Sallie Mae Spinoff Navient Could Face CFPB Lawsuit Over Student Loans

In the short time since Navient the nations largest student loan servicing company spun off from Sallie Mae, the company has come under scrutiny for it allegedly unfair practices of overcharging and imposing excessive fees on consumers loans. While those practices resulted in a $97 million settlement with the Depts. of Education and Justice, and the Federal Deposit Insurance Corp, they could soon lead to a lawsuit from the Consumer Financial Protection Bureau.

Navient revealed in a Securities and Exchange Commission filing [PDF] on Monday that the companys wholly-owned subsidiary Navient Solutions Inc. (NSI) could soon be party to a lawsuit regarding its servicing practices.

According to the filing, Navient received a letter from the CFPB on August 19 serving as notification that the regulators enforcement office is considering recommending legal action against the loan servicing company.

The letter relates to the agencys ongoing investigation into Navients disclosures and assessment of late fees and other matters, and stated that in connection with any action, the CFPB may seek restitution, civil monetary penalties and corrective action against NSI.

Known as a Notice and Opportunity to Respond and Advise (NORA), the CFPB letter is intended to give Navient the opportunity to present its positions to the CFPB before an enforcement action is recommended or commenced, something the servicing company plans to do.

NSI continues to believe that its acts and practices relating to student loans are lawful and meet industry standards and, where applicable, the statutory or contractual requirements of NSI’s other regulators, Navient said in the SEC filing. The company is committed to resolving any potential concerns.

Navient, which was spun off from Sallie Mae in 2014, has faced several probes by federal and state agencies, including increased scrutiny over its contract with the government.

Earlier this month, a group of senators sent a letter to Inspector General Kathleen Tighe raising concerns that the Dept. of Education’s probe into its student loans servicers compliance with the Servicemembers Civil Relief Act (SCRA) was riddled with problems.

The Dept. of Education’s review, which was released in May, found that less than 1% of servicemember files serviced by Navient, Great Lakes, Nelnet and American Education Services contained violations of SCRA, including a provision that limits the amount of interest on military personnel student loans to no more than 6%.

Those findings were in contrast with a May 2014 investigation by the Depts. of Education and Justice, and the Federal Deposit Insurance Corp.. Those agencies jointly announced a sizable settlement against both Sallie Mae and Navient for overcharging and imposing excessive fees to nearly 78,000 military members.

The two companies agreed to pay a combined $97 million to settle charges that they violated the Servicemembers Civil Relief Act which caps loan interest rates at 6% for active duty military members.

The Huffington Post points out that the New York Department of Financial Services, along with the attorney generals offices in both Washington and Illinois have launched investigations into the companys debt collection practices.

[via The Huffington Post]

Business loans and capital market activities in M’sia seen to be slow this year

PETALING JAYA: Business loan growth is expected to be slow for the remainder of 2015, while capital market activities are likely to stay flat due to continued market volatility, according to MIDF Research.

It also expected Bank Negara to maintain the overnight policy rate (OPR) at 3.25% throughout the year.

We do not expect a cut in the benchmark interest rate in view of the weaker ringgit as well as on grounds that the interest rate remains accommodative while gross domestic product (GDP) growth is still expected to be decent at 4.7% for 2015 considering the economic challenges, MIDF said in a report yesterday.

The research house also said it expect overall asset quality for the banking system to remain stable.

However, there remains external headwinds which may impact net export growth in the second half of 2015 hence affecting business loan growth.

MIDF Research noted that loans in the banking system grew 9.1% year-on-year in June, with business loans growth turning softer while growth in household loans continued to moderate.

Banking system loans grew 9.1% year-on-year in June 2015 compared with 8.9% year-on-year in May 2015. Business loans growth turned softer to 8.7% year-on-year compared to 9.1% year-on-year in May.

It said loans to households continued to decline, registering a lower growth of 8.7% year-on-year in June 2015 while growth in loans for purchase of securities and outstanding in credit cards continued to trend lower.

Similar to the previous month, MIDF said working capital loans continued to pick up pace with a higher growth rate of 11.4% year-on-year while construction loans slipped further with a growth rate of 11.2%.

By business sectors and compared with the previous month, loans to the finance, insurance and business services, manufacturing, primary agriculture and the wholesale, retail, restaurants and hotels sectors recorded higher growth rates but they were slower for loans to the construction and real estate sectors.

Mortgage loans in June, meanwhile, were stable but loans for purchase of securities and credit cards were slower in pace, it said.

Compared to the preceding month, mortgage loan growth was stable with loans for purchase of residential property and for purchase of non-residential property registering growth of 12.8% year-on-year and 15.5% year-on-year respectively.

Momentum in loans for purchase of passenger cars remained slow with a growth rate of 2.4% year-on-year, said the research house.

Hey, Millennials, Want to Pay Off Student Loans? Consider These Careers

If youre trying to find a career path that might actually have a decent income and a future, you may want to consider becoming a physician assistant, an actuary or statistician or an engineer. Not as keen on math and sciences? Market research, fundraising or even public relations are growing fields with good pay.

Thats according to a new report from Young Invincibles, a Washington-based group that represents the interests of young Americans, that dives into data from the Labor Department to attempt to identify the top jobs for millennials–the current generation of young people trying to launch their careers in a rapidly changing labor market.

To come up with its list, researchers Konrad Mugglestone and Tom Allison considered three factors. First, the occupations median salary, to give a sense of what occupations may pay by mid-career. Second, the occupations projected growth in coming years. (Ask any journalist and you can get an earful about how a career path in a shrinking industry can be tough.) Third, whether a significant number of young people are in an occupation. Being a chief executive is great, but you dont get hired for that role at age 22.

Baldwin hosts roundtable on student loans

The current UW-Waukesha student enlisted in the US Army to reap the benefits of the GI Bill, a piece of legislation that provides assistance to veterans who go back to school.

You shouldnt have to go to war to go to college, Newton shared with a roundtable Wednesday.

The roundtable included facilitator US Sen. Tammy Baldwin, D-Wis., students from Chippewa Valley Technical College and UW-Eau Claire and others working to curb high rates of student loan debt they say are preventing young adults from buying homes and cars and starting businesses.

Baldwin is expected to take the information gleaned from the session at CVTCs Health Education Center back to Congress to further push for changes to address the student debt crisis.

Currently student loan debt is reaching $1.3 trillion, surpassing the combined total of auto and credit card debt, falling short only of mortgage loans, said Scot Ross, executive director of One Wisconsin Now a non-profit advocacy group based in Madison with a focus on economic issues.

He said there are 55 million people who get some form of Social Security, and 47 million people receiving Medicare benefits. A group of 43 million people is sharing the trillion dollars in student loan debt.

That population is a giant drag on our economy, Ross said.

Options for change

Baldwin co-sponsored legislation that would let borrowers refinance their student loans, much like homeowners are able to refinance their mortgages.

That would help Paul Savides, a UW-Eau Claire student who has taken out unsubsidized direct loans at 6.8 percent interest, compared with current rates of 4.2 percent.

It does make quite a bit of difference, he said, referring to savings he could incur from refinancing.

But a previous version of the bill, Bank of Students Emergency Loan Refinancing Act, failed to garner enough votes last session to pass.

Baldwin brought up other options for addressing the debt, including Americas College Promise Act of 2015 that would cover the cost of two years of higher education after high school.

The credits would be fully transferable to a four-year college, if that was the path that somebody wanted, but if not there would be a real emphasis on training in areas that industry needed a qualified workforce, she said.

The Working Student Act, reintroduced by Baldwin, wouldnt penalize students who need to work during college, since eligibility for aid is reduced depending on income.

That struck a chord with some of the students in attendance such as UW-Eau Claire senior Brittany Flaherty, who said that although her parents are financial sound, they have taught her to live financially indepedent.

Most of the time Im penalized by getting more loans instead of grants, which is really what I need, because my parents can afford the things that I cant afford, she said.

The Career and Technical Education Opportunity Act, Baldwin said, would provide aid to students looking into short-term career and tech ed programs that at present would be too short to qualify the students for aid.

Were at this moment where most young people who are just beginning their careers are doing so burdened with sometimes tens of thousands hellip; of dollars in debt, at the beginning of that path, Baldwin said. This has emerged as an issue that has caught the attention of the nation.

Baldwin urged voters to keep the conversation about student debt fresh, suggesting voters contact their legislators.

Contact: 715-833-9206, elizabeth.dohms@ecpc.com, EDohms_LT on Twitter

Local ‘Angry Grad’ pens book about the dangers of student loans

They were decisions, she said, that she was led to believe would guarantee her future success.

I had months of sitting with him, alone in my thoughts, and I kept thinking, if I could only go back, said Bell, a 2003 graduate of Shenango High School and a 2007 graduate of Westminster College.

I see the pattern students are making, year after year. We all have that mentality that college is going to be awesome, were going to do well, and were going to land this high-paying job.

But you graduate and youre working at Ruby Tuesday or Sears, just treading water, barely paying rent, and you think, This isnt how its supposed to be. I cant pay my bills. Ive been lied to.

Bells reflecting on her post-college financial struggles led her to write a book in hopes of saving others from the same debt and regret that she has. Titled The Angry Grad: Your Guide to Student Loans, a Struggling Economy and Becoming Your Own Boss, the book was released in May.

Since then, Bell has written for other websites, appeared on online radio shows, and done podcast interviews with bloggers Digital Dads and financial coach Steve Stewart, promoting her book and trying to convince students that there are better options than getting into debt for their education.

Theres such a fear about being seen as dumb or not intelligent if you dont go to college, but thats so not true, Bell said. There are many people who are intelligent, who can self-educate and who dont need a piece of paper to say theyre smart. It should be your decision (to go to college) right from the beginning.

If it wasnt looked down upon, students could take a year or two and figure things out, she continued. It would help people to be more responsible, if they could see what it costs to live in the world first. They could make a better decision about taking on that debt.

Bell said when she was 18 years old, she was forced to make a big financial decision to take on student debt, but she didnt fully understand the repercussions of her choices.

When she graduated from college, Bell said she decided to reject a teaching job she was offered in North Carolina in order to stay closer to home and family. Instead, she took an Americorps tutoring position at a local school, and was paid just $11,000. In order to make ends meet, she took on two other part-time jobs. The next year, she fell into a similar position at another school, and in the third year after graduating college, she took a job at a private school, in which she made $19,000.

It wasnt a livable wage, Bell said. When you have so many loans, and you put so much into your job, it just wasnt worth it. If I had been working full-time as a waitress, I wouldve been making more money. It was so frustrating.

Others urged her to begin graduate school to improve her job prospects, but after taking only a few classes, Bell said she realized she wasnt making a good decision.

So I left education completely, and found a job in medical sales, Bell said. It was better money than teaching, and I liked the job. I felt like I had finally landed in a job that fit me better than the job I thought I wanted when I was 18.

Since then, Bell has become an entrepreneur, and has written the book to encourage others to have realistic expectations about financing their college education.

I just want to educate them on the reality of student debt and the problem it causes. My husband and I have a ton of debt combined, and its crippling, Bell said.

Im trying to teach people about the different alternatives that are out there, even if they still go to college, she continued. I just wish I had known those options are out there — like real estate, for example — instead of being told that college is the only way of being successful.

(Email: j_shelenberger@ncnewsonline.com)

Walker Has More Than $100K in Student Loans for Sons

Wisconsin Governor Scott Walker, who is seeking the Republican presidential nomination, owes more than $100,000 in loans for his childrens college education, newly released financial disclosure statements show.

Walker reported owing between $100,000 and $125,000 in federal student loans for his two sons, according to disclosure forms posted online by CNN. Walkers sons are attending Marquette University and the University of Wisconsin-Madison.

Earlier this year, former Maryland Governor Martin OMalley, a Democratic candidate for president, disclosed that he and his wife owed nearly $340,000 in student loans taken out for their childrens education.

What Happened to Government Small Business Loans?

SBA spokesman Miguel Ayala told Reuters that the agencys lending capacity for fiscal 2015 was exceeded by stronger-than-anticipated demand for the government-guaranteed 7(a) program loans made by banks to small businesses.

Another Consumer Nukes Their Student Loans Through Bankruptcy

A reader contacted me to share his story of dealing with his unmanageable student loans through bankruptcy. Just recently Ive written two articles that showed how people have fought the battle against their student loan companies and the bankruptcy court agreed to eliminate their debt. Read this and this.

The cases of consumers making there case with the bankruptcy court are coming more frequently now. And while Ive always been a big proponent of people hiring smart attorneys to help them with their bankruptcy, these cases reinforce some of the research by Jason Iuliano, JD See How to Really Discharge Your Student Loans in Bankruptcy. Many Can. But Never Try.

In 2013 Iuliano said, 99.9 percent of student loan debtors in bankruptcy never attempt to get a discharge and In fact, debtors without attorneys were just as likely to receive hardship discharges of their student loan debt as were those debtors who had counsel.

Ron Nichols reached out to me to share his story of dealing with his student loans without an attorney to file the necessary second step, the Adversary Proceeding.

Nichols said, I just want to share my story about what happened to me in regards to student loans and bankruptcy. Hopefully, you can share it with your many readers.

My wife and I co-signed our three childrens student loans to the tune of $254,000 (about $1,900 a month). At the time, we were healthy and prepared to back them up if they were unable to.

Two of our children had difficulties in securing jobs–so they couldnt afford the payments to Sallie Mae (SM) and National Collegiate Trust (NCT). The loans we co-signed were all private ones ($254,000).

My wife had to retire on disability and I was medically retired from Air Force Special Ops due to a brain tumor. Our incomes dropped so bad that we had to file for chapter 7 bankruptcy (BK). Before filing that, we were hit with a couple of lawsuits because the vast majority of the loans were in default.

We were so stressed out with the constant phone calls and threats that we didnt know what to do. We answered every call and tried to workout a payment agreement with them. They were having none of that. This went on for three years before the lawsuits. We always heard that student loans couldnt be discharged in bankruptcy. I was fully aware that they couldnt garnish our income or levy our bank accounts because we receive Social Security and Veterans Administration disability benefits only. As stated above, all the loans are private so we are protected from garnishments. Our house is under-water too. Thats why I found it hard to believe that SM and NCT wouldnt negotiate with us.

Here is what I did. I couldnt afford an attorney so I researched tons of websites to see how to go about it Pro Se (representing yourself). When I filed bankruptcy, we immediately got relief from phone calls from all creditors including SM and NCT for about two years. That was worth it just in itself. We then filed an Adversary Proceeding with our bankruptcy which is basically suing the student loan lenders for relief due to undue financial hardship. Sallie Mae told the court our $30,000 loan with them was completely discharged at the first Status Conference!

After going back and forth with Status Conferences for about two years with NCT, they got scared that they would lose and offered us a settlement a week before the Adversary Trial. Their offer was to settle all our loans with them (15 of them), for $80,000 at $195 a month with 0% interest! The original loan balance was $224,000. The peace of mind this gave us was tremendous. We can finally get on with our lives without worrying about the crushing stress of student loans. I hope more people can find solutions to their student loan dilemma in some way.

Not long ago a few legal educators said they were, part of a larger study, Jim Greiner, Lois Lupica, a couple of dozen students, and I have been working to create a DIY guide to a no-asset Chapter 7 bankruptcy guide, complete with a module on representing yourself through an adversary proceeding to discharge student loans. Dale Jimenez, one of the lawyers involved, said, If we succeed, we hope that the materials we create will be useful to attorneys as well as pro se individuals.

If I look into my crystal ball I see more people who could get a total or substantial bankruptcy discharge of their student loan debt, like Nichols did.

To help this movement, the definition of what constitutes an undue hardship, the magic words needed for the discharge, have been recently clarified by the Department of Education. See Department of Education Reaches Decision About Student Loans and Bankruptcy.

For me, that adoption of undue hardship by the Department of Education is a green light for those that meet the criteria defined here.

In that recent announcement by the Department of Education the government got behind the undue hardship argument for federal loans. In fact to be crystal clear, what the government said was, If this consideration leads to the conclusion that repayment would impose an undue hardship, the holder should consent to, or not oppose the discharge, as authorized by the governing statute and regulations.

If consumers cant afford a bankruptcy attorney to take on their case, maybe they might just have to file an Adversary Proceeding themselves and fight the good fight. Not all consumers would be willing to adopt that approach but recent cases confirm it can be a successful strategy to crawl out from under life crushing student loan debt.

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

Six Careers That Pay Off Your Student Loans

Other teachers at public elementary or secondary schools can qualify for up to $5,000 in loan forgiveness.

Those schools must qualify for funds under Title I of the Elementary and Secondary Education Act of 1965, have at least 30 percent of students that qualify for Title I services, and make it on to the Education DepartmentsTeacher Cancellation Low Income Directory.

Teachers with federal Perkins loans can get all of their loans forgiven if they teach for five consecutive yearsin a school that serves low-income families, teach special education, math, science, foreign language, bilingual education, or in an area where there is a shortage of teachers.

Become a Civil Servant

+(Stewart F. House/Getty Images)Federal, state, or local government agency workers can have their student loans forgiven after 120 monthly loan payments as part of Public Service Loan Forgiveness. Paid consecutively, thats just 10 years of service and in any job–from a staff assistant to a program director.

Canadian Province Eliminates Student Loans

Why Is This Important?

Because outlandish student loan debt is crippling an entire generation.

Long Story Short

The Canadian province of Newfoundland and Labrador announced that its eliminating student loans. Instead, eligible students will receive non-repayable grants that will cover up to 40% of their college tuition.

Long Story

In theory, borrowing money to finance a secondary education isnt a bad idea. In practice, not so much. College tuition costs have skyrocketed in the last few decades I think my last year at my (small, public) alma mater ran about $12,000; now it costs nearly $30,000 for tuition, fees, room and board. At that rate, many people may choose to eschew college, become hairdressers, and use the saved tuition to fix their botched penis surgeries. Fewer college grads is categorically bad for any economy, which is why the Canadian province of Newfoundland and Labrador has taken a novel approach: Its eliminating student loans.

Now the province isnt eliminating need-based assistance, but is instead replacing provincial loans with non-repayable grants. For students attending universities within the province, the grants will cover up to 40% of their costs. The rest can still be funded by federal loans, which have to be repaid.

It means students are graduating with less debt, Travis Perry, chairperson of the Canadian Federation of Students for Newfoundland and Labrador told CTVs Canada AM. Theyre able to get out of their program of study, start a family, purchase a home, start a small business, and meaningfully contribute to the economy in these ways.

The announcement is expected to affect about 7,000 students, especially poorer ones who would never have been able to afford college in the first place. With President Obama announcing his intentions to make community college free for all students, it appears were blurring the line between whether college is a privilege or a right. Its a reasonable question to ask when employers have made a degree all but a requirement, while rising costs increasingly make college the exclusive domain of the wealthy elite.

The government of Newfoundland and Labrador sees the non-repayable grants as an investment in its economy, which is a good way to look at it. Its nice to see governments stepping in on behalf of those in need, but the real culprit remains the unabated rising cost of tuition. Until someone fixes that, measures like these will be little more than band-aid cures.

Own The Conversation

Ask The Big Question: Would something like that work in a country as large as the US?

Disrupt Your Feed: And I thought the lower legal drinking age was the only reason to attend college in Canadahellip;

Drop This Fact: Average student loan debt levels for graduating seniors rose 25% between 2008 and 2012.