Timeline of US Government Guarenteed Student Loans

Sallie Mae padding its profits at the cost of students; AGAIN.

2012-01-27T18:59:00.001-08:00

Over 50,000 college grads across the country have joined a campaign on change.org urging student loan giant Sallie Mae to stop charging unemployed borrowers a $50 fee for forbearance on their loans, according to PRWeb.

The campaign was launched by Stef Gray, a recent college graduate who took out private loans through the company and was hit with the $50 fee when she requested a delay on the repayment of her loan due to unemployment. After graduating, Gray found herself without a fullt-time job and with no co-signers for her loan, since her parents had passed away. As a result she was forced to go into forbearance, or suspend the repayment of her loans.

Gray told PRWeb, “For Sallie Mae to tack on these extra fees just to pad their profits is to kick people like me when we’re already down. Charging a forbearance fee is wrong, and more than 50,000 people who agree are standing with me.”

The campaign is gaining strength as millions of student loan borrowers could be seeing the interest rates on their loans rise significantly unless Congress extends a rate reduction passed in 2007 and set to expire this July. While the current interest rate, based on the 2007 reduction, is 3.4 percent, the rate could double to 6.8 percent, adding more fuel to the fire of protests against student loans.

As of Friday afternoon, nearly 70,000 people had signed the petition.

Government theft of your cell phone time

2011-10-06T20:00:00.001-07:00

Recently it was reported in the news that the Obama administration wants to pass a law that allows 3rd party parasites (3rd party collections agencies) to be able to use robo-callers to call the cell phones of people in default.

BAD IDEA.

In America, unlike other parts of the world, a person in the US pays for Cell Phone Minuets for both incoming and outgoing calls. The result of this is telemarketers and 3rd party collectors are not allowed to call these numbers.

Some want to switch the American system to one like that of many European systems, where the person only pays for outgoing calls. This would allow the telemarketers and others to call the cell phone numbers.

There is just one problem. Many people switched to cell phones BECAUSE they do not allow telemarketers to call. The so called "do not call list" is not working the way it should and many have found that having a cell phone is just as good as having one home phone.

In the case of student loans, many people in default have pre-paid phones. These phones require you to purchase minuets ahead of time. Many of these people use the phones for emergencies only, or when they are trying to find work.

IF the Obama administration gets its wish, the 3rd party parasites robo callers will be able to tie up a line with constant calling. And unless the person can block the call, or set a specific ringer to it, they will end up answering the call - and doing that costs them Minuets. Even a 5 second answer to find out its a robo call, costs the cell phone user 1 full minuet. In effect, this law would allow the government to steal resources (property) from a defaulted student, without having a court order.

The Obama Administration knows, that due to the dismal economy, many students are defaulting simply because there are no jobs. So instead of helping these students, the administration is victimizing them.

And for students who have been in default for a long period, this is just another of and endless attacks on them by the US government.

Time for it to end. It is time for the government to address the problem and help the students instead of further persecuting them.

A billion dollars wasted on 3rd party parasites - private collections agencies

2011-10-06T19:56:00.000-07:00

http://government.brevardtimes.com/2011/10/us-taxpayers-give-billions-to-student.html

Tuesday, October 4, 2011
U.S. Taxpayers Give Billions To Student Loan Collection Contractors For No Reason
The U.S. Government paid over $2 billion to private debt collection contractors to collect just under $1 billion for Fiscal Year 2011.

U.S. taxpayers are needlessly losing billions of dollars each year in collections costs that the U.S. government could be collecting without the help of private debt collection contractors.

According to the most recently available data, total student loan debt in collections that was collected for FY 2011 as of July 2011 amounted to $10,410,993,183.

Of that amount:

1. 42% was rehabilitated into a non-defaulted loan;

2. 25% was consolidated into a Direct Federal Loan.

3. This leaves 33% that had to be collected by Administrative Wage Garnishment, Treasury Offset (taking a borrower's income tax refund), and regular collections.

4. The most amount collected was by Treasury Offsets 16% at $1,609,108, 522, followed by Regular Collections 9% at $973,874,789, then Administrative Wage Garnishments 8% at $849,332,994.

So without the expense of contracting private collection companies for regular collections, the U.S. Government would have received $2,458,441,516 into the U.S. Treasury.

But since those are defaulted loans, the amount collected first goes to the private contractors who hold the debt contracts even if they didn't have a hand in actually collecting the money.

According to the Department of Education's website:

"Pursuant to the Higher Education Act and the terms of most borrowers' promissory notes, you are liable for the costs of collecting your defaulted Federally-financed student loans.

The largest of these costs is usually the cost of contingent fees that may be incurred to collect the loan.

The Department gives you repeated warnings before it refers a debt to a collection contractor.

If those warnings do not persuade you to reach repayment terms on defaulted loans, the Department refers those loans to collection contractors.

The contractors earn a commission, or contingent fee, for any payments then made on those loans.

The Department charges each borrower the cost of the commission earned by the contractor, and applies payments from that borrower first to defray the contingent fee earned for that payment, and then to interest and principal owed on the debt.

As a result, the amount needed to satisfy a student loan debt collected by the Department's contractors will be up to 25 percent more than the principal and interest repaid by the borrower.

On each billing statement, the Department projects an estimate of the total amount needed to satisfy the debt on the date of the statement, including collection costs that would be incurred by payment in full of that amount." (Emphasis Added).

So while Obama was hailed for cutting out the middle man by offering direct student loans to college students, he certainly made it up with the graft given to private debt collection companies.

It is obvious that this is the next middle man that must be cut out of the student loan program.

Termination or restructuring of these contracts would immediately bring in an additional $1 billion into the U.S. treasury.

Statistical Source: http://www.fsacollections.ed.gov/contractors/ga/stats/090611.htm
U.S. Dept. of Ed. payment policy: http://www.fsacollections.ed.gov/contractors/ga/stats/090611.htm

Students sue school over Recruitment departments job placement promises.

2011-09-13T18:46:00.000-07:00

http://studentloansblog.nextstudent.com/2011/09/12/recruiting-for-student-loans-leads-to-40-million-settlement-with-cooking-school/

Thousands of students who took out tens of thousands of dollars in student loans to attended San Francisco’s California Culinary Academy, one of 18 cooking schools in the Le Cordon Bleu for-profit college chain, may be getting some of their money back.

Under a pending $40 million settlement in state court, Career Education Corp., Le Cordon Bleu’s parent company, has agreed to offer rebates of up to $20,000 to approximately 8,500 students who attended the academy between 2003 and 2008.

In a class-action lawsuit, former students of the cooking school accused it of misleading them about the value of a culinary education and their job prospects after graduation. The students alleged the for-profit school defrauded them with promises of high-paying jobs and encouraged them to take on crushing debt from student loans for expensive programs but provided them with no more chance of finding a high-paying culinary job than someone who didn’t go to culinary school at all.

= = =

Folks, this is EXACTLY what I have been saying all along about these schools.
This is a MAJOR recruiting tactic. Using Job placement promises, and future earning potential is a major tool to get students to sign up for these high priced trade schools.

It is high time SOMEONE hold them accountable. Too bad it had to be the students here, because I think it was the GOVERNMENTS job, to provide oversight on the schools to ensure this did not happen.

What the schools did, is commit FRAUD.
At least these kids got some relief. But notice the article does not say if they got complete relief.
If not, many may still find themselves in default and then they will suffer heavily as those who are in default, do.

Record number of college students filing bankruptcy in 2011

2011-09-13T18:43:00.000-07:00

Fox news reports that many students are now filing bankruptcy - even though they know they cannot get rid of student loans. Perhaps this is way for the government to get real honest numbers of how many people ARE in default and how many need help.

Kids (students) today are graduating from 2 and 4 year colleges in the worst economy since the great depression and government is not doing one damm thing to help them avoid default status.

see http://www.foxbusiness.com/personal-finance/2011/09/13/more-college-grads-defaulting-on-student-loans-filing-bankruptcy/#content

US Deparment of Education blows it again

2011-09-04T16:12:00.000-07:00

The US Department of education, is again wasting millions of taxpayer dollars, by giving federal aid to on line colleges who are not licensed in the states where they enroll students. Rather than pass and impose new regulatory oversight on the schools, the Education Department passed a regulation that restates what the previous regulation and the law already say.

In other words, they did NOTHING except waste taxpayer dollars.

Is it any wonder American Student loans are in trouble?

Student Loans, Another trade school sued for false job placement reports.

2011-08-14T04:14:00.000-07:00

This one is closer to home. Clips from the article, used without permission.

http://www.mlive.com/news/grand-rapids/index.ssf/2011/08/cooley_law_school_target_of_fe.html

Cooley Law School target of federal lawsuit claiming it cooks its books when it comes to employment claims

GRAND RAPIDS – Either law school students are the victims of an elaborate scheme to bilk them out of $100,000 for tuition and leave them with dim job prospects or they are self-entitled elitists who think they are guaranteed a job because they have a juris doctorate.

Four graduates of Thomas M. Cooley Law School have brought a federal lawsuit against their alma mater, claiming the school misrepresented its post-graduation employment statistics to attract students.

New York law firm Kurzon Strauss filed the suit this week in U.S. District Court for the Western District of Michigan in Grand Rapids, claiming Cooley counts part-time jobs -- or employment other than working full-time as lawyer -- in its job statistics.

The suit accuses Cooley of using “Enron-style” accounting techniques that would “leave most for-profit companies facing the long barrel of a government investigation.”

Kurzon Strauss attorney and University of Michigan Law School graduate David Anziska said while Cooley claims that 75 to 80 percent of graduates get jobs within nine months of graduation, his firm believes that number is less than 30 percent.

“The dirty little secret is that this is a common practice among law schools,” said Anziska, who adds that a nearly identical suit has been filed against the New York Law School.

Anziska describes Cooley and NY Law School as law degree factories and the real problem is with the way that law schools report their employment and salary information as a matter of course.

Ed note: no, its not just law schools, who have this problem, MOST if not ALL the trade schools do. It is their biggest recruitment tool.

The federal suit asks for $250 million in damages including the reimbursement of students' tuition and other damages and it also demands that the named schools have their employment data checked by independent audit.

Cooley has about 1,000 graduates a year and about 4,000 students enrolled, with campuses in Lansing, Ann Arbor, Auburn Hills and Grand Rapids and plans to open a fifth in Tampa Bay, Florida.

Texas Leads the way against For Profit Trade schools.

2011-08-06T18:32:00.000-07:00

The Texas Workforce Commission (TWC) announced last week (last week of July 2011) that it was revoking the license of a major for-profit school chain to operate in the state. The commission took this action against ATI Enterprises after concluding that the company had engaged in a systematic effort to mislead students and regulators about its record in placing graduates into jobs.

“Schools that misrepresent employment information about their programs potentially exploit vulnerable individuals with false hopes for job-placement after completing the program,” Tom Pauken, the commission’s chairman, said in a news release announcing the decision. “TWC’s role is to ensure that students who make a decision to attend a career school receive reliable information so they can make an educated choice.”

ED note: Exactly.

Since before 1980, The for profit trade schools have been using Job Placement as a major recruiting tool. It is what got a lot of us defaulters into trouble during the late 1980's, which lead to the 1992 Student loan reforms being passed. These were the first of their kind since the program started. While some of the changes did effect the schools, they did not go far enough, and nothing was done to help the students who were victimized by the falsified claims of placement, which was a Critical item in making the decision to apply for that particular school.

I know in my place, what I was told during recruitment, and what turned out to be reality, were 2 different things. But at the time we had bankruptcy protection, so I was not worried too much. What I did not expect, nor planned for, was congress systematically removing bankruptcy protections, WHILE I WAS STILL IN SCHOOL. Had I known they could do that, I never would have signed up for the school.

Still, the fact is, we have over 30 years of historical evidence of schools using placement as a major recruiting tool, and many over the years got into trouble because of how they did it. They got sued in court by State or Federal, only when enough students complained. But for every one that got sued, at least 5 more were doing the same thing.

The government needs to continue to crack down. The Good State of Texas has shown us what to do. Now I hope the Federal Government takes notice, and follows the example.

Another For Profit school sued. Hopefully shut down soon.

2011-07-25T19:18:00.000-07:00

http://studentloansblog.nextstudent.com/2011/07/25/for-profit-college-settles-student-loan-lawsuit-for-1-point-6-million/

For-Profit College Settles Student Loan Lawsuit for $1.6 Million

Posted by Shannon Rasberry on Jul 25, 2011 in Student Loan Scams & Scandals

A campus of for-profit college Kaplan agreed Friday to pay $1.6 million over allegations that the school enrolled students and got them to take out student loans to pay for a vocational training program that the school knew some students would not be able to complete.

The CHI Institute in Broomall, Pa., was the subject of a federal investigation after David Goodstein, the school’s former director of education, filed a whistleblower lawsuit against it in 2007.

The lawsuit alleged that the school misled students and government officials about its surgical-technology training program, which required students complete externships in the field in order to graduate. According to the lawsuit, the school knew that it didn’t have enough externship spots available for students but continued to admit students into the surgical-technology training program.

Students took out expensive student loans to pay for the program, which the school collected as revenue. However, when it was revealed that the required externships were unavailable, some students were unable to complete the program. According to the lawsuit, many of the students who were unable to complete the program subsequently defaulted on their student loans.

Under terms of the settlement agreement, which doesn’t include an admission of wrongdoing, CHI Institute will pay $1.6 million, including $1.13 million to the federal government and almost $500,000 to reimburse borrowers of student loans. As the filer of the whistleblower lawsuit, Goodstein will receive a percentage of the government’s settlement (“Kaplan Campus Settles Allegations For $1.6 Mln,” The Wall Street Journal, July 22, 2011).

CHI Institute, which stopped enrolling students in its surgical-technology training program in early 2008, has been the focus of other investigations, including a review by the U.S. Department of Education.

Enrollment at Kaplan’s colleges has slumped in recent quarters as educators, consumer advocates, and democrats in the U.S. Senate continue to battle for-profit college industry lobbyists and U.S. Senate republicans over rules that tighten access to federal financial aid, including federal grants and federal student loans, at for-profit colleges.

Kaplan announced last week that the chief executive and chief financial officer of Kaplan Higher Education Corporation were resigning. Kaplan said that it’s shifting many of that unit’s services into one institution for its brick-and-mortar campuses and another for its online schools.

Government uses Swat team for student loan payment.

2011-06-08T18:21:00.000-07:00

June 2011. US Department of Education sent a swat team to a local residence because one of the adults owed student loans.

California citizen Kenneth Wright had quite a wake-up call Tuesday morning, when he says a 15-man SWAT team broke down his door, dragged him into the front yard wearing only his underwear, handcuffed him and then detained him, as well as his three children, for six hours while they searched his house. Why all the gun-toting hubbub? Because Wright’s estranged wife owes money on her student loan.

This is a shame for all American citizens. To allow this kind of abuse by government to go unpunished, should be proof that America is now a police state, and is becoming very much like the USSR.

Government says no to pell grants - students screwed again.

2011-03-23T18:15:00.001-07:00

Well, it was the Republicans under Ronald Reagan that first started de-financing the pell grant system, only to replace it with the now failed Government Guaranteed student loan system.

Today the Democrats joined the Republican party. The man sitting in the white house, acting as if he were a lawful president, cut funding to pell grants this year as part of his multi trillion dollar budget proposal for 2012.

Congratulations Democrats. You sold us out too.

For Profit schools under attack for recruitment practices.

2010-09-02T17:51:00.000-07:00

August 2010, Westwood College, owned by Alta Colleges Inc.
At least 750 former Westwood students and employees have come forward with complaints about the school engaging in deceptive recruiting practices that have left some students with an unmanageable amount of debt, according to a class-action lawsuit filed in U.S. District Court in Denver, Colorado, in August.

This summer, the multibillion-dollar for-profit college industry has come under the scrutiny of the U.S. Senate. Blog note:(again?!) Some government officials say the industry is regulated too loosely. Senate hearings in August revealed government findings that 15 for-profit schools, including Westwood, were encouraging fraudulent practices among students.

Across the country, other for-profit schools are facing their own legal battles.

In June, a Chicago law firm filed a lawsuit on behalf of students at Illinois School of Health Careers claiming the school engaged in deceptive trade practices. Students say the college failed to inform them that the school's nursing program was not approved by the Illinois Department of Public Health.

Some, such as Sen. Tom Harkin, D-Iowa, are concerned that for-profit schools may be failing to adequately inform students of the risks of taking loans they cannot pay back.

Blog ed's note. Senator Tom Harkin was one of several on the senate committee who in 1991, was responsible for US Senate report 102-58. Why do I keep referring to this report? Because today history is repeating itself, and its echoing the 102-58 report. I keep getting deja vu. Only back then we didn't have internet, nor were there any regulations imposed on the industry.

That's right. Senator Tom Harkin heard this stuff before back in 1990 thru 1994 when the congress first discovered it had a problem and needed to impose some reforms on the industry.

And although I do appreciate Tom Harkin and others who today, are also concerned about these students receiving worthless degrees and leaving with debts they cannot pay, I still must stand and Shout, " WHAT ABOUT HELPING THOSE OF US WHO HAVE ALREADY BEEN VICTIMIZED BY THESE SCAM SCHOOLS?!!"

Senator Harkin says he is concerned about students leaving those schools with debts they cannot pay. The same words uttered in 1991. But back then we had Bankruptcy protections. Today students do not.

I truly do not know why ANY one would take out a student loan, when they know they have no consumer protections on them. My car loan, my home loan, my signature loan, (if I went and obtained them) would all have some kind of consumer protections on them, including bankruptcy. But not student loans.

So my question to Senator Harkin is this: are you going to offer some relief for the students of these for profit rip off artists, or are you going to let them languish for 30 years in perpetual debt like you did the 1980s generation of students?

USSC rules, chapter 13 can include student loans.

2010-03-24T19:56:00.000-07:00

On March 23, 2010, the U.S. Supreme Court issued a 9 – 0 opinion in United Student Aid Funds, v. Espinosa (08-1134) in which the Court affirmed the 9th Circuit’s holding that a chapter 13 debtor can obtain a discharge of a student loan by including it in a chapter 13 plan, if the creditor fails to object after notice and opportunity to do so, and the BK court enters an order confirming the chapter 13 plan. In bankruptcy, a student loan is not discharged unless the bankruptcy court makes a determination that excepting the student loan would be an undue hardship on the debtor. Under Bankruptcy Rules, the court is required to make such a determination in an adversary proceeding — a lawsuit within the bankruptcy case. In Espinosa, the debtor did not bring an adversary proceeding. Rather, the debtor put in his plan that only the principal amount of the loan would be paid through the plan, but that accrued interest would be discharged. The student loan lender did receive a copy of the plan, and even filed a Proof of Claim. But, the lender did not object to confirmation.

SCOTUS Confirms Chapter 13 Can Include Student Loan

On March 23, 2010, the U.S. Supreme Court issued a 9 – 0 opinion in United Student Aid Funds, v. Espinosa (08-1134) in which the Court affirmed the 9th Circuit’s holding that a chapter 13 debtor can obtain a discharge of a student loan by including it in a chapter 13 plan, if the creditor fails to object after notice and opportunity to do so, and the BK court enters an order confirming the chapter 13 plan. In bankruptcy, a student loan is not discharged unless the bankruptcy court makes a determination that excepting the student loan would be an undue hardship on the debtor. Under Bankruptcy Rules, the court is required to make such a determination in an adversary proceeding — a lawsuit within the bankruptcy case. In Espinosa, the debtor did not bring an adversary proceeding. Rather, the debtor put in his plan that only the principal amount of the loan would be paid through the plan, but that accrued interest would be discharged. The student loan lender did receive a copy of the plan, and even filed a Proof of Claim. But, the lender did not object to confirmation.

The court did, subsequently, enter an order confirming the plan as proposed. After confirmation, the chapter 13 trustee sent a notice to the lender, saying that the Proof of Claim amount differed from the amount stated in the chapter 13 plan, and that if the lender disputes the amount in the plan, they should notify the trustee within 30 days. After the debtor completed his plan payment, the student loan lender tried to collect the remaining amount due. The debtor filed a motion seeking enforcement of his bankruptcy discharge.

The lender filed a motion seeking to declare the order confirming the chapter 13 plan void — which was the issue before the Supreme Court. That is, the student loan lender argued that the BK Court order confirming the chapter 13 plan void because they (the lender) was denied due process regarding the required statutory finding of undue hardship, which did not happen here.

The Supreme Court, in looking only at Bankruptcy Rule 60(b)(4), which permits a court to relieve a party for a final order or judgment, found that the lender was not denied due process, since the lender did receive the plan, filed a claim, and received the notice from the chapter 13 trustee. The Court agreed that the confirmation of the plan without an undue hardship determination was legal error, legal error does not void the order. The Court noted that Rule 60(b)(4) strikes a balance between the need for finality of judgments, and the right of parties to have a full and fair opportunity to raise issues.

Another Proprietary school, another (same ole) lawsuit.

2009-12-16T04:58:00.000-08:00

The University of Phoenix has reached a settlement in a False Claims Act lawsuit, in which it was charged with violating Federal law by paying admissions recruiters based on how many students they recruited. It had set aside slightly over $80 million for a settlement, and came in slightly below that. In the Chronicle piece about it, DeVry and Grand Canyon Education are alleged to have set aside about $5 million each to settle similar suits.

To my mind, a settlement makes perfect sense in this case, since in a meaningful sense, both sides are right. And the stock going up makes sense, too.

A college professor repored that having worked at a proprietary, she could attest that the Admissions side was a sales force, and was unapologetic about it. Admissions reps did what they had to do to close the sale. On the bright side, that meant that students got terrific help in navigating the bureaucracy of financial aid and registration. On the dark side, and it was much more dark than bright, students frequently came in with wildly absurd expectations that they got from somewhere.

And that is the bane of the proprietary for profit schools. Something which congress has never addressed.

These lawsuits are nothing new. We hear about them all the time. Yet again congress does nothing, and the students get the shaft.

Same ole STUPIDITY, is now NEW NEWS!

2009-12-15T04:10:00.000-08:00

Yes once again, those people in WDC seem to have had a momentary spark of intellegence.

USA Today and the Chicago Chronical have reported that 1 in 5 students that attend for profit colleges are defaulting with in the first 3 years. This is nothing new.

Mary Beth Marklein, USA TODAY, reports that The Education Department is releasing data today on the percentage of students at more than 5,000 colleges and universities who defaulted on student loans over a three-year period.
The data, which are preliminary, appear consistent with a congressional report out in August showing that students who took out federal loans to attend for-profit colleges have higher default rates than those who attended public or private non-profit schools.

A number of studies show that low-income students and those from families who lack higher education are more likely to default on their loans. Student-loan defaulters "can tarnish their credit reports, make it difficult for them to obtain employment, and jeopardize their long-term financial well-being," says an August report by the U.S. Government Accountability Office, the investigative arm of Congress.

And once again the government failes to address the real problem. The problem of these schools selling worthless educations or 2nd rate ones at best. During economic times, employers will prefer to hire students from traditional colleges, not from the for profit schools.

Mean while the Chicago Tribune reports it in a different way.

More than 1 in 5 borrowers of federal student loans who attend for-profit colleges default within three years of starting repayment, new figures made available by the U.S. Department of Education on Monday show.

Historically, the government has reported such figures in terms of how many students default within two years -- a figure that stands at 6.7 percent of student borrowers overall and about 11 percent at for-profit schools.

Nearly 12 percent of borrowers who began repayment in fiscal 2007 defaulted within three years -- up from 9.2 percent for 2006, the latest year for which figures are available. But at for-profit colleges, the rate was 21.2 percent within three years. That was up from 18.8 percent for fiscal 2006.

This is NOT new news. It is OLD news. It is the same news we had in 1988. Now it is victimizing another generation.

Maybe now they will offer us some kind of relief, but I doubt it.

Government not dealing with real issue, still exploiting students

2009-12-09T23:20:00.000-08:00

http://www.thenation.com/doc/20091221/de_la_torre

Reports that Student loan Giant Sallie Mae corp, spending thousands on lobbying efforts in congress is actually adding jobs instead of loosing them.

Sallie Mae, the student loan giant, has had no shortage of work lately. It has spent $125,500 on campaign contributions, at least $3,052,000 this year on lobbying and at least a quarter- million more on advertising against a bill in Congress, the Student Aid and Fiscal Responsibility Act (SAFRA), which would cut wasteful government subsidies to student loan companies

Lately, Sallie Mae executives have been paying visits to Capitol Hill to make their case against SAFRA, claiming it will mean thousands of jobs lost. But there is something objectionable about a company manipulating data and its own workers to preserve the corporate welfare on which it has long thrived. According to Sallie Mae's own numbers, even if SAFRA becomes law and the subsidized Family Federal Educational Loan (FFEL) program is abolished, the company may actually end next year with nearly the same number of employees in the United States as it has now, and possibly even more.

Sallie Mae's dubious calculations are not the only funny numbers being bandied about the halls of Congress. Lenders have also been claiming that passage of SAFRA would cost the country between 30,000 and 35,000 jobs. These numbers are frightening at first glance; but if one digs a little deeper, they mean almost nothing.
With all the fearmongering coming from the lenders, it is easy to lose sight of what this debate should really be about: making sure that every child has the chance to get a good and affordable education, from kindergarten to college.
While this is a goal that cannot be accomplished with one bill, or solely by acts of Congress, the Student Aid and Fiscal Responsibility Act would take a major step in the right direction. It would do this not by increasing taxes or growing the deficit but by making the federal financial aid system work for students rather than just for student loan companies. Most of what it would eliminate from the student loan industry is not the jobs of everyday workers but the enormous windfall profits and top executive salaries taken in by Sallie Mae and a handful of other companies--privileges reaped while taxpayers have borne the actual risk of lending, and privileges maintained through years of aggressive Capitol Hill lobbying.

ALSO,
http://abcnews.go.com/Business/wireStory?id=9293199

ABC news is reporting that a student loan companies bottom line has resulted in its stock price going up. News that not as many students have defaulted, has resulted in the prices of its stock to go up by 86 cents per share. If this is not exploiting students, I don't know of a better example.

This is NOT what the original Higher education act was supposed to accomplish!

So the exploitation of students continues because congress is not dealing with the real issues.

They MUST remove the profitiablity by 3rd parties, on student loans. If companies want to profit from student loans, it should be by the result of hiring students with college degrees who are highly trained, not by investing in student loans and causing the students to end up paying 3-5 times what their education actually cost.

Time line reminder

2009-12-09T23:18:00.000-08:00

For those who want to see the time line of legal changes to the Student Loan laws, Go to the July 2009 postings. It is the very first post in this blog. I update that one from time to time.

Sallie Mae workers loosing jobs that exploit college students.

2009-10-20T04:42:00.000-07:00

Wow, I'm wondering if I should change the name of this blog to include the thousands of students that have been victimized by the predatory exploitation of the students by the student loan industry.

Now that the Government is eliminating the middle man, we are starting to see just how many people depended upon making their lively hood on the backs of students!

2 different news articles reported in the same day.

www.indystar.com/article/20091019/OPINION01/910190312/1002/OPINION/Direct+student+loans+would+lack+quality+service.

For example, The INDY STAR has a letter to the editor claiming that government direct student loans would lack the quality of service that was given to students by this person - who happens to work at Sallie Mae. Ah ha! So that is what this is. The same company that for years has been exploiting students. Well I for one am glad this person is loosing their job. Time to go find a honest job that doesn't exploit people. And what is even better, is this person is a Sallie Mae Employee. Good.

And on the same day, the sunsentinel.com reports that yet another group of Sallie Mae jobs is about to be threatened. (GOOD! -ed)

With unemployment at 11 percent in the Sunshine State, the concern on everyone's mind is jobs. This concern has particular significance for the 700 Sallie Mae employees in Florida, because our jobs are in jeopardy. But it is not the bad economy that's threatening them — it is our own representatives in Washington that are planning to legislate out hundreds of quality jobs.

The common thread here is Sallie Mae, corp loosing jobs. And the exploitation of students whose payments pay for all those parasites at Sallie Mae. No wonder college costs skyrocketed.

JPMorgan and Citi bank accused of cheating on student loans.

2009-10-20T04:25:00.000-07:00

Once again we find students are being exploited by the predatory student loan industry contrary to the intent of the original higher education act. Now yet another lawsuit, with another financier. This is getting to be a broken record.

http://www.businessinsider.com/jpmorgan-citi-charge-with-cheating-on-student-loans-2009-10

Did JPMorgan And Citi Screw Taxpayers By Cheating On Student Loans?
Previously sealed court documents show that JPMorgan (JPM) and Citigroup (C) are being sued for conspiring with education finance company Nelnet (NNI) to allegedly receive federal student loan subsidies by making false claims and illegally recruiting more borrowers.

The civil action suit was filed in May 2008 at U.S. District court in Omaha, Nebraska and was posted recently on Wikileaks, just before it was officially unsealed by the court.

The 285 page suit (below) says Nelnet illegally induced students to apply for federal student loans, paying telemarketers to aggressively push the government product, and used false advertising to get more applications, like promising that students would save thousands of dollars in interest payments by consilidating their loans with Nelnet. They then presented false claims to the Department of Education to receive federal funding.

According to the suit, JPMorgan and Citi alledgely "ratified and/or authorized the wrongful acts of Nelnet and have benefitted from such conduct."

Without specifying a total amount, the suit asks for triple the U.S. claim payments and other damages, plus civil penalties. It asks for $5,500 to $11,000 for each claim Nelnet presented to the Department of Education between 2004 and 2007 (the number is unclear).

The government could have intervened in the suit, but declined, according to court filings.

Like the sub-prime mortgage debacle, banks and their brokers had an interest in attracting as many borrowers as possible, even risky ones. And Nelnet has gotten into trouble for such practices before.

The company has already had to sign agreements with state authorities promising not to offer a variety of incentives to students and school authorities, according to the Lincoln Journal Star. Here's their summary:

A settlement with the U.S. Department of Education in 2007 allowed Nelnet to keep $278 million in disputed profits from the controversial loan subsidy.

Nelnet agreed not to take advantage of the subsidy in the future. In 2006, the department's Office of Inspector General concluded Nelnet got the $278 million improperly and should repay it. After the settlement in early 2007, the Justice Department opened a civil file on other issues contained in the inspector general's report.

Separately, Nelnet settled with Nebraska Attorney General Jon Bruning and New York Attorney General Andrew Cuomo, who said Nelnet may not have broken the law but acted deceptively and uncompetitively by sponsoring marketing events and paying for school employees to participate.

In 2005, JPMorgan and Citi loaned Nelnet $500 million to help the company pay for its legal problems, committing $120 million themselves, according to the recently unsealed suit, calling it a "war chest."

It appears to have worked. In June, Nelnet announced that it is one of four companies awarded a federal contract to service student loans.

Jennifer Zuccarelli, a spokesperson for JPMorgan, told us "we'll just decline to comment on this;" Citi spokesperson Mark Rodgers didn't comment "because the matter is in litigation;" and Nelnet didn't immediately respond to our questions.

Student Loan scandle, criminal acts swept under the rug?

2009-10-13T19:19:00.000-07:00

The Higher Ed Watch blog,
http://www.newamerica.net/blog/higher-ed-watch/2009/sweeping-scandal-under-rug-15305

Sweeping the Student Loan Scandal Under the Rug
Stephen Burd -
October 13, 2009 - 10:45am
The student loan industry must think we all have very short memories. As part of their effort to derail legislation that would eliminate the Federal Family Education Loan (FFEL) program, lenders have been sharing talking points with Senators and staff arguing that the "pay for play" scandles that engulfed the student loan industry in 2007 were much ado about nothing.

“After thorough investigations by Congress and various state Attorneys General, there were no findings that any employee or a lending institution or school broke any laws, nor were there any criminal penalties levied,” lenders wrote in talking points -- Which Higher Ed has obtained -- that were distributed to Senate staff.

While that statement may have been technically true at the time it was first made, it’s a brazen sweeping under the rug of a scandal that outraged the American public, particularly college students and their parents. New York Attorney General Andrew Cuomo did charge about a dozen colleges and lenders, such as loan giants Sallie Mae and Nelnet, with violating federal and state laws, and filed lawsuits against them. But instead of fighting Cuomo, the student loan companies and schools quickly reached settlement agreements with his office that required them to change their conduct. In other words, they were not confident enough about the legality of their practices to defend them in court.

Read the entire article on their webpage. The fact is this is nothing less that further exploitation of students. This is why, although I support Alan Collinge's call for restoration of Consumer protections on ALL student loans, I also can only support the total elimination of the US governments participation in all student loan industry activities. THis means NO loans, no subsidies and no guarentees. Nothing. The US government must withdraw from the student loan mess, beacause all it has done is allowed preadatory companies, (schools, lenders and service providers) to exploit students, for over 30 years.

Texas reports High Student Loan Default rate

2009-10-12T20:16:00.000-07:00

KFOX14 of ElPaso Texas is reporting that default rates in Texas have increased from 5.8 percent to 9.3 percent in the last 3 years. Texas currently has the 2nd highest default rate in the nation, with Arizona topping the list at 9.8 percent.

Students all over the country are finding themselves going into default a mere 6 months after graduating due to lack of jobs, in this country's floundering economy.

And they have no idea what is in store for them for the future. As one student put it, "if I am lucky I will be able to find a job within the next 6 months, but if I let these loans stay in default much longer, my future will be ruined.

And he is not alone. He will be joining special ranks of 2 generations of defaulters who are still struggling to pay off their loans, loans which grow at astronomical rates once they enter default status.

Unlike a car loan or a home loan, when a student loan defaults, the total amount of the loan is declared due and interest on that balance starts accruing. Penalties and collections fees can double that amount yet again. And by the time the student manages to pay it off, if they ever do, they can find that they have paid 5 to 8 times what they originally borrowed, and that only 10 percent of what they paid actually went to paying off the principal.

When a student in default makes a payment, the first of 3 parts of the amount due for that month is paid - the collection cost for that month. If any amount remains, that is applied to the interest for that month and then if anything remains from the payment, it is applied to the principal.

This means a 800 dollar a month payment can be eaten up by 700 dollars worth of Collections fees and interest fees, and then late fees, with only 50 dollars put on the principal.

In many cases, the students cannot make full payments and their lower payment is eaten up by the collection fees alone. This means the collections fee is added to the principal, and the debt grows, instead of decreasing.

Despite congressional knowledge that some private school systems have higher default rates, and for what ever reason these schools have default rates, very little has been done by the US congress to help students who are in default, other than offer an income based repayment plan. No caps on the amount of collections fees that can be charged, nor caps on interest, have ever been offered. Thus the students in default are exploited even more than regular students.

The original intention of the higher education act was to ensure America would have highly trained workers available when needed, and to help students get their higher educations at an affordable cost via low interest loans. Along the way, greedy financiers corrupted the system turning it into the most predatory of all lending practices in America. This means it has also became the most exploitative of young adults in America.

In one case, the US Congress knew of, and even stated that some students were victimized by predatory schools who sold them worthless educations and leaving the students with bills (loans) they could not pay. Congress knew these students were in, or about to go into default, yet has never offered any kind of relief to those students.

Now with another group of students about to enter into the highest default rate since the pre- 1990 days of Higher education, maybe the US congress will finally address how to help those with defaulted loans who are trying to make payments and pay off their debt, but cannot due to financial disaster, or in this case, the extremely bad economy that has unemployment rates closing on those during the great depression.

Defaulted student loans fuel growth of collections industry.

2009-10-10T04:38:00.001-07:00

Once again, students across America are being harassed and exploited by 3rd party collections agencies who specialize in Defaulted Student loans. With America deep in a recession that is producing record high levels of unemployment, newly graduated students are finding themselves going into default despite their best efforts - and the vultures of debt are waiting for them.

Continental Service Group Inc., which operates as ConServe, has expanded in the past five years from fewer than 100 workers to 340. And the third-party debt collection company, which specializes in student loan defaults, plans by November to open a call center in the Buffalo suburb of Depew with a capacity for 100 workers.

Debt is big business for western New York. According to the state Labor Department, 16 debt collection companies operate in the Rochester region, employing a total of 1,500 people at an average annual wage of almost $39,000. Debt is an even bigger business in the Buffalo area, with 90 companies employing almost 6,000.

Student loan debt plays a particularly sizable role. Wyoming County-based Pioneer Credit Recovery Inc., a subsidiary of student loan giant Sallie Mae, employs almost 1,000 people across western New York.

Private companies collected $376 million in defaulted federal student loan debts in fiscal 2008 for the U.S. Education Department. The average student loan account balance handled by these companies is $4,233, according to the Association of Credit and Collection Professionals.

ConServe began in 1985 serving a variety of colleges and universities. Today its client base ranges from the U.S. Education Department to institutions such as the University of Rochester, Rochester Institute of Technology, Harvard University and Southern Methodist University. Roughly 10 percent of the nation's higher education institutions use ConServe as one of the debt collection agencies with which they work.

Ever since the radical changes to both the Higher education laws, and the bankruptcy laws which started in the early 1970's and were completed by the mid 1990's, student loans slowly became bankruptcy exempt - including those which were created prior to 1999 which had at some level, bankruptcy protections with a 3, 5 or 7 year wait. Also the 1989 garnishment law which allows the government to garnish a paycheck without a court order also worked to exploit students who were in financial crisis.

Prior to the radical, yet incomplete changes to the Higher education laws which existed in 1990, students had full consumer protections on their loans. The laws changed, and many argue so did their contracts. The US Congress held hearings and created a classification of students whom they recognized as victims of predatory proprietary trade schools. Several senators recognised that these students were left with useless educations and debts they could not pay. And these students have been harassed and hounded by 3rd party collections agencies for years. Now a new generation of students are about to experience the same situation; all because they wanted to better themselves.

I for one, categorically refuse to deal with 3rd party collections agencies. They have no legal standing in my contract, are not parties to my contract, and I see them as evil parasites that do nothing but create misery and stress for students who are already stressed out while trying to repay their loans. I also see these agencies as further exploitation of students.

And its time we end the exploitation of these students once and for all.

Updating this blog

2009-10-03T18:37:00.000-07:00

This is the time line, of the US Higher Education law, and the events which have shaped it and the effects on the students. Also included are current events which either are or will have a historical effect on the students and the student loan industry.

I am currently making some changes to this blog, updating it and adding more functionality to it. If it helps one person, then my efforts are worth it.

I remind everyone of the other blog that you may find interesting, the Victions of Predatory Trade schools Blog, found at http://voptsslf.blogspot.com/ .

Sallie Mae, Exploiter of students looks for friends.

2009-09-24T13:44:00.000-07:00

http://www.opensecrets.org/news/2009/09/sallie-mae-finds-friends-as-ma.html

Sallie Mae Finds Friends As Major Student Loan Bill Moves Through Congress.

yes Sallie Mae, the biggest exploiter of students is once again trying to ensure that it will have another generation of students to victimize.

Although Sallie Mae -- officially known as SLM Corp. -- didn't get the result it wanted out of the House, the lawmakers who sided with Sallie Mae have collected more money, on average, than those who voted for the bill, the Center for Responsive Politics has found.

SLM, which was formerly a government-sponsored entity, dumps cash into politics, spending $2.1 million on lobbying during the first half of this year and giving the current crop of legislators $2.9 million since 1989 (including contributions to both candidate committees and leadership PACs).

The 171 lawmakers who voted against the direct federal loan program have during the past 20 years collected $2,986 more, on average, from SLM Corp. than the 253 who voted for the bill ($6,880 versus $3,894). The bill is formally known as the Student Aid and Fiscal Responsibility Act.

The most notable discrepancy in campaign contributions from SLM Corp. is to House Democrats. The four Democrats who opposed the legislation have brought in $32,721 more, on average, from SLM Corp. than the 247 who helped pass the bill ($36,650 versus $3,929).

Two of the Democrats to vote in the minority, Reps. Paul Kanjorksi of Pennsylvania and Allen Boyd of Florida, are among the top members of the House -- including members of both parties -- to benefit from SLM Corp. cash. The company has given Kanjorski $95,900 since 1989, more than all other lawmakers but two. Boyd comes in at No. 7, having collected $42,200 since he was elected in 1996.

The top recipients of Sallie Mae cash are both Republicans who support the current Federal Family Education Loan Program (FFELP). House Minority Leader John Boehner of Ohio has brought in $259,700 since 1989, while Rep. Howard "Buck" McKeon of California has collected $233,000 since he was elected in 1992. SLM Corp. is McKeon's No. 1 donor, while the private lender ranks among Boehner's top 20 donors over time.

SLM Corp. and other private lenders have tried to convince the government to keep FFELP program, arguing that eliminating subsidies to lenders would erode consumer choice and result in the loss of thousands of jobs. SLM currently collects big profits on Treasury-backed loans.

Yes, thats right. The idea behind Higher Education was to make it possible for people to afford to go to college, but how can they when they have parasites like SML corporation making millions off the backs of people who are only trying to improve their lot in life? SML is an ABOMANATION that must be eliminated.

Stop the exploitation of students. Abolish ALL government involvement in student loans and restore basic Consumer protections INCLUDING bankruptcy on existing loans.

House Subcommittee Weighs Discharging Private Student Loans in Bankruptcy

2009-09-23T19:28:00.000-07:00

Congressman John Conyers, Jr., D-MI, put it this way:

Your yacht is dischargeable in bankruptcy, your vacation place is dischargeable in bankruptcy, your second or third homes are all dischargeable in bankruptcy… then you run into these people trying to get an education who go to a bankruptcy judge and no, the door is closed.

And Representative Conyers is correct. Unlike a mortgage, an automobile loan or credit card debt, student loan debt can’t be erased by declaring bankruptcy — or at least not without exceptional circumstances and without a fight.

But a House subcommittee held a hearing today to discuss why, how and if that should change.

Student loans haven’t always stuck to debtors, even those in bankruptcy, like glue. Prior to 1976, student loans were dischargeable like most other consumer debt, but that changed when the U.S. Bankruptcy Code was amended to place limitations on which loans could be erased.

The thinking was that Congress didn’t want to undermine the federal student loan program, with all its protections, lower interest rates and benefits for borrowers, by allowing students to take out massive loans they had no intention to pay. But over time, this exception has evolved to include private student loans, which have none of the borrower protection provisions that make federal student loans so attractive.

Today, Subcommittee Chairman Representative Steve Cohen, D-TN, said it happened “without any rationale for such expansion.”

And some of the experts who testified before the panel today agreed.

Lauren Asher, the president of The Institute for College Access and Success, explained that unlike federal loans, private loans, which were taken out by a third of students in college last year at some point during their education, often lack a fixed interest rate. She went as far as saying that:

Private loans are not financial aid any more than using a credit card to pay for tuition.

[Which got me thinking -- at the time I began graduate school, I had enough credit on various cards that I could have financed a year of my education. If I declared bankruptcy, that could be discharged. My loan from Citibank will follow me to the grave.]

Another expert, law professor Rafael Pardo, pointed out the magnitude to which some former student borrowers in debt — according to his research, student loan debtors are in more distress than those declaring bankruptcy and the average borrower is someone in their 40s who would need to set aside two years and nine months of their pretax income in order to pay off their student debt. “This is a crushing debt burden, plain and simple,” Pardo said.

Pardo’s written testimony pointed out that:

The median debtor in the Discharge Litigation Study would have had to devote two years and nine months of household income to fully repay his or her student loans. In comparison, consider that the median debtor in the general bankruptcy population in 2007 would have had to devote approximately one year and three months of income to fully repay his or her total unsecured debt.

One panelist, J. Douglas Cuthbertson of Miles & Stockbridge in Virginia, pointed out that changing the bankruptcy code could have some negative effects. If students were permitted to file bankruptcy immediately following graduation, Cuthbertson argued that private lenders would no longer offer private loans, which often fill the gap between what students can borrow from federal loan programs and the cost of tuition.

New Congressionally mandated disclosure requirements on private lenders take effect next year, but student advocates at the hearing argued that the law did not go far enough to protect students from taking on unmanageable amounts of ballooning debt.

Pardo argued that to truly modify the bankruptcy code to level the playing field between student borrowers and private lenders, Congress would have to remove the restriction on discharging private loans in bankruptcy and clarify the legal definition of undo hardship, which determines under what circumstances a loan can be discharged, because it is applied inconsistently

US House of Represenatives oks Overhaul of GSL program.

2009-09-20T09:32:00.000-07:00

Voting 253 for and 171 against, the House on Sept. 17 passed a bill (HR 3221) to shift federally backed student loans to direct lending by the Department of Education, excluding the private-sector lenders who now dominate the government program. The bill would save $87 billion over ten years by ending the private lenders' taxpayer subsidies, guarantees and bailouts. The savings would be used, in part, to expand Pell Grants for poor students and Perkins Loans for middle-income students. Pell Grants would be converted to an entitlement program and increased from today's cap of about $5,350 annually to $5,550 in 2010 and $6,900 by 2019.

The $55 billion annual student-loan market is split between federally backed private lending and the government's direct lending. The rules allow banks and other private firms to keep all interest revenue while shifting their losses to taxpayers. Some private portfolios have received Treasury bailouts during the current recession.

Over ten years, $10 billion of the bill's $87 billion in savings would be allocated to community colleges; $8 billion to early-childhood education; $8 billion to reducing the national debt; $6.6 billion for K-12 and higher-education classroom construction, and $2.55 billion to institutions serving mainly blacks, Hispanics, native Americans and other minorities, along with allocations to Pell Grants, Perkins Loans and other programs.

The bill awaits Senate action.

9.5 Scandle, Exploiting students at taxpayer expense

2009-09-02T05:51:00.000-07:00

From The NEW American, Higher Ed watch blog:
http://www.newamerica.net/blog/higher-ed-watch/2009/new-chapter-9-5-scandal-14289

It is important we keep records of these happenings as we expose the exploitation of students by greedy criminal financiers.- Timeline blog author.

Begin article:

On Monday, a federal court in Virginia unsealed a whistleblower lawsuit filed by Jon Oberg, the U.S. Department of Education researcher who uncovered the 9.5 student loan scandal, against 10 student loan companies that participated in the scheme. The lawsuit, which Oberg filed in 2007 under the federal False Claims Act, seeks the return to the federal government of $1 billion in excess student loan subsidies these lenders improperly obtained.

The roots of the 9.5 student loan case go back to the 1980s when Congress guaranteed non-profit lenders, which use tax-exempt bonds to finance their loans, a minimum rate of return of 9.5 percent on federal student loans made with these bonds. As interest rates on all other student loans fell in the 1990s, policymakers became concerned that these nonprofit student loan providers were making a killing. So in 1993, Congress rescinded that policy, but grandfathered in loans made from the old bonds, believing that the volume of 9.5 loans would decline as they were paid off and the bonds retired.

Instead, beginning in 2002, a small group of lenders devised a strategy to aggressively grow the volume of loans that they claimed were eligible for the 9.5 guarantee. This was a goldmine for lenders in the existing low interest rate environment (at the time, the borrower interest rate on regular loans hovered around 3.5 percent.) They accomplished this scheme by transferring loans that qualified for the 9.5 subsidy payment to other financing vehicles and recycling the proceeds into new loans that they claimed were then eligible for the subsidy. The lenders repeated this process over and over again.

As a researcher in the Education Department's Institute for Education Sciences, Oberg discovered the scheme in 2003 while reviewing internal agency spreadsheets that showed that the total volume of outstanding 9.5 loans was growing rather than shrinking. He brought his concerns to his superiors at the Department but they brushed them off. His supervisor, Grover Whitehurst, ordered him to stop pursuing the issue, and instead to focus solely on his responsibilities as a research administrator in the final 18 months before his scheduled retirement.

But Oberg had also reported his findings to the Department's Inspector General, which launched its own investigation into the 9.5 scandal. His work paid off in September 2006 when the Inspector General declared the lenders' loan and bond manipulations to be illegal. In January 2007, Education Secretary Margaret Spelling concurred with the Inspector General's opinion and barred the student loan company Nelnet and other lenders that refused to submit to independent audits from receiving any further 9.5 payments. But she did not require the lenders to return the overpayments they had already received.

Unhappy with this resolution, Oberg (who first revealed himself to be the whistleblower on the 9.5 scandal at an event hosted by the Education Policy program here at the New America Foundation in 2006) decided to file his own false claims lawsuit on behalf of the government, his lawyers stated. The lawsuit has been under government seal for the last two years, as the U.S. Justice Department weighed whether or not to join it. The federal district court lifted the seal last week after DOJ decided against joining the lawsuit. By law, Oberg has to right to continue to pursue recovery on behalf of the United States, with the Justice Department retaining the right to intervene at a later time.

Among the main targets in the case is Nelnet, which was created in 1998 when Nebraska's nonprofit student loan agency converted to for-profit status. The most active participant in the scheme, Nelnet increased the amount of loans for which it sought the 9.5 percent rate from $393 million in 2001 to more than $3.3 billion in 2004. The lawsuit estimates that Nelnet made approximately $407 million in unlawful 9.5 claims.

Other student loan companies named in the suit are the following:

•The Pennsylvania Higher Education Assistance Agency
•The Kentucky Higher Education Student Loan Corporation
•Panhandle Plains Higher Education Authority (Texas)
•Sallie Mae
•Southwest Student Services Corporation (Arizona)
•Vermont Student Assistance Corporation
•Education Loans Inc.(South Dakota)
•Brazos Higher Education Services Corporation (Texas)
•Arkansas Student Loan Authority

END

Lawsuit targets Loan Service companies

2009-09-02T05:42:00.000-07:00

Sept 1st, 2009.
http://www.forbes.com/feeds/ap/2009/09/01/business-financial-administration-financial-impact-us-student-loans-nebraska_6839189.html

Student lenders face lawsuit about overpayments
Associated Press, 09.01.09, 05:51 PM EDT

RICHMOND, Va. -- A former U.S. Department of Education researcher has filed a lawsuit against 10 student loan companies to recover roughly $1 billion the companies received improperly.

The lawsuit Jon Oberg filed in eastern Virginia's federal court was unsealed on Monday. Oberg filed the lawsuit on behalf of the U.S. government as a whistle-blower because he helped uncover the overpayments.

The lawsuit asks for the companies to return overpayments they received improperly.
A government audit found several student lenders had received an artificially high rate of return through a program that was supposed to be phased out in 1993.

The defendants include two of the biggest student lenders: Lincoln, Neb.-based Nelnet Inc. and Reston, Va.-based Sallie Mae.

End

Now this is not surprising to anyone who has been a student during the last 20 years.
Espically if you had to deal with SMC.

Higher Ed Bubble to burst, Sallie Mae posed to take full advantage of it.

2009-08-10T23:40:00.000-07:00

http://www.examiner.com/x-1760-Baltimore-Investing-Examiner~y2009m8d10-Higher-Education-Bubble-The-Next-Bubble-To-Burst

Interesting article today, 10 Aug 2009, in the baltimore examiner, about the comming student loan bubble, and how it is about to burst.

It's every investor's dream: buy into a theme before any one else has caught on; ride it all the way up until it gets bubbly; sell to the suckers who bought at the top.

It's like buying housing names in 2004 (as we did), only to sell and go short in 2007 (as we did). . . or oil prior to the rise to $147 (again, as we did). . . or even dot-coms before the bubble burst.

Yep, we've become all too familiar with the term "bubble" in recent years — that unsustainable phenomenon pumped full of irrationality and over-valuation only to burst and trigger monumental downturns.

We've seen it happen in Treasuries, financials, commercial real estate, autos, and credit. We watched in tortured silence, as an over-extended housing bubble popped, triggering a seismic credit meltdown.

And pretty soon we'll have bubble bubbles, where our heads explode over the financial chaos.

And now. . . unbeknownst to many, as we deal with banking and housing issues. . .

Higher Education will be Next

So say Joseph Marr Cronin, secretary of education in Massachusetts, and Howard E. Horton, president of Boston's New England College of Business and Finance.

And there is a fear of mergers, closures. . . even bankruptcies of colleges that took on too much debt, based on a unbalanced system of student loans paying for rising tuitions.
And we agree. The next bubble to burst will be higher education.

No doubt about it.

You see, higher education is big money for institutions and lenders alike. . . and they're in big trouble.

What most people who are not involved directly in higher education fail to understand is that these institutions and lenders are in the same sinking boat that banks and other financial companies are in. Assets are drowning. And debt and costs are rising.

So is it really surprising to then learn that applications for community colleges and other public institutions have skyrocketed some 440%? Or does it surprise you that non-traditional online colleges are becoming successful at challenging higher-priced private schools?

Not at all.

Get this: According to a Forbes.com article, college tuition has increased by more than three times the rate of inflation over the last 20 years, despite flat-lining U.S. wages. The average tuition at a private four-year school is up 6.6% yearly in 2007 to $23,712, according to the College Board. . .

And it could haunt students and America for years to come.

Couple tuition with living expenses and students (and in most cases, their parents) are looking at about $50,000 for a year of school. For the bubble to not pop, tuition must drop. . . or there will be limited demand at pricey schools.

But the schools aren't the only ones suffering from this education meltdown.

The Lenders Could Get Crushed, Too. . . by Two Things

One: The education bubble, fueled by easily-lent money and over-borrowing, has created yet another bubble: student loans.

The last days of college are supposed to be the happiest time of year for thousands of students. Instead, there's trouble ahead for graduates who are competing in the toughest job market in years.

Only 19% of them can find a job, as compared to the 50% in 2007 and the 25% in 2008.

And then there are those graduates, like my friend Mikey — who will have to start paying back $1,150 a month for student loans, on top of a mortgage and mounting credit card debt — and who simply can't find a job.

And thousands more are in the same sinking boat; thousands more that won't be able to pay back student loan debt.

As usual, the numbers tell the whole story. According to the College Board in early 2009, total student loan borrowing more than doubled between 1998 and 2008. The numbers are staggering. We're talking about $85 billion in loans, as compared to $41 billion ten years ago.

Privately funded student loans have risen, too, from 7% in 1998 to 23% of all student loans in 2008. It makes for quite a brew for cash-strapped Americans this year, who are already saddled with unemployment and loss of income. Sallie Mae, for example, had a delinquency rate of 9.4% in Q3 2008, as compared to a rate of 8.5% just a year earlier.
I'm willing to bet that rate gaps higher as the months go by.

The student loan market has been, is, and will be riddled with trouble. Expect higher default rates, as students can't pay back these loans. Still, we'll look to profit from their demise.

ED note. Yes, Companies like Sallie Mae will look to profit from those students who are unable to find a job. And they too will join the ranks of those of us who are in default and whose lives are ruined, because we cannot escape the esculating debt, as it grows beyond our ability to control.

Sallie Mae, participant in the 9.5 percent scam?

2009-08-05T20:50:00.000-07:00

Sallie Mae has long boasted that it did not take part in the 9.5 percent student loan scheme. But a new report from the U.S. Department of Education's Inspector General (IG) refutes that claim. participant

According to the report, which was released on Monday, Sallie Mae improperly obtained $22.3 million in excess student loan subsidies from the federal government between Oct. 1, 2003 and Sept. 30, 2006. The actual amount that the company over-billed the government is probably substantially higher -- as the IG looked only at how the student loan giant handled the 9.5 loans it obtained through its purchase of Nellie Mae [NLMA], the Massachusetts non-profit student loan agency. Between 2000 and the end of 2004, Sallie Mae bought three other non-profit lenders, including the Arizona-based Southwest Student Services Corporation, which had increased the volume of federal loans that it claimed eligible for the 9.5 percent guarantee by 135 percent in the years immediately preceding the sale.

To be clear, Sallie Mae does not appear to have engaged in the type of loan and bond manipulations that other companies, like Nelnet and the Kentucky Higher Education Student Loan Corporation, did to massively grow their 9.5 loan holdings. Instead, the loan company violated the law by submitting 9.5 claims on loans financed by tax-exempt bonds that had matured and been retired, the IG report states.

Uncle Sam and Sallie Mae need to go their separate ways

2009-08-03T06:12:00.000-07:00

time for sallie may to take a hike. http://blog.nj.com/njv_linda_stamato/2009/08/uncle_sam_and_sallie_mae_need.html

Nice article about why Sallie Mae and government need to go their seperate ways.
"One way we can make college more affordable -- because a lot of young people have been asking me about this on the campaign trail -- is by reforming a wasteful system of student loans that benefits private banks at the cost of taxpayers. Private lenders are costing America's taxpayers more than 15 million dollars every day and provide no additional value except to the banks themselves. I think the system needs to be fixed." (Barack Obama in Yale Daily News: May, 2007)

The new Student loan reform bill contains the essence of Obama's reform proposal: Scrap the existing program--so that all federal loans are made directly by the government--in order to save billions of dollars in subsidy payments to lenders and make it possible to redirect money to pay for expanded grant aid to needy students. According to the Congressional Budget Office, replacing subsidized loans made by private banks with direct government lending would save between $87 and $94 billion over the next decade.

Under the bill, banks and other lenders would no longer "originate" federal student loans--there is no need for a "middle man"--but they can service them. And guarantors can compete for grants to provide borrower services like financial-literacy education, default prevention, and borrower retention.

Given the money banks and private lenders get from this cash cow, however, they aren't walking away. Lobbying to stay in the game is unrelenting. In "Student loans: Use public funds for college students, not for banks and private lenders," I highlighted the efforts of Citibank to defeat the reform legislation.

Recently, efforts by Sallie Mae have now come to light. Sallie Mae, the nation's largest student-loan company, spent $3.4 million on lobbying in the first half of this year in an effort to persuade lawmakers to consider alternatives to President Obama's plan to end bank-based lending to students and replace it with direct lending, according to an analysis by the Chronicle, the Center for Responsive Politics andThe Huffington Post.

Sallie Mae is pushing a counterproposal that would allow student-loan companies to originate loans before selling them to the government. Such a great idea that Sallie Mae felt it necessary to hire several Washington-based lobbying firms, including a group led by Tony Podesta, a top Democratic fund raiser with longstanding ties to members of Congress, to push it. According to the Chronicle of Higher Education, its key hire was Jamie Gorelick, a deputy attorney general in the Clinton administration and partner in the law firm of Wilmer, Cutler, Pickering, Hale and Dorr. The firm billed Sallie Mae $270,000 for its work in the first half of 2009, according to the analysis.

Sallie Mae also showered campaign contributions on individual members of Congress, and on moderate "Blue Dog" Democrats. (The Blue Dogs have been the most vocal in their opposition to the president's plan, warning of job losses that could result from a switch to 100-percent direct lending.)

Enough already! Blatant lobbying on behalf of private interests can not be allowed to obscure the fact that it is public money we are talking about--public money--and the need to use as much of it as possible in direct support of students. If aiding banks and private lenders has merit, and creating private jobs with public funds is defensible, let's do it directly and transparently and with sufficient safeguards--not indirectly as a subsidy for dispensing public funds (which the government also guarantees!).

Let's cut through all the rhetoric and do what's right and sensible. Let's reform the student aid program once and for all and put our dollars where the needs are--with the students. That the banks can (and will) take care of themselves is clear from the week's headlines.

Personal note from blog owner: About damm time someone speaks sense about this issue.

No regulatory laws covering for profit schools; history repeating itself

2009-08-03T05:54:00.000-07:00

http://www.insidehighered.com/news/2009/08/03/california

WOW, Todays issues of Inside HigerEd, contains this article about another for profit school that has no regulatory laws imposed on it. And the students have been victimized by the predatory school.

As officials in California have grappled for more than two years with a structure and law for regulating for-profit colleges in the state, there has been much speculation about hypothetical ways in which the expiration of the law governing for-profit regulation could limit the ability of students to seek redress from career colleges for perceived wrongs. But examples of actual effects have been hard to come by.

The U.S. Court of Appeals for the Ninth Circuit offered one on Friday, though. A three-judge panel of the court tossed out a former student's lawsuit against DeVry University, saying that it could not consider an appeal of a lower court's decision October 2007 against him because the California Private Postsecondary and Vocational Education Reform Act, "on which all of [the student's] claims are based, was repealed" without a clause that continued its enforcement. California has not passed a new law to succeed the expired one. "Because we cannot grant any effective relief, we lack jurisdiction to entertain this appeal."

DeVry officials played down the significance of the appeals court's ruling, noting that the lower court judge had fully rejected Saro Daghlian's accusations that DeVry had violated California law by failing to provide written disclosure explaining that credits he earned there might not transfer to other colleges. California's private postsecondary law, which was in effect at the time of Daghlian's suit, required such disclosure.

DeVry got sued for a huge number over a disclosure that it was never appropriate for it to have had to make, and made anyway. The court looked at it extremely carefully" and found that DeVry was right. "The guy had his recourse," Davis added, "and justice was done."

J. Mark Moore, a lawyer for Daghlian, the former student, said that the absence of an enforceable California law absolutely impaired his client's ability to benefit from the full legal protections due to him.

Yet his ability to establish that on appeal is basically over, because the State of California let these statutes get repealed without a savings clause. It wiped out our case," and with it Daghlian's recourse to legal remedies in California, Moore said.

"California's lack of regulatory structure has caused confusion for students and institution," said Sharon Thomas Parrott, senior vice president for government and regulatory affairs and chief compliance officer at DeVry. That's why "we have been working in support of legislation that does give California the regulatory structure to have oversight over all of the institutions" -- legislation that consumer advocates and for-profit college officials continue to view through different lenses.

YES once again, the lack of regulatory oversight of for profit schools has created ANOTHER class of victims, just like it did in the 1980's.. And like the students of old, these kids will soon feel the bite of a worthless education and student loan bills that they cannot pay, when they fall into default.

Licenced and practicing attorney sued for failure to make payments on student loan.

2009-07-22T18:13:00.000-07:00

2009, July. SACRAMENTO, CA - A Sacramento attorney who hasn't made a payment on her student loan in over a decade is being sued by the federal government for more than $150,000.

According to a civil suit filed Tuesday in U.S. District Court, Robbin Michelle Coker consolidated multiple student loans in 1996 with a single federally-guaranteed loan of $60,466. The complaint indicates Coker stopped making payments on the new loan 18 months later.

The U.S. Department of Education reimbursed the lender for the defaulted loan and is trying to collect a total of $138,212.23, which includes the original loan amount plus interest which continues accruing at $17.25 per day.

The U.S. Attorney, which filed the suit, is seeking an additional 10 percent "debt surcharge" authorized by federal law.

Federal court records indicate Coker specializes in personal bankruptcies. With few exceptions, student loans cannot be discharged in a bankruptcy.

According to an online directory of attorneys, Coker was licensed to practice law in 1995 following graduation from McGeorge School of Law.

NOTE added by blog author: This woman has WORKED over the years, and refused to make payments. That is a heck of a lot different than those of us who experiance long periods of unemployment and need bankruptcy to get out from under the swealtering debt of student loans.

To make things worse, she is an attorney specializing in bankruptcy! I hate to see anyone get sued for student loans, but this one has victimized the system, not the other way around.

Time line

2009-07-20T05:44:00.000-07:00

2011 September
More and more college students are filing bankruptcy even though student loans are not dischargeable under US bankruptcy laws, according to article on Fox business news. Default rates are at their highest in decades - approaching 14 percent, halfway to the record high default rate of 23 percent in 1989. And For profit (predatory trade schools) trade schools have the highest default rates again.

2011 September
Thousands of students who took out tens of thousands of dollars in student loans to attended San Francisco’s California Culinary Academy, one of 18 cooking schools in the Le Cordon Bleu for-profit college chain, may be getting some of their money back.
Under a pending $40 million settlement in state court, Career Education Corp., Le Cordon Bleu’s parent company, has agreed to offer rebates of up to $20,000 to approximately 8,500 students who attended the academy between 2003 and 2008.
In a class-action lawsuit, former students of the cooking school accused it of misleading them about the value of a culinary education and their job prospects after graduation. The students alleged the for-profit school defrauded them with promises of high-paying jobs and encouraged them to take on crushing debt from student loans for expensive programs but provided them with no more chance of finding a high-paying culinary job than someone who didn’t go to culinary school at all.
Although the school’s website says 48 percent to 100 percent of graduates find work in their field of study or a “related field,” critics say that the school purposefully uses methodology that includes jobs that don’t pay much more than minimum wage and that don’t require a formal culinary education.

This is the first time students have sued a For profit school successfully, for their recruitment and job placement fraud.

2011 August 12. Once again the US Department of Education fails in its attempt to regulate For Profit schools, who are obtaining federal funds thru state ran agencies. The result: Millions of wasted Taxpayer dollars.

The Department of Education has distributed massive amounts of federal financial aid to online for-profit schools that were unlicensed in the states in which students were being enrolled. Rather than admitting to this extraordinary mismanagement, the Education Department put into effect a "state authorization" regulation that basically reiterates what's already in the law: that online schools must obtain a license from states in which students are being enrolled to benefit from federal financial aid. Issuing a rule that simply repeats the existing Higher Education Act requirement is counterproductive -- as it suggests that the statute, by itself, does not already include this mandate.

2011 July. The state of Texas closes down ATI Enterprises, a For profit trade school after a local TV station investigations proves that ATI has been "cooking the books" for years about job placement of its graduates. 2 Thumbs up for the State of Texas. It is just a shame that it took a TV Station to uncover what the Federal government, should have found.

2011 June. For the First time in our nations history, the US Department of Education uses Local Swat team to raid private home, because adult living there owed student loans.

http://www.deathandtaxesmag.com/100591/education-department-sends-swat-team-for-student-loan-payment/#1

So much for the right to privacy, the right to be king in your own castle, and the right against government invasion. What is next? Public flogging for j-walking?

2010 Aug. - Westwood College, owned by Alta Colleges Inc. At least 750 former Westwood students and employees have come forward with complaints about the school engaging in deceptive recruiting practices that have left some students with an unmanageable amount of debt, according to a class-action lawsuit filed in U.S. District Court in Denver, Colorado, in August.

2010 June. - A Chicago law firm filed a lawsuit on behalf of students at Illinois School of Health Careers claiming the school engaged in deceptive trade practices. Students say the college failed to inform them that the school's nursing program was not approved by the Illinois Department of Public Health.

2010 March 23rd - SCOTUS Confirms Chapter 13 Can Include Student Loans.
On March 23, 2010, the U.S. Supreme Court issued a 9 – 0 opinion in United Student Aid Funds, v. Espinosa (08-1134) in which the Court affirmed the 9th Circuit’s holding that a chapter 13 debtor can obtain a discharge of a student loan by including it in a chapter 13 plan, if the creditor fails to object after notice and opportunity to do so, and the BK court enters an order confirming the chapter 13 plan. In bankruptcy, a student loan is not discharged unless the bankruptcy court makes a determination that excepting the student loan would be an undue hardship on the debtor. Under Bankruptcy Rules, the court is required to make such a determination in an adversary proceeding — a lawsuit within the bankruptcy case. In Espinosa, the debtor did not bring an adversary proceeding. Rather, the debtor put in his plan that only the principal amount of the loan would be paid through the plan, but that accrued interest would be discharged. The student loan lender did receive a copy of the plan, and even filed a Proof of Claim. But, the lender did not object to confirmation.
The court did, subsequently, enter an order confirming the plan as proposed. After confirmation, the chapter 13 trustee sent a notice to the lender, saying that the Proof of Claim amount differed from the amount stated in the chapter 13 plan, and that if the lender disputes the amount in the plan, they should notify the trustee within 30 days. After the debtor completed his plan payment, the student loan lender tried to collect the remaining amount due. The debtor filed a motion seeking enforcement of his bankruptcy discharge.
The lender filed a motion seeking to declare the order confirming the chapter 13 plan void — which was the issue before the Supreme Court. That is, the student loan lender argued that the BK Court order confirming the chapter 13 plan void because they (the lender) was denied due process regarding the required statutory finding of undue hardship, which did not happen here.
The Supreme Court, in looking only at Bankruptcy Rule 60(b)(4), which permits a court to relieve a party for a final order or judgment, found that the lender was not denied due process, since the lender did receive the plan, filed a claim, and received the notice from the chapter 13 trustee. The Court agreed that the confirmation of the plan without an undue hardship determination was legal error, legal error does not void the order. The Court noted that Rule 60(b)(4) strikes a balance between the need for finality of judgments, and the right of parties to have a full and fair opportunity to raise issues.

2009 July 22nd, Two men have pleaded guilty to illegally accessing the National Student Loan Database to get personal information about borrowers without their consent.
Both men worked at loan consolidation companies in Pinellas County, where they abused their access privileges to the NSLDS, a comprehensive computerized database maintained by the U.S. Department of Education that contains borrowers' personal and financial information.
The marketing director for University Financial Lending Services, one of the 2 men misused database accounts in the spring of 2007.
Working as a senior financial specialist for Student Funding Services in Largo, the other abused his access to the database between 2005 and 2007.

2009, July new america.net blog does an excellent article on getting to know guarentee agencies. www.newamerica.net/blog/higher-ed-watch/2009/getting-know-guaranty-agencies-federal-subsidies-and-payments-12976#comment-3136

Getting to Know Guaranty Agencies: Federal Subsidies and Payments
Ben Miller - July 2, 2009 An excellent article that finallys starts to shead light on the backroom industry that is destorying so many futures of students who are in default.
By contrast, when a guaranty agency rehabilitates a defaulted student loan, it receives 18.5 percent of the loan's value at the time of default, plus any interest that has accrued since then (usually around 1.5 percent).[i] In addition, it keeps another 18.5 percent of the loan in the form of collection costs that have been added to the borrower's balance owed. Rehabilitating a loan thus yields the guaranty agency as much as 38.5 percent of the loan's balance.
Similarly, payments for default aversion pale in comparison to those for collection efforts. A guaranty agency receives 16 percent of any amount it collects.
In addition, there is no strict cap on collection costs, meaning it could charge borrowers as much as 25 percent for trying to recover missed payments. With payments this high, a guaranty agency has to collect only a small amount of a loan's balance in order to earn more through this activity than what it gets for default prevention.
The significant discrepancy between payments for rehabilitation/collection and default aversion means that the most profitable action for guaranty agencies -- letting a loan default -- is the worst possible outcome for borrowers, taxpayers, and even lenders. The guaranty agency may receive a hefty payday from this action, but the federal government is on the hook for at least 97 percent of the loan's value, while student loan companies suffer the other 3 percent loss. Meanwhile, defaulted borrowers are left with a tarnished credit record, and face wage garnishment, and other types of aggressive collection activities.

2009, July. Student Loan collections agencies creates breach of trust.
It has been discovered recently that a student loan debt collection company, Vangent, is moonlighting as staff for the Department of Education's Ombudsman office. We confirmed this yesterday. As such this creates a breach of trust between the ombudsman office and that of the students. This is being looked into.

March 2009. Media is finally picking up the story. Many articles on both the web and local television covering the predatory student loan fiasco. Media reporting about how current students are having a difficult time finding loans to complete their degrees, how recent grads cannot find work to pay off their loans and thus end up in default right of the start, and how defaulting destroys lives.

Even more so, the media is also looking at the history of Higher Education and how we moved from a pell grant system which allowed people to be able to go to school and pay for it with grants and a part time job, to one that puts a student up to their eyeballs in debt for 20 years after they leave school.

Consumer protections and the lack thereof are also discussed.

2009, Feb. Article published on alternet calls student the new indentured servants.
Are Students the New Indentured Servants?
By Jeffrey J. Williams, Dissent Magazine. Posted February 5, 2009.
College student-loan debt has revived the spirit of indenture for a sizable proportion of contemporary Americans.

2009, Feb. Article published on web about Credit scores being used to deny employment opportunities. Claims that with the current economic conditions, having bad credit is not proper grounds for denying employment. But that has what has happened to many students who found themselves in default after long periods of unemployment.

2009 Jan. Articles are appearing on the internet calling for loan forgiveness to stimulate the economy, due to the economic collapse of the U.S.
More and more articles are discussing the impact of the debt of students who find themselves in default due to economic conditions, NOT because of refusal to pay the debt. FINALLY, the media is starting to get the real story: That many people in default are that way because they lost jobs, were unemployed for long periods, etc.
Combined with the home Mortgage crisis and the new American economy crisis, more and more people are finding themselves in economic and financial distress. Many are defaulting on loans simply because they do not have enough money to pay their basics, (home, and transportation costs) let alone any luxuries.

2009 Jan Alan Coolinge, founder of studentloanjustice publishes a book entitled "The Student Loan Scam; The most oppressive debt in U.S. History - and how we can fight back." One of the first ever such books to be published on this subject.

2009 Dec Article in Higher Ed watch on Bankruptcy.
http://www.newamerica.net/blog/higher-ed-watch/2008/bankrupt-policy-8753 reports that "In fact, a 1977 study by the General Accounting Office - which Congress appears to have ignored -- found that only a fraction of 1 percent of all matured student loans had been discharged in bankruptcy. "This compares favorably with the consumer finance industry," the study stated.

And, the bare facts are that in 1976, Congress made student loans generally non-dischargeable except five years after default or if the borrower could prove "undue hardship." Since then, there have been three significant legislative changes. First, in 1990, the five year period was extended to seven years. In 1998, Congress eliminated the seven-year floor primarily as a budget savings gimmick to pay for student loan changes it made when it reauthorized the Higher Education Act that year. Finally, in 2005, lawmakers included private loans in the non-discharge ability category as part of comprehensive bankruptcy amendments (the change primarily affected for-profit lenders because private loans made by nonprofit providers were already exempt). If there were reasons to consider restricting bankruptcy for federal loans, there was absolutely no such basis for extending the policy to high-cost private loans.

2008 Oct. The Chronical of Higher Education website posts article.
Suit Alleges Fraud in 'Resolving' Troubled Student Loans By PAUL BASKEN

A former Sallie Mae employee, in a "false claims" lawsuit against the loan company recently unsealed in federal court in Indiana, alleges that the student-loan giant used the practice of granting forbearances to systematically balloon student-loan debts.
With a forbearance, struggling borrowers get a temporary break from making payments on their loans. But the interest on the loans continues to accumulate, often leaving borrowers in a worse financial bind over time.
Mr. Zahara said he was fired from his job in Las Vegas after he reported his concerns about the practice to federal investigators. Sallie Mae moved much of the operations to its new Indiana facility in October 2006, and Jeff Whorley, the executive vice president in charge of the Student Assistance Corporation, left Sallie Mae in January 2007.
Debtors in such straits include William M. McLaughlin of Plattsburgh, N.Y., who borrowed $37,625 to attend Embry-Riddle Aeronautical University, in Florida, in the early 1990s. He has paid back more than $50,000 and still owes more than $33,000.
As far as I knew, I wasn’t in default,” said Mr. McLaughlin, now 49, who worked several years in aviation maintenance at Pratt & Whitney in both Canada and Connecticut. “I was making payments and everything, and the next thing I know, these people are calling me, and there’s a whole other set of loans that I wasn’t even aware of that I’m defaulting on now.”
Most of his loans were held by Sallie Mae, with USA Funds and ERS among the agencies placed in charge of contacting him for payment, Mr. McLaughlin said.
“Lenders don’t care if you default,” said Alan M. Collinge, founder of StudentLoanJustice.org, a grass-roots organization for borrowers. “On balance, it can actually be far more profitable for them when you do.”
And Sallie Mae’s size and importance in the system of federally subsidized student lending gives it protection against the possibility that a federal prosecutor would punish it for further violations, Mr. Stern said.

And that fact is as true today as ever before. Sallie Mae for all practical purposes, is untouchable, and unaccountable, according to may students who have to deal with them.

2008 May. www.bankruptcylawnetwork.com/2008/05/01/some-student-loan-justice-in-st-louis/
Article about a woman who filed for and obtained bankruptcy discharge (rare occurrence) for undue hardship. In 2004, she filed with 71K due in student loans. In a way, the facts of this case are themselves unique. Not unique in the struggles and hardships the debtor has suffered, since her story is all too common. Rather, unique in that Senior Judge David McDonald looked beyond the superficial labels to the consumer’s dire situation — and bleak future. Because she proved to the court that due to her spotty employment record for over 10 years, left her with little or no money to pay the loans, AND, due to this courts own view of what is and what is not "undue hardship".
Perhaps the most important factor in this case was the court’s rejection of the Income Contingent Repayment Plan (ICRP) as a substitute for the law. It has been argued by student loan lenders that a debtor’s ability to fund a reduced payment under the ICRP is sufficient grounds to deny a hardship discharge. This argument has been rejected by the Eighth Circuit Bankruptcy Appellate Panel (most recently in an opinion written by the same judge who heard this case), although such a position has been defended aggressively by the Eastern District’s chief judge less than two years ago in a concurring opinion.
For example, the only time the ICRP allows for no payment is when a consumer’s income falls below federal poverty line. And that poverty line definition is now being challenged as out of date, and out of sync with reality.

The assumption has been that a consumer must prove it is a virtual human rights violation to make even a minimal payment in order to win. And given the added costs of litigating — and the high probability of an appeal plus addition of litigation costs to the debt owed, if discharge is denied — most consumers and their lawyers have come to believe the right to a hardship discharge a chimera. So perhaps the law is beginning to evolve towards a more balanced understanding of what is an “undue” hardship. Such an evolution will be welcome indeed.

2008 Jan. Chronicle of Higher Education reports a suit alleging fraud in resolving troubled student loans. Article claims that if Sallie Mae were ever put out of business, it would put a huge dent in the ability of the industry to service student loans. Now what was it my grandpa told me about “putting all your eggs in one basket”?!!

2008 Jan CNN webpage on the tv show, “Money line” reports on Student loan fugitives who have left the country, and cannot return because they cannot afford to make payments on their student loans, and that if they do return, they are afraid every penny they make will be taken from them, thus preventing them from saving for retirement (not becoming a burden to society when the are unable to work due to old age), or from ever owning a home. As one person says, “why should I try to make a payment of any amount, and be forced to live as a 3rd class citizen, when not one penny goes to paying off the principal?”. And that is the main thorn for so many who are in default. The interest payments alone, blown out of proportion due to default status, makes it all but impossible for these people to pay off their loans.

Another fellow says "But I'm most angry at the fact that for anyone who has debt that's not student loan debt, there's relief. You can get into $150,000 worth of credit card debt and you can declare bankruptcy and you can go on with your life. But with student loans, you're being punished for trying to be a better person."

2008 Under the new administrative garnishment law, students who are refusing to give USDE or Private Collections Agencies (PCA) access to bank accounts, refusing/unable to pay the monthly amount demanded due to lack of funds, or students who challenge the validity and/or amount of the alleged debt are being classified as “unwilling to pay”.

Then the USDE or PCA is using that classification to empower them to issue administrative garnishments, which destroy the student’s ability to earn a living, amongst other things.

2008 April 3rd. Reports of many banks pulling out of the student loan industry due to the United States Economy. Students half way thru their education in danger of defaulting and becoming victims of the student loan industry. Many banks admit to getting involved with student loans only because the government guaranteed them.

2008 Jan Sallie Mae says no more loans.
Several leading companies that provide higher education announced that they had been told by Sallie Mae and other lenders that they would severely restrict or cut back entirely on student loans to their students. In separate announcements:

Corinthian Colleges said that Sallie Mae, which provides 90 percent of the private loans taken out by its students, would no longer make loans to students with poor credit scores (who represent about 75 percent of Corinthian students who receive private loans, the company acknowledged). Corinthian also said that College Loan Corp. had told the company that it would stop making all private and federal loans to the for-profit higher education sector, and that another lender, Student Loan Express, would no longer make private loans, but will continue to make federal loans to for-profit colleges.
Career Education Corp. made a similar announcement, saying that Sallie Mae had decided to end a two-year agreement to provide the college company’s students with “recourse loans,” also known as “opportunity loans” — loans provided by some lenders to students with lower credit scores who might not otherwise qualify for loans. Career Education said it would search for alternatives to such loans but might end them altogether.
ITT Educational Services issued an upbeat statement (headline: “ITT Educational Services, Inc. Announces Availability of Additional Student Loan Options") saying that three lenders — Bank of America, Chase Education Finance and Citibank’s Student Loan Corporation — had agreed to provide federal and private loans to its students through 2008-9. ITT’s statement neglected to mention, however, that those lenders would be replacing Sallie Mae, which is pulling the plug on some of its loans to ITT, too.
Sallie Mae is expected to announce its fourth quarter and year-end results in a news conference today, and is likely to say at that time exactly how far back it is cutting its student loan business. The company had said in a filing this month that it would be “more selective” in making federal and private loans, but until the for-profit companies began making their announcements Tuesday, it was not clear exactly what that meant.

2008 Feb 23. www.ripoffreport.com/reports/0/311/RipOff0311484.htm Student loan finance person reports that Everest college, Kalamazoo Michigan office, is altering Government student loan paperwork to show students as being totally independent of their parents, so that they can qualify for Government student loans, when in fact they are not qualified for such. This is the same practiced used by the schools previous owner, National Education Center, when it owned the school in the 1980’s.

2007 Feds Raid Another Broward Campus -3 Florida College Campuses Raided in U.S. Department of Education Investigation.
http://www.topix.com/city/fort-lauderdale-fl/2007/10/federal-agents-raid-another-career-college
Federal investigators raided another Broward County for-profit technical school on Wednesday, shutting students out while agents seized documents. Officials with the U.S. Department of Education executed a search warrant at the Fort Lauderdale offices of the National School of Technology and loaded boxes into a Budget rental truck. Agents conducted similar raids at Florida Career College campuses Tuesday in Lauderdale Lakes and Pembroke Pines. The National School of Technology has three other campuses, Miami, Hialeah and Kendall, and offers programs like medical insurance billing, medical assisting, pharmacy tech and patient care. It's accredited by the Accrediting Bureau of Health Education Schools, which is recognized by the federal government as a legitimate accrediting agency. The for-profit school is owned by the California-based Corinthian Colleges Inc., which operates dozens of schools nationwide, including Florida Metropolitan University, which has a campus in Pompano Beach. In their annual report filed with the U.S. Securities and Exchange Commission, Corinthian Colleges acknowledged that it is being investigated in Arizona and Illinois for its lending practices. The California Attorney General sued the company in August alleging some schools in that state inflated student success rates and told fake success stories in marketing materials. The company settled the case for about $6.5 million. The National School of Technology and Florida Career College were named by the federal government as having some of the worst student loan default rates in Florida in the late 1980s. Students at Florida Career College campuses in Lauderdale Lakes and Pembroke Pines returned to classes Wednesday, and school officials said they didn't anticipate any more 2008 Feb 23. http://www.ripoffreport.com/reports/0/311/RipOff0311484.htm Student loan finance person reports that Everest college, Kalamazoo Michigan office, is altering Government student loan paperwork to show students as being totally independent of their parents, so that they can qualify for Government student loans, when in fact they are not qualified for such.

2007 Corinthian Colleges Class Action Lawsuit
Corinthian Colleges, Inc.,
This action is brought on behalf of public investors who purchased or otherwise acquired securities of Corinthian Colleges, Inc. between August 27, 2003 and June 23, 2004. The Complaint charges Corinthian and certain of its executive officers with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and S.E.C. Rule 10b-5. Plaintiff alleges the Company failed to disclose and misrepresented material adverse facts which defendants knew or recklessly disregarded, including that: (1) the Company manipulated financial aid documents to boost loan amounts available to students, thereby fraudulently receiving additional federal funds; (2) the Company used the fraudulently obtained funds to boost its revenues and stock price; (3) the Company lacked adequate internal controls; and (4) as result of the illegal practices, Corinthian's earnings and net income were materially inflated and in violation of Generally Accepted Accounting Principles.
https://www.glancylaw.com/amazing_case.php?caseid=84

2007 July
LOS ANGELES — California Attorney General Edmund G. Brown Jr. today announced that Corinthian Schools, Inc. and Titan Schools, Inc. will pay $6.5 million, including $5.8 million in consumer restitution, to settle a lawsuit alleging that the for-profit vocational operator engaged in false advertising and unlawful business practices by presenting inaccurate salary and employment information to students.
http://caag.state.ca.us/newsalerts/release.php?id=1444

2007 NY AG Cuomo Says the Student loan program is broken and should be abolished.

2006 NOV 30 Canadian TV Whistle blower story about a large Canadian private college, CDI.
One of their former students, Aaron LaForest, had sued the college, claiming he was misled and didn't get the computer education he signed up for. LaForest has won his lawsuit. CDI has been ordered to pay him $5,000 in expenses and damages. The judge said he agrees with LaForest -- that CDI did not deliver as promised.
He's now suing CDI for $10,000, alleging "false advertising and misrepresentation." Laforest claims, in his lawsuit, "There has been no teaching received throughout this program." CDI College is owned by a U.S. corporation called "Corinthian Colleges" - and it is also being sued by some students in the U.S. It's being investigated by the State of Florida, as well, over its advertising and marketing practices. There has been no conclusion announced in that probe yet and Corinthian Colleges maintains that they have complied with all regulatory standards. "There should be an investigation done on the school," said Laforest. "What the school said was not what it turned out to be."
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20060601/whistleblower_cdi_060601/20060608/

2006 Aug Securities and exchange commissioned launched an informal inquiry into stock option granting practices at Corinthian colleges,

2006 June Florida AG office widened its investigation of Florida Metropolitan University

2006 June, National Consumer law Center of Boston Ma Publishes its report, "No way out: Student loans, Financial distress and need for policy reform. This PDF file is 53 pages long and the report itself was originaly 49 pages. The purpose of the paper was to discuss why students find themselves in default, and why their problems spiral out of control so quickly.
This paper calls for restoring a reasonable staute of limitations for student loans, and acknowledges that the removal of the statute of limitations put studentloans in a rare catatgory equal to those guilty of murders, traitors and a few civil laws. It notes that even rapists have statute of limitations.

2006 Jan http://www.usatoday.com/money/perfi/general/2006-02-22-student-loans-usat_x.htm Article on suffrage of students.
Students suffocate under tens of thousands in loans. In 1981, a student could work full time all summer at minimum wage and earn about two-thirds of annual college costs, according to an analysis by Heather Boushey, economist for the Center for Economic and Policy Research. Today, a student earning minimum wage would have to work full time for a year to afford one year of education at a four-year public university — and that assumes she saves every penny, Boushey concluded. Tom Dillon, 19, a pre-pharmacy major at the University of Connecticut, is carrying $52,000 in student loans. And he's just getting started. When he gets his pharmacy doctorate in four years, he expects his debt to exceed $150,000. John Reykdal says all his friends have student loans and predicts that the higher rates will force many future graduates to spend years paying off their debts. "Their student loans will double by the time they pay them off, just on interest alone," he says. "It makes me really worry about the future."

2006 New York State education department orders Taylor business Institute a commercial 2 year business college to close as of Jan 2007. Amongst other things, a high attrition rate of 80 percent, lead to the decision.

2005 Nov New Jersey Dept of Labor and Workforce Development issued letter to Sanford Brown Institute-Iselin, owned by Career Education Corp, over allegations raised in 60 Minutes Television show report on for profit colleges.

2005 Nov Kentucky’s AG asked a court to strip Decker College, a for profit school, of its charter. Kentucky’s officials revealed widespread fraud and abuse.

2005 Aug Group of students have filed suit against ECPI college of Technology in Greenville, SC alleging that the school is a “Fraud and a Sham”.

2005 Aug Pennsylvania AG office has begun investigation of Lehigh Valley College owned by Career Education Corp, into business practices of the school.

2005 May Corinthian Colleges ordered to repay 776,241 to USDE for violations of Student aid procedures at Bryman college.

2005 April Washing State HECB bars two BCTI presidents from ever again operating a school accredited by that Council.

2005 Mar Washington State Higher Education Coordinating Board, orders BCTI ordered to pay 63,000 in state need grants for low income students after the school admitted falsifying enrollment tests to admit unqualified students.

2005 March US House of Representative from California, Representative Maxine Waters, gives testimony before the Committee on Education and the Workforce and Full Committee Hearing on “Enforcement of Federal Anti-Fraud Laws in For-Profit Education”, about the problem with proprietary trade schools. Again, showing the students to be victims of student loan abuse by the for profit schools.

2005 Feb. www.encyclopedia.com/doc/1G1-129027838.html Corinthian Colleges accused of fraud. Former employees of Corinthian Colleges Inc. have alleged that the company routinely falsified students' financial-aid applications in order to win federal funds, according to an amended lawsuit filed in federal court in Los Angeles. The allegations by the former employees, who are not identified by name, are described in a complaint filed Thursday by the class-action law firm Milberg Weiss Bershad & Schulman LLP.

2005. Private student loans are added to the list of non bankruptcy discharge able student loans.

2004 Nov. The California attorney generals office examines allegations of fraud against a number of for profit schools, including ITT and Corinthian.

2004 University of Phoenix paid 9.8 million to settle investigation by USDE into recruiting practices that violated the ban on commissioned sales.

2004 – Taxpayer-Teacher Protection Act of 2004 suspended for one year the ability of
certain FFELP lenders to expand the number of federally-backed loans that are
guaranteed a 9.5 percent return. This is expected to be made permanent when HEA is reauthorized in 2005.

2003 Jan New York State Comptrollers office begins an audit of Devry New York’s compliance with the NY State tuition Assistance program Grant requirements for the 3 year period ending in June 2002. Devry ended up paying back an undisclosed amount.

2003-2006 Various federal agencies including USDE, SEC, and FTC launch investigations into for profit colleges for violations of HEA and other federal laws. USDE announces 9.8 million settlement with Apollo Group citing multiple and flagrant violations of ban on incentive based recruiting and admission.

60 minutes tv show, Arizona Republic, New York Times, Financial times, Portland Oregonian, and other media report on alleged recruitment violations in the for profit sector.

Regular news reports from news media sources nation wide illustrate a return to the fraudulent practices of the past and subsequent legal action taken by students and shareholders.

2002 June 11, National Consumer Law Center, (NCLC) makes comments and objections to administrative garnishments on student loans. Says they are concerned for the due process students would get under proposed regulations. And points out that for the first time, the USDE is utilizing the Dept collection improvement act, of 1996, codified at 31USC3720D.

http://www.consumerlaw.org/initiatives/test_and_comm/061102_DL.shtml
NCLC makes its objections and concerns clear, some of which are:
1. Objects to the percentages of garnishments.
2. Concerned about the use of private contractors to be used.
3. Object to the lack of clear standards for hearing officers.
4. Section 34.14 of the proposed regulations do not protect constitutional due process rights as far as clear and precise determination is concerned.
5. Objects to the use of oral hearings, unless student can show cause why resolution cannot be obtained via paper hearing.
6. Defenses to garnishment clauses are incomplete.
7. Concerned about the number of specific provisions for hardship defense.
8. Object to multiple garnishment orders.
9. Confusion over garnishment regulations.

2002. 38 billion dollars is borrowed in Federal student loans by 5.8 million Americans.

2001. March. Dreams protected: A new approach to policing proprietary schools' misrepresentations Georgetown Law Journal, Mar 2001 by Linehan, Patrick F
Mr. Linehan, publishes a 20 page report on the predatory practices of proprietary schools.
http://findarticles.com/p/articles/mi_qa3805/is_200103/ai_n8931568/pg_1 Although this article appears in 2001, it covers the time from 1980 to 2000. And is a highly recommended read for anyone who wants to understand what happened to so many students during the 1980s.

2001-2002 USDE conducts negotiated rule making which 12 safe harbors to the incentive compensation ban are proposed.

1999. Section 523(a)(8) of the US bankruptcy laws changed for a second time, concerning student loans. The 7 year bankruptcy wait is extended to infinity. That is to say, Student loans are non dischargeable in bankruptcy unless undue hardship can be shown. However, what constitutes "undue hardship" is never made clear. And each Federal court circuit has its own definition.

1999 GAO report says default rates need to be reported more appropriately.
GAO/HEHS-99-135 Computing Default Rates Appropriately.

1999-2001 The office of Inspector General of the US Dept of Education (USDE) finds violations at multiple institutions (most not-for profit) that had contracts with Apollo group for recruiting students.

A 1989-90 Senate investigation headed by Sen. Sam Nunn (D-Ga.) blasted the department for running a multimillion-dollar loan operation with a computer data system that contained incomplete, inaccurate and unreliable information. ''For more than 15 years the department has tried to build a student loan data base and failed over and over again,'' says the Council on Education's Atwell. ''They have absolutely no idea who is holding loans or where they live.'' Nor has the DOE kept tabs on the 10,000 primary lenders and the 64 institutions operating in the secondary market. These firms, such as Sallie Mae (Student Loan Marketing Association), purchase loans from the original lenders and service them. As one result, Senate investigators found that eight out of 10 lenders were not following DOE procedures -- for example, mailing at least six collection notices to a borrower within a six-month period and making ''diligent'' phone calls to collect before declaring a loan in default. Testified chief investigator David Buckley: ''We were told, time and time again, that given the profits being made, there is inadequate government oversight of the lenders.'' The DOE claims to have made improvements since the Senate report.

The DOE has started turning over defaulters' Social Security numbers to the three dominant credit bureaus (TRW Information Services, Equifax and Trans Union). If you have ever been plagued by a bad credit report, you know just how difficult that can make life. ''We really wreck them,'' says Jean Frohlicher, executive director of the National Council of Higher Education Loan Programs, an association of loan services and secondary market firms. Clearly, tougher penalties for defaulters and tighter screening of schools and lenders can start to clean up this mess. But there's more work to do. Congress and the DOE should: -- Force the lenders to take more responsibility for student loans. The best way to achieve that is to stop reimbursing them 100%. One idea: 80%. ''This would surely heighten the lenders' interest in reducing defaults,'' says Sen. Nunn. -- Create an information clearinghouse. ''Students need a single source to call to update their status, clear up problems or locate the holder of their loan,'' says Sallie Mae's chief executive, Lawrence Hough. -- Require colleges and universities to make sure students truly understand their loan responsibilities. -- Make the interest on college loans tax deductible. This proposal, put forward by President Bush in his State of the Union address, would help millions of young people repay their debts. For example, the deduction would save Singel, who faces yearly bills of $1,970, nearly 10%, assuming she is in the 15% tax bracket. And that 10% might be just enough to save you, me and our fellow taxpayers from having to swallow yet another tuition bill.

1993 – FDLP becomes a full-scale program under the Student Loan Reform Act. Loans
would be financed and managed directly by the federal government and an income
contingent repayment process was added.

1992 May Money magazine contributor y KERRY HANNON Reporter associate: Vanessa O'Connell May 1, 1992 Reports that students are getting stiffed by student loans. The article in part reports:
Gary Lynn (right), a 34-year-old marketing consultant in Troy, N.Y., finally paid off his $9,959.62 in student loans that he thought he had paid off. An indignant Lynn insists: ''I wrote about a dozen letters to faceless, nameless people and could never find out how much I owed or to whom. At one point I was even getting bills from two different creditors. Then they got my account confused with another student's loan. I called more than 20 times asking for information. But when the collection agency finally called me last year, all they said was, 'Look, you are seriously delinquent, and we're going to start proceedings against you.' '' Lynn figures he shouldn't have to pay interest or penalties for the years he tried to sort out the confusion.

''The managerial competence of the Department of Education is a real question mark,'' says Thomas Wolanin, staff director of the House Subcommittee on Postsecondary Education. ''We are not talking here about a well-oiled machine.

All told since 1965, when the Higher Education Act created the loan program, taxpayers have footed the bill for around $17 billion in defaulted loans -- and these numbers are mounting fast.

The grim facts: -- There have been 62 million loans made since 1965, and an estimated 10 million students have defaulted. From 1988 to 1990, the annual default rate has climbed from 17% to 20%. -- With tuition, fees, and room and board running $10,000 to $20,000 a year at most four-year private colleges (up from $5,947 in 1981) and averaging $5,500 at public colleges, more applicants than ever are seeking federal loans (maximum four-year limit for undergraduate students: $17,250, up from $10,000 in 1986). ''We have created a new indentured class in the United States -- the student debtor,'' says Rep. William Ford (D-Mich.), chairman of the House Education and Labor Committee. -- A 1991 General Accounting Office study indicates that more than 25% of the defaulters earn enough ($15,000 or more) to make loan payments.

BULLL CRUD!. Where I lived, 15K per year would not give you enough to have a proper apartment and a car payment at the same time.. Ford is out of touch with reality. (Remember this was in 1992). Furthermore, the new William D Ford pay off option, based on income, is not a real solution. If you cannot afford to make payments that pay off the interest, it all keeps adding up and at the end you owe the IRS income tax on the balance due, which in many cases, will be more than the original loans. So the problem just switches from the USDE to the IRS. That is no solution; it’s a continuation of the victimization of students.

Why have defaults exploded? Fraud is part of the answer. Callousness accounts for much of the rest. Since 1980, when the government program was amended to allow students who have not completed high school to get student aid, federal loans have proved a bonanza for trade school operators who simply take the money and run. And don't think trade school swindlers are found only in beauty academies and air- conditioner maintenance courses. They also operate business and computer- training schools. From 1982 to 1988, loan volume to trade school students increased six fold. At the same time, the number of DOE reviews of schools eligible for aid fell from 721 in 1984 to 417 in 1986. The result: Today, trade school students account for around 35% of defaults, and the numbers continue to increase. The DOE's weak oversight has allowed scam artists to prey on students.

Secure in the fact that the loans are risk-free for them, some lenders put little effort into collecting. They know that if a borrower goes for six months without making a payment, the government will pay them back -- with interest -- and that they will have avoided the high cost of servicing the loan. ''It is convenient when a loan gets in trouble to hand it back to the feds, get their money and get out,'' says Robert Atwell, president of the American Council on Education

1992 – GSLP program was renamed the Federal Family Education Loan Program
(FFELP) in the 1992 HEA reauthorization. FFELP is a public-private partnership that
provides affordable private sector financing for students and their families seeking
postsecondary education. The Direct Lending pilot project was created.

1992 Congress finally acts, due to pressure and high default rates, passes ban on paying commissions to admission and financial aid officers. The Act bans commissions, bonus, or other incentive payments based on success in ensuring enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities. 20USC1904(a)(20). Yet still no relief for the victims of Student loan farming by predatory trade schools.

1991 May US senate Subcommittee on investigations, committee on government affairs, senate Report R-102-58, covers the Higher education Act, and student loan industry.
Reports on the abuses of the Federal student loan program. Senator Sam Nunn, Dem, Georgia testifies that the congress knew back in 1975, that some of those for profit schools were selling worthless educations, leaving the students with debts they could not pay, amongst other things reported. See report for full disclosure of facts. Yet no relief for those students is offered to this day. The report clearly shows the students as victims, under Section 3, Subsection E on page 11. Again, no remedy or relief is ever offered to these students who suffer to this very day, including the author of this timeline.

1991. The Emergency Unemployment compensation act of 1991, (P.L. 102-164), amended the Higher Education Act of 1965 to include section 448(a) which Now allows the U.S. Department of Education to require employers who employ an individual who is not repaying their defaulted student loans, to begin deducting 10 percent of the debtor's take-home pay in order to recover the entire balance due. Under this authority, no legal action is required to obtain administrative cooperation from the employer.

Note: this notice does not say how the term "employer" is being defined. It does however, admit that your rights as guaranteed by the US constitution are going to be violated willfully by the very government that is sworn to uphold them. Specifically your rights under the 4th, 5th, and 7th amendments to the national charter.

1991, GAO report: In Student Loans: Characteristics of Defaulted Borrowers in the Stafford Student Loan Program, the GAO identified nine defaulter characteristics most frequently cited in published studies of defaults. These are:
1. attended vocational/trade schools
2. had low incomes
3. had little financial support
4. had minority backgrounds
5. lacked high school diplomas
6. failed to complete education programs
7. attended school for one year or less
8. borrowed small amounts
9. were unemployed when defaulting.
Defaulter characteristics cannot be used to predict who will default. An often misunderstood fact about default is that while most defaulters have certain characteristics, the majority of borrowers with these characteristics do not default on their loans.

Note: Most defaultres who have those charcteristics DO indeed default, but they do so past the 2 year record keeping practices of the Dept of Ed. These students tend to default within the range of 3-7 years after leaving school.

1990. Approximately 11.7 billion is borrowed for student loans.

1990. Section 439A of Higher Education Act of 1965 is Amended. The waiting period to file bankruptcy is extended to 7 years.

1990. Section 523(a)(8) of the US bankruptcy laws changed. It is also changed in 1998 and 2005. The comprehensive overhaul of the US bankruptcy code enacted in 1978 that treatment of student loans then became addressed under the bankruptcy laws, specifically section 523(a)(8). Proponents of this re writing of the law, claimed that congress was treating student loans the same way they did people who were charged with fraud, felony and alimony dodging, and that the actions by the congress in limiting discharge ability of student loans were fighting a scandal that existed only in their imagination.

1990 Feb Inspector Generals report says that 87 percent of student loan lenders have serious procedural violations and abuses of students

1998 New wage garnishment law, allowing wage garnishment without a court order is now put into effect by the Dept of Education.

1989 LA TIMES article Reports Bank of America put away close to 100 million to cover looses involving student loans.

1987 – GSLP was renamed Stafford Loans in honor of Senator Robert Stafford (R-Vt.).

1986. Section 439A of the Higher Education act of 1965 is amended to impose a 5 year waiting period on defaulted student loans before a student can file for bankruptcy protection unless the student can claim "undue hardship". Undue hardship is never defined.

1986 – Reauthorization of the Higher Education Act gave financial aid administrators
broader discretion and ability to use "professional judgment" on loans; required financial need for the GSLP interest subsidy; NDSL was renamed Perkins Loan; Supplemental Loan to Students (SLS) for graduate, professional and independent students was created; PLUS loans to parent borrowers were restricted.

1983 – 1987 United Education and Software, the service company for FITCO, (First Independent Trust Co.) was found to have hundreds of boxes of unopened returned mail in a warehouse, and also found thousands of unopened and unprocessed requests for forbearances. These thousands of requests for forbearance’s put the students in default because a loan service provider failed to do its job (again).

1983 – Student Loan Consolidation and Technical Amendments Act approved, which
allowed borrowers to consolidate multiple loans into a single loan with a longer
repayment term and smaller monthly payments.

1980-1992 Some for profit colleges abuse student aid programs by using high pressure sales tactics to enroll students under false pretenses, yielding no educational benefit to students, ad resulting in losses of hundreds of millions of dollars to students and taxpayer s thru defaulted loans and wasted financial aid. Students of this era are classified as victims of student loan farming by some members of congress. Yet no relief for the students is ever offered and even today, they are being hounded to pay loans that have ballooned in some cases to over 7 times their original value..

1980 – Parent Loans for Undergraduates (PLUS) approved, which allowed parents of
dependent undergraduate students to obtain low-interest loans to pay for their children's college education.

1980’s. Proprietary school (private trade schools) loans at one time defaulted at a rate of 5 times that of traditional 2 and 4 year colleges.

1980-1989 First Independent Trust of Sacramento California writes an estimated 1.5 billion in Government Guaranteed student loans. And later files bankruptcy.

1979 – The Department of Education (DoED) was created, P.L. 96-88.

1972 – Student Loan Marketing Association (Sallie Mae) was created; Basic Educational
Opportunity Grant (BEOG), now the Pell Grant, was established; Education Amendments
of 1972 were enacted (federal matching grants for state incentive grants).

1969 National Education Center, Olympia, Everest, Corinthian Colleges.
http://www.cci.edu/directory/National-Institute-of-Technology.phpThe history of National Institute of Technology (NIT) is diverse. Each campus was acquired individually; however, together they comprise a national school system providing students with a total educational experience. National Institute of Technology in Long Beach, California, was originally founded in 1969 as the Rosston School. In 1986, the school was acquired by Educorp, Inc. and renamed as Educorp Career College. Corinthian Schools, Inc. (CSI) acquired the campus in 2000 and subsequently changed the name of the campus to National Institute of Technology. Corinthian Schools, Inc. is a division of Corinthian Colleges, Inc. (CCI). Corinthian Colleges, Inc. is one of the largest postsecondary school organizations in the United States, operating more than 80 colleges and institutions across the country and is and has been the target for numerous civil cases and investigations for violating laws.

1966 – National Association of Student Financial Aid Administrators (NASFAA) was
created.

This is the earliest I have any records of the Historical time line for student loans. And back in 1966, I was just starting life.