18 states and counting have now filed lawsuits following delays in vital protections designed to help students that were victimized by predatory student loan practices. Much controversy was made this year about the largest student loan provider, Navient, after they were sued by the Federal Government. They were found guilty of malicious misinformation, hidden fees and rate increases, and breaking promises to dismiss loans for employer-sponsored repayment plans. Student loan debt in the US currently sits at approximately $1.4 trillion, according to the Federal Reserve. This extreme debt crisis is a hot button issue in legislature right now.
Barack Obama implemented a rule designed to allow victims of these unfair lending practices to have their bad student debts dismissed, but the Trump-elected Secretary of Education, Betsy DeVos, has delayed the ruling from going into effect. The Obama ruling was scheduled for July of 2017. The Obama rule highlighted “Borrower Defense to Repaying,” which allows students to have their federal student loans forgiven if a school engaged in deceptive or illegal lending practices to encourage the students to attend. Another rule being decided under DeVos, is the gainful employment rule. The government uses a formula to determine the amount of the loan payment regarding the possibility of that student having a successful job because of their degree. Student loan payments cannot exceed 20% of their potential discretionary income or 8% of their total earnings.
Critics of the Obama-era rule state that it is too easy to prove that universities engaged in unfair lending techniques. Regardless, the student debt crisis is out of control and new regulations need to be decided upon. DeVos is rewriting the rules regarding the borrower defense and gainful employment laws, citing they are currently unfair, but she says she is dedicated to fight university fraud.
How Can I Ease My Current Student Loan Debt?
- Volunteer: Many volunteering opportunities offer student debt forgiveness or reimbursement programs. AmeriCorps, Teach for America, and the Peace Corps offer repayment options.
- Move: Some US cities are offering student loan assistance to lure in more young professionals. Detroit, MI, Kansas, and Niagara Falls, NY all offer student loan repayment for just moving there. You may have to live in a certain community, work at certain companies, and commit to staying to be accepted into the program.
- Student loan refinancing: You may be able to negotiate a new, more affordable repayment plan with your lender that better fits your needs. Refinancing can get you a lower interest rate for repayment.
Additionally, there are many federal and private organizations dedicated to help students with debt issues. Washington, D.C. bankruptcy lawyer Kevin D. Judd can give you a free consultation of your financial picture and use a stockpile of financial knowledge to find out the repayment program that will best fit your student loan needs.