borrowers who were in the two popular income plans last year weren’t able to recertify their information by June 30 of this year in order to keep paying based on their earnings. The department disputed the figure, though it didn’t state the correct number or explain how HuffPost’s figure is wrong. The CFPB launched an industry-wide investigation last month to determine why borrowers are being kicked out of the Education Department’s income-driven repayment plans. The consumer regulator has found that borrowers who are unexpectedly dropped from these programs face surprise overdraft fees, thousands of dollars in extra payments and interest, and "payment shocks" that are so high they cause borrowers to miss payments. Problems in ensuring borrowers’ paperwork is processed by their annual deadlines are widespread. A Education Department study from April found that 57 percent of borrowers, or 696,000 people, didn't recertify their earnings information by the annual deadline. The department, which pays its loan servicers in part to remind borrowers about the deadlines, couldn’t say why that was the case. Borrowers who fall out of income-based plans are especially at risk of falling behind on their loans, said Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice. That’s because when borrowers receive the income plans’ full benefits, they rarely fall behind on their payments. The government’s Income Based Repayment and Pay As You Earn plans have the lowest delinquency rates of any federal repayment plan, according to Education Department data released in December. Over the last five years, three of the Education Department’s four primary loan servicers have failed to earn even average customer satisfaction scores from borrowers surveyed by the department. In two of those years, borrowers rated Great Lakes Higher Education Corp. & Affiliates as above average, department records show. The Education Department’s survey administrator encourages companies to attain scores in the low 80s. Borrowers haven’t rated any of the department’s main loan servicers above 77.2. “Is the federal government providing the quality of service that borrowers need? No, I don’t think it does, and that ripples down to the servicers,” said Combe, the American Student Assistance chief executive. “Usually the borrower gets the right information six months too late.” The Education Department expects to pay its loan servicers $804 million this year, Dorie Nolt, a department spokeswoman, said Aug. 6. *** The Education Department has faced relentless criticism from consumer advocates, Senate Democrats and its own inspector general for its lackluster oversight of loan contractors. In one recent example, its inspector general said in an Aug. 24 report that the department failed to hold one of its contractors, Xerox Education Solutions, accountable for widespread problems in its system to track defaulted student loans. Another problematic contractor is Navient, the student loan giant formerly known as Sallie Mae. Federal prosecutors last year accused the company of intentionally cheating tens of thousands of active-duty troops on their private and federal student loans, a charge the company settled without admitting wrongdoing. The CFPB is prepping a possible lawsuit against the company for allegedly mistreating student loan borrowers. But as other government agencies attempt to penalize Navient for allegedly faulty servicing practices, the Education Department continues to send the company new accounts. It also has yet to recoup $22 million in alleged overpayments to Navient under the FFEL program, despite a 2009 recommendation from its inspector general that it recover the money. The department and Navient are in settlement negotiations, Nolt said early this month. Navient has repeatedly insisted it hasn’t violated any rules, and it is hoping to convince the CFPB not to penalize it for allegedly violating consumer protection laws, the company told investors last month. To date, the Department of Education hasn’t brought any public enforcement actions against Navient over its loan servicing practices. Nor have they taken action against the other three main loan servicers -- Nelnet Inc., Great Lakes, and Pennsylvania Higher Education Assistance Agency (PHEAA), which is more commonly known as FedLoan Servicing -- despite allegations that all four routinely mistreat and mislead student loan borrowers.  “We recognize that we’re not all the way there, and too many students are struggling to repay their loans,” Lehrich, of the Education Department, said. “We will not rest in our efforts to ensure that borrowers are successfully managing their debt and more and more Americans are getting an affordable college education that leaves them with a meaningful degree and the job prospects to repay their loans and get ahead.” Consumer groups and some federal officials said that many of the problems in student loan servicing stem from servicers’ inadequate spending on their systems and training for their employees, despite the fact that the four loan servicers have generated billions of dollars in profit over the last three years, according to their annual reports. From 2012 to 2014, Navient recorded $3.5 billion in combined net income while Nelnet recorded $788.3 million in profit. PHEAA, a quasi-government agency, generated $660.1 million in combined income before grants and financial aid during the three-year period. Great Lakes, a nonprofit that hasn’t yet disclosed its 2014 figures, recorded combined income of $286.4 million in 2012 and 2013. Spokespeople for Nelnet, Great Lakes, Navient and PHEAA did not respond to requests for comment. In March, President Barack Obama issued a memorandum calling for a “student aid bill of rights” that, if all the measures were enacted, would significantly improve how servicers treat borrowers. In response, the administration last month recommended that the Education Department make numerous changes to how its loan servicers interact with borrowers. Some of the proposals amounted to bypassing servicers altogether, such as creating a new government website where borrowers could check their account information, make payments and learn about various repayment options. The Obama administration has publicly touted its efforts to go around loan servicers to directly reach at-risk borrowers, such as through email campaigns and a partnership with Intuit’s TurboTax platform. But at the same time the administration has asked Congress for more money to pay its servicers -- the White House this year requested an additional 18.5 percent for the 2016 fiscal year -- leading some federal officials to question why the administration has continued to boost pay for servicers as it also takes on some of their responsibilities. Other Obama administration recommendations included more stringent oversight of servicers by the Education Department; developing new customer-focused metrics to grade servicers’ performance, such as measuring the amount of time it takes servicers to answer phone calls or respond to borrower complaints; withholding pay when servicers fail to meet expectations; using the results of department audits when allocating new accounts; and forcing servicers to proactively tell borrowers how much they could be saving if they made monthly payments based on their earnings. Borrower complaints led the Education Department to adjust its contracts with loan servicers in 2014. The department decreased how much it would pay its loan servicers for delinquent and nonpaying accounts, and increased the weight given to borrower surveys when determining how many new accounts it annually sends to its contractors. Under the revamped 2014 contracts, the department agreed to pay its servicers quarterly bonuses if they slightly decreased or maintained the same delinquency rates they had prior to the August signing of the contracts. The White House, which has been pushing the department to reduce student loan distress, praised the move. The department has since doled out $1.8 million in quarterly bonuses, Nolt said last month, with Great Lakes receiving $1.2 million in bonuses and Navient getting $600,000 -- even though serious delinquencies and defaults in general have risen over the past year. But the department’s loan servicers don’t like aspects of the new contract, and have told policymakers in Washington that reducing the amount they’re paid on delinquent accounts could lead them to devote fewer resources to helping delinquent borrowers get back on track. They’ve also disputed allegations that they’re mistreating borrowers, and they’ve argued that when they get in touch with borrowers they help them avoid default. Jack Remondi, Navient’s chief executive, has said that “nine times out of 10 when we can reach past due customers, we can identify a solution to help them avoid default.” Other servicers have made similar claims. *** The lack of meaningful changes to how loans are serviced, despite ever-increasing delinquency rates and growing complaints from student loan borrowers and legal aid lawyers, has some current and former federal officials worrying that millions of Americans could fall victim to preventable defaults. Default data compiled by the New York Fed suggests that distress is widespread among all types of borrowers, from drop-outs to those with advanced degrees. For example, about one in five borrowers who entered repayment in 2009 with at least $100,000 in student debt defaulted within five years. The regional Fed defined defaults as being at least nine months past due, similar to the government’s definition for federal student loans. Widespread borrower distress is drawing comparisons to the housing crisis that began in 2007 before eventually rippling throughout the U.S. economy. Defaults ruin borrowers’ credit profiles, limiting their ability to buy homes and cars. And in many states where licenses are needed for certain jobs, state governments will revoke a borrower’s occupational license for defaulting on a federal student loan -- all of which bodes ill for the 5.1 million people currently in distress on loans directly from the Education Department. “The loan portfolio is increasingly taking on characteristics of subprime loans, which would -- along with the [Education] Department's servicing issues -- explain why its performance is deteriorating despite an improving economy,” said Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities. Others drew similar comparisons. “Regulators uncovered foul play in the mortgage servicing industry that led to too many unnecessary and avoidable foreclosures,” said Rohit Chopra, formerly the top student loan official at the CFPB. “There is a spooky similarity to the problems we are seeing with student loan servicers.” “If the student loan industry is failing to keep serious delinquencies under control,” he added,“this can have consequences for the broader economy.” -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

03 сентября 2015, 03:50

Wall Street Punishes Troubled Student Loan Giant Navient Corp.

Investors fled Navient Corp. on Wednesday, sending shares in the nation's largest student loan company to an all-time low as federal consumer regulators prepare a possible lawsuit targeting the loan specialist over its alleged mistreatment of borrowers. Navient stock closed at $12.16 after falling to $11.97 in Wednesday trading, its lowest price since the company spun off from Sallie Mae last year. Its shares have plummeted nearly 44 percent since the start of the year, making it one of the worst performers in the Standard and Poor's 500 Index. The S&P 500 has tumbled about 5 percent this year, while shares in one of Navient's main competitors, Nelnet Inc., have dropped by 21 percent. Traders also have pummeled Navient's debt securities as worries spread that the company may not make good on its obligations. The price of Navient's 10-year notes due in 2024 have fallen 13.63 cents over the last three months to 83.75 cents on the dollar, according to data compiled by the Financial Industry Regulatory Authority. Wall Street is meting out punishment as the Consumer Financial Protection Bureau readies a possible lawsuit against Navient, a major Department of Education student loan contractor, for allegedly cheating borrowers. The consumer bureau sent Navient a letter on Aug. 19 telling its executives that the agency's enforcement staff had found enough evidence indicating that the company violated consumer protection laws, according to an Aug. 24 filing with the Securities and Exchange Commission. The CFPB has been investigating the company for nearly two years, and in its August letter to Navient, the agency said its senior officials are now considering whether to sue the company in court. A group of state attorneys general led by Washington and Illinois has been probing the company for more than a year, amassing evidence that Navient allegedly harmed borrowers with its practices. State banking regulators also have launched an investigation. Federal and state regulators have increased their surveillance of the student loan sector as outstanding debts reach $1.3 trillion and borrowers continue to fall behind on their payments despite the improving economy and generous federal plans that allow borrowers to make payments based on their earnings. Officials at the CFPB have repeatedly said they see parallels between how student loan companies process borrowers' monthly payments and counsel them on their repayment options and the way mortgage companies treated borrowers during the height of the recent housing crisis. Millions of Americans lost their homes as a result of mortgage companies' failures. Navient has previously denied allegations that it acted improperly. In a sign of its confidence, Navient has increased how much it pays Timothy Hynes, the company's chief risk and compliance officer, despite its pending regulatory woes. Patricia Christel, a Navient spokeswoman, didn't respond to a request for comment. Consumers have filed thousands of complaints with the CFPB against Navient and its predecessor company, Sallie Mae. A Huffington Post analysis earlier this year found that no company had paid out more money in refunds to aggrieved borrowers with private student loans than Navient. Analysts who follow the financial services sector have previously noted that refunds to borrowers via the CFPB complaint system could be a sign of company errors, heightening the risk of government fines for alleged wrongdoing. Still, the company remains one of the Education Department's favored contractors for now. The department last year renewed Navient's lucrative contract to collect monthly payments on federal student loans. The Education Department also cleared the company of wrongdoing following what Senate Democrats allege was a flawed investigation into Justice Department accusations that Navient intentionally cheated active-duty troops on their student loans for nearly a decade. Navient and the Justice Department agreed to settle the charges in exchange for refunds to allegedly harmed military personnel. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

03 сентября 2015, 03:50

Wall Street Punishes Troubled Student Loan Giant Navient Corp.

Investors fled Navient Corp. on Wednesday, sending shares in the nation's largest student loan company to an all-time low as federal consumer regulators prepare a possible lawsuit targeting the loan specialist over its alleged mistreatment of borrowers. Navient stock closed at $12.16 after falling to $11.97 in Wednesday trading, its lowest price since the company spun off from Sallie Mae last year. Its shares have plummeted nearly 44 percent since the start of the year, making it one of the worst performers in the Standard and Poor's 500 Index. The S&P 500 has tumbled about 5 percent this year, while shares in one of Navient's main competitors, Nelnet Inc., have dropped by 21 percent. Traders also have pummeled Navient's debt securities as worries spread that the company may not make good on its obligations. The price of Navient's 10-year notes due in 2024 have fallen 13.63 cents over the last three months to 83.75 cents on the dollar, according to data compiled by the Financial Industry Regulatory Authority. Wall Street is meting out punishment as the Consumer Financial Protection Bureau readies a possible lawsuit against Navient, a major Department of Education student loan contractor, for allegedly cheating borrowers. The consumer bureau sent Navient a letter on Aug. 19 telling its executives that the agency's enforcement staff had found enough evidence indicating that the company violated consumer protection laws, according to an Aug. 24 filing with the Securities and Exchange Commission. The CFPB has been investigating the company for nearly two years, and in its August letter to Navient, the agency said its senior officials are now considering whether to sue the company in court. A group of state attorneys general led by Washington and Illinois has been probing the company for more than a year, amassing evidence that Navient allegedly harmed borrowers with its practices. State banking regulators also have launched an investigation. Federal and state regulators have increased their surveillance of the student loan sector as outstanding debts reach $1.3 trillion and borrowers continue to fall behind on their payments despite the improving economy and generous federal plans that allow borrowers to make payments based on their earnings. Officials at the CFPB have repeatedly said they see parallels between how student loan companies process borrowers' monthly payments and counsel them on their repayment options and the way mortgage companies treated borrowers during the height of the recent housing crisis. Millions of Americans lost their homes as a result of mortgage companies' failures. Navient has previously denied allegations that it acted improperly. In a sign of its confidence, Navient has increased how much it pays Timothy Hynes, the company's chief risk and compliance officer, despite its pending regulatory woes. Patricia Christel, a Navient spokeswoman, didn't respond to a request for comment. Consumers have filed thousands of complaints with the CFPB against Navient and its predecessor company, Sallie Mae. A Huffington Post analysis earlier this year found that no company had paid out more money in refunds to aggrieved borrowers with private student loans than Navient. Analysts who follow the financial services sector have previously noted that refunds to borrowers via the CFPB complaint system could be a sign of company errors, heightening the risk of government fines for alleged wrongdoing. Still, the company remains one of the Education Department's favored contractors for now. The department last year renewed Navient's lucrative contract to collect monthly payments on federal student loans. The Education Department also cleared the company of wrongdoing following what Senate Democrats allege was a flawed investigation into Justice Department accusations that Navient intentionally cheated active-duty troops on their student loans for nearly a decade. Navient and the Justice Department agreed to settle the charges in exchange for refunds to allegedly harmed military personnel. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

25 августа 2015, 03:22

CFPB Considers Suing Student Loan Giant Navient For Cheating Borrowers

Federal regulators are considering suing Navient Corp., the nation's largest student loan company, for allegedly cheating borrowers, the company said Monday. The Consumer Financial Protection Bureau, which has been investigating the company for nearly two years, sent Navient a letter on Aug. 19 telling its executives that the agency's enforcement staff had found enough evidence to indicate the company violated consumer protection laws, Navient disclosed Monday in a filing with the Securities and Exchange Commission. The CFPB also told Navient that the agency's senior officials would now consider whether to sue the company in court. The agency sent similar letters to for-profit college chains Corinthian Colleges Inc. and ITT Educational Services before it later sued them. Representatives for the CFPB didn't respond to requests for comment. Concerns are mounting among policymakers that the nation's growing $1.3 trillion student loan tab risks slowing economic growth, as millions of households either struggle to make payments or cut back in other ways. And regulators and experts worry that shoddy loan servicing may be partly responsible, as many borrowers complain they're routinely mistreated and forced to stump up larger monthly payments than required. Navient, which processes more student loan payments than any firm in the country, has been under investigation for at least two years by several federal and state authorities for allegedly overcharging borrowers and otherwise mistreating them in violation of the law. The Department of Justice accused the company in 2014 of intentionally cheating active-duty troops on their student loans for nearly a decade. The CFPB also has been investigating the company for numerous allegedly dodgy practices, such as the way its debt-collection unit treats distressed debtors and how its loan-servicing operation interacts with borrowers. A group of state attorneys general led by Washington and Illinois has been probing the company for more than a year. A feared regulator on Wall Street, the New York Department of Financial Services, also has launched an investigation. Navient executives told investors in the Monday filing that the company couldn't assure them that a CFPB lawsuit wouldn't significantly hurt the company, nor could it share an estimate of potential losses as a result of a CFPB-ordered penalty or lawsuit. Investors have hammered Navient's stock, sending its shares plummeting 39.6 percent since the start of the year. By comparison, one of its competitors, Nelnet Inc., is down 19.5 percent. The Standard & Poor's 500 Index, the U.S. equities benchmark, has fallen 8 percent. "The company is committed to resolving any potential concerns," Navient said. It added that it planned to challenge the CFPB's preliminary findings and persuade the agency to not go after the company. In its Monday filing, Navient said the CFPB's potential legal action stems from its late-fee practices and what it described as "other matters." Patricia Christel, a company spokeswoman, didn't respond to a request for comment. Last year in May, Navient and its predecessor, Sallie Mae, agreed to pay $36.6 million in fines and restitution after the Federal Deposit Insurance Corp. alleged it processed payments in a way that maximized late fees while the company also misled borrowers about how they could avoid late fees. Around the time of the settlement, the company disclosed that it would "voluntarily" pay back other aggrieved borrowers about $42 million for its late-fee practices. That refund process -- which the CFPB is expected to address -- is now mostly complete, the company said in August in its most recent quarterly report. For more than a year, Navient consistently has denied wrongdoing, though its chief executive, Jack Remondi, apologized last year for how it treated some troops. In its Monday filing, the company said it "continues to believe that its acts and practices relating to student loans are lawful and meet industry standards." Navient also said that some of its practices were in line with rules set by its other regulators. The company has a lucrative federal contract to collect payments on government-owned loans with the Department of Education. In May, the department formally cleared the company of wrongdoing after what some Senate Democrats reckon was a dubious investigation into how Navient treated active-duty troops with federal student loans. Last year, Holly Petraeus, assistant director for service member affairs at the CFPB, said Navient's alleged conduct toward service members was "particularly troubling from a company that benefits so generously from federal contracts." Earlier this year, the Education Department stopped sending new accounts to a Navient debt-collection subsidiary after determining that it had allegedly misled borrowers "at unacceptably high rates.” But the company continues to receive newly originated loans from the Education Department, boosting its overall profit. Navient hasn't disclosed any pending Education Department investigations into its practices.  "We continue to work closely with CFPB and other federal agencies to protect student loan borrowers," said Dorie Nolt, an Education Department spokeswoman. "We’ve made a variety of changes to improve loan servicing, and we’re constantly monitoring our servicers. We won’t hesitate to take action against a servicer that isn’t following the law." Navient's predecessor company, Sallie Mae, ran afoul of government authorities numerous times before it split itself last year into Navient and Sallie Mae Bank. State prosecutors, banking regulators and Education Department auditors all have at different times alleged that the company violated the law. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

25 августа 2015, 03:22

CFPB Considers Suing Student Loan Giant Navient For Cheating Borrowers

Federal regulators are considering suing Navient Corp., the nation's largest student loan company, for allegedly cheating borrowers, the company said Monday. The Consumer Financial Protection Bureau, which has been investigating the company for nearly two years, sent Navient a letter on Aug. 19 telling its executives that the agency's enforcement staff had found enough evidence to indicate the company violated consumer protection laws, Navient disclosed Monday in a filing with the Securities and Exchange Commission. The CFPB also told Navient that the agency's senior officials would now consider whether to sue the company in court. The agency sent similar letters to for-profit college chains Corinthian Colleges Inc. and ITT Educational Services before it later sued them. Representatives for the CFPB didn't respond to requests for comment. Concerns are mounting among policymakers that the nation's growing $1.3 trillion student loan tab risks slowing economic growth, as millions of households either struggle to make payments or cut back in other ways. And regulators and experts worry that shoddy loan servicing may be partly responsible, as many borrowers complain they're routinely mistreated and forced to stump up larger monthly payments than required. Navient, which processes more student loan payments than any firm in the country, has been under investigation for at least two years by several federal and state authorities for allegedly overcharging borrowers and otherwise mistreating them in violation of the law. The Department of Justice accused the company in 2014 of intentionally cheating active-duty troops on their student loans for nearly a decade. The CFPB also has been investigating the company for numerous allegedly dodgy practices, such as the way its debt-collection unit treats distressed debtors and how its loan-servicing operation interacts with borrowers. A group of state attorneys general led by Washington and Illinois has been probing the company for more than a year. A feared regulator on Wall Street, the New York Department of Financial Services, also has launched an investigation. Navient executives told investors in the Monday filing that the company couldn't assure them that a CFPB lawsuit wouldn't significantly hurt the company, nor could it share an estimate of potential losses as a result of a CFPB-ordered penalty or lawsuit. Investors have hammered Navient's stock, sending its shares plummeting 39.6 percent since the start of the year. By comparison, one of its competitors, Nelnet Inc., is down 19.5 percent. The Standard & Poor's 500 Index, the U.S. equities benchmark, has fallen 8 percent. "The company is committed to resolving any potential concerns," Navient said. It added that it planned to challenge the CFPB's preliminary findings and persuade the agency to not go after the company. In its Monday filing, Navient said the CFPB's potential legal action stems from its late-fee practices and what it described as "other matters." Patricia Christel, a company spokeswoman, didn't respond to a request for comment. Last year in May, Navient and its predecessor, Sallie Mae, agreed to pay $36.6 million in fines and restitution after the Federal Deposit Insurance Corp. alleged it processed payments in a way that maximized late fees while the company also misled borrowers about how they could avoid late fees. Around the time of the settlement, the company disclosed that it would "voluntarily" pay back other aggrieved borrowers about $42 million for its late-fee practices. That refund process -- which the CFPB is expected to address -- is now mostly complete, the company said in August in its most recent quarterly report. For more than a year, Navient consistently has denied wrongdoing, though its chief executive, Jack Remondi, apologized last year for how it treated some troops. In its Monday filing, the company said it "continues to believe that its acts and practices relating to student loans are lawful and meet industry standards." Navient also said that some of its practices were in line with rules set by its other regulators. The company has a lucrative federal contract to collect payments on government-owned loans with the Department of Education. In May, the department formally cleared the company of wrongdoing after what some Senate Democrats reckon was a dubious investigation into how Navient treated active-duty troops with federal student loans. Last year, Holly Petraeus, assistant director for service member affairs at the CFPB, said Navient's alleged conduct toward service members was "particularly troubling from a company that benefits so generously from federal contracts." Earlier this year, the Education Department stopped sending new accounts to a Navient debt-collection subsidiary after determining that it had allegedly misled borrowers "at unacceptably high rates.” But the company continues to receive newly originated loans from the Education Department, boosting its overall profit. Navient hasn't disclosed any pending Education Department investigations into its practices.  "We continue to work closely with CFPB and other federal agencies to protect student loan borrowers," said Dorie Nolt, an Education Department spokeswoman. "We’ve made a variety of changes to improve loan servicing, and we’re constantly monitoring our servicers. We won’t hesitate to take action against a servicer that isn’t following the law." Navient's predecessor company, Sallie Mae, ran afoul of government authorities numerous times before it split itself last year into Navient and Sallie Mae Bank. State prosecutors, banking regulators and Education Department auditors all have at different times alleged that the company violated the law. -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.