Category Archives: education

Biden Administration To Cut Ties With Debt Collectors For Student Loans

Source: site

The U.S. Department of Education said it is ending its relationship with private collection agencies that had been tasked with recovering payments from federal student loan borrowers in default to improve collections and provide borrowers with more support.

Richard Cordray, chief operating officer of the department’s office of Federal Student Aid, said Thursday that collecting on defaulted loans would now be handled by five private contractors hired by the department last year to provide customer support to borrowers as they navigate the repayment process.

Photo: John Minchillo/Associated Press

FHA extends mortgage forbearance options

Source: site

Borrowers struggling to make their FHA mortgage payments now have more time to file for forbearance.

According to the U.S. Department of Housing and Urban Development, you can now file for forbearance – essentially a temporary pause of mortgage payments – on FHA loans from now until the end of the COVID-19 National Emergency. Previously, the option (well, at least filing for it) was set to expire Sept. 30.

“Our top priority is to help as many individuals and families as possible to recover from the COVID-19 pandemic and keep their homes,” said Lopa Kolluri, principal deputy assistant Secretary for Housing. “For FHA, this means that we will continue to work through all of our channels – mortgage servicers, housing counselors, and our other federal partners – to ensure we get the positive outcomes struggling homeowners need.”

Do you have an FHA-financed investment property? Are you struggling to stay on top of payments due to nonpaying tenants or other issues? Here’s what you need to know.

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FHA forbearance extensions

HUD’s latest move brings FHA forbearance options more in line with Fannie Mae‘s and Freddie Mac‘s, which have no set expiration date for conventional loan borrowers.

To be clear, HUD’s extension doesn’t mean borrowers can pause mortgage payments for however long they need. There are still length limits on FHA forbearance, but now, borrowers can file at any time. Before, they’d be unable to file a forbearance request beyond September.

A borrower’s exact time limits will depend on when their forbearance period starts. For those who file Oct. 1 or later, they can have up to 12 months total (six months for an initial forbearance and another six-month extension). Borrowers who filed earlier can have up to 18 months in some cases.

HECM – or Home Equity Conversion Mortgage – forbearance options were also extended with HUD’s announcement this week. These borrowers can also request forbearance for up to 12 months through the end of the COVID-19 National Emergency.

► Is your mortgage coming out of forbearance?  Here’s what to do next

Other strategies to help

If you’re a landlord who’s unable to pay your mortgage, filing for forbearance isn’t your only option. Consider these tips for cutting your overhead costs, or think about raising your rents if you have tenants up for renewal. These strategies can also help you increase cash flow while you get back on your feet.

Finally, if you’re really struggling, talking to a housing counselor or selling your property may be your best bet. In today’s hot market, there’s a good chance your returns will be strong – especially if you bought the home a few years ago.

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Minorities hit hardest by student loan debt

Source: site

Student loan debt affected people’s ability to pay their bills and meet their basic needs during the Great Recession – and the burden of that debt was disproportionately placed on Black and Latino families, a study by Elizabeth Martin, a doctoral student in sociology at The Ohio State University in Columbus, has found.

The study, published in the journal Social Currents, found that having student debt universally increased the odds of financial stress during the recession, regardless of race. But Black and Latino families with higher student loan debt felt more financial stress than their white counterparts with the same levels of debt.

“People who were already financially stressed going into the recession were much worse off to begin with,” Martin, the study’s lead author, said in a Sept. 8 Ohio State University news release. “But when we looked at other measures­ – specifically at the amount owed – we found that Black and Latinx households were starting to face higher levels of financial stress at lower levels of debt load than white households.”

For this study, the researchers analyzed data from the 2007 to 2009 Survey of Consumer Finances, a survey of U.S. families and their finances. The researchers evaluated responses from nearly 3,900 households in the 2009 survey. Those surveys answered questions about the previous year, which was in the middle of the Great Recession from 2007 to 2009. Some of the questions included whether the household fell behind in a loan or mortgage payment, whether spending exceeded income, whether respondents carried credit card debt and whether they took out a payday loan. The researchers considered a household “financially stressed” if the family experienced at least one of those circumstances.

Researchers analyzed four different measures of student loan debt: whether a household held any student loans, the amount the household owed, monthly payments and the percentage of a household’s income that went to student loan payments.

The study mostly captured households experiencing less extreme financial problems, Martin said, offering a unique opportunity to see how student loans affected families that might otherwise consider themselves financially stable.

They found that when households owed less than $20,000 in student loans, the risk of financial stress was equal among Black and white households. But when families owed $20,000 or more, Black families were more likely to experience greater levels of financial stress. Hispanic families and white families experienced similar levels of financial stress at lower debt levels, too. But when families held $80,000 or more in student loan debt, Hispanic families were more likely to experience financial stress.

“For everyone, just having a student loan increases the odds of financial stress, but for white households, owing more money on the loan doesn’t change whether they experience financial stress,” Martin said.

“For Black and Latinx households, you see that having any student loans increases financial stress during the recession, but that they also have these increased odds of financial stress with higher amounts of money owed, more so than white households. And this is really important, because Black families especially are more likely to hold student loan debt than white families, and aren’t able to pay off their student debts to the same degree that white families are.

“I think what we found, big picture, is that student debt is not just a middle-class, white-person problem. It’s disproportionately a problem for Black and Latinx people, especially when larger amounts of money are owed.”

Student Debt Weakens Retirement Security

Source: site

In the past, older households were more likely to retire debt free with a paid-off mortgage. Those days are over. Student loan debt for older adults, their children, and their grandchildren has been rising for decades.

Debt undermining retirement security is a sinister and under-appreciated problem, but the United States Government Accountability Office (GAO) is catching on. The median debt amount for Americans older than age 50 was three times more in 2016 than it had been in 1989, especially for home, credit card, and student loan debt. Many may think student loan debt only afflicts young people, yet our calculations emphasize the increased concern older households have when it comes to education loan debt (Barbara Schuster, Schwartz Center for Economic Policy Analysis’s calculations based on the Survey of Consumer Finances, 1992–2019 for households with heads ages 55–64).

Student Loan Debt Is the Fastest Growing Type of Debt for Older Americans

Although student loan debt is not the most common type of debt among older American households, it is the fastest growing debt category since 1992. More than four times as many older households have student loan debt now than they did 30 years ago (12.2 percent in 2019 versus 2.9 percent in 1992). At the same time, the median student-debt-to-earnings ratio almost doubled from 15.8 percent in 1992 to 28.4 percent in 2019. Meaning older adults use a much greater portion of their income to pay off student debt today than 30 years ago.

For older households of color, the problem is even worse. Eleven percent of older white households had student debt compared to 18 percent of older Black households. And the median student-debt-to-income ratio is 46 percent for Black households versus 29 percent for white households.

The excellent research at the Center for Retirement Research at Boston College finds monthly student loan payments reduce retirement plan contribution rates. In 2019, the median outstanding student loan debt for an older household was $24,000 which was a whopping 90 percent of median retirement savings of $30,500. In other words, 90 percent of retirement savings are needed to repay student loans. This does not leave a lot for everyday needs, let alone unexpected emergency expenses.

Low-Income Elders Hurt Worse By Student Debt

The share of older households with any education debt increased for every income group over the past three decades, however the increase hit the bottom 50 percent of the income distribution worst. Low-income households are more likely to experience debt stress and retirement insecurity because they have to devote a substantial portion of their income to debt repayment and therefore cannot save for retirement.

Our calculations show the median education-debt-to-earnings ratio for households is 69 percent for those in the bottom 50 percent of the earnings distribution, 23 percent for the middle 40 percent, and only 8 percent for the top 10 percent. Since the bottom 50 percent of older households are disproportionately, predominantly Black and Hispanic, this new debt source reinforces already existing inequalities in retirement security.

More Than Half of Older Households with Student Loan Debt Hold Education Loans for Children or Grandchildren

More than half of older households with student loan debt finance their children or grandchildren’s education. Thus, instead of saving for their retirement, older Americans are paying their children’s student loans. Additionally, because there is no cap on the size of Parent PLUS loans, parent loans are often much larger than student loans, which puts added financial stress on older individuals. This debt could be putting pressure on older adults to work longer and eventually postponing retirement to continue working to repay their debt. Working longer could seem like a good plan until it’s not—i.e. a pandemic hits or unexpected layoff occurs or an employer decides the younger hire’s healthcare costs is better for their bottom line, and on and on.

Covid-19 Exacerbates Debt Accumulation Upon Retirement

The Covid recession has made it even harder for older households to pay off their steadily rising debt burdens. Even in “normal” times, older workers  have less control over how long they work (or how much they are able to save) than some may think. About half of older workers are pushed out of the labor force in normal times. But the Covid-19 pandemic forced 1.7 million additional older workers into involuntarily retirement, or a retirement they are financially unprepared to sustain.

As mentioned, older households—especially older Black households— came into this recession with more debt than ever. Now, to worsen things, older workers are also more likely to be forced into retirement with less savings due to the Covid-19 recession. Of course, without a steady income this makes it harder for older Americans to pay off their debt—especially those of color with higher debt levels—let alone meet their basic needs.

Three New ATDS Cases May Have Just Titled the TCPAWorld in Favor of Text Usage

Source: site

When Facebook was decided I predicted that 90 percent of courts would determine that the TCPA did not apply to callers attempting to reach non-randomly produced phone numbers. I’ve also said—repeatedly—that the text channel is now the safest communication channel. (Indeed I blew people’s minds at contact.io when I said from the stage that conversational and triggered texts can now safely be used to communicate with customers without consent…outside of Florida and DNC issues, of course)

Out of the gate there was some tension, with more courts than expected pushing back and adopting—at least at the pleadings stage—the Plaintiff bar’s FN7 arguments.

But now, at moderate last, the chips are starting to fall into place.

Three huge cases out in the last week really drive home the importance of Facebook –at least as applied to text message communication.

First, in Laguardia, Case No. 2:20-cv-2311, 2021 U.S. Dist. LEXIS 170704 (S.D. Oh.  September 9, 2021) the court granted summary judgment to Defendant holding squarely that only the use of a R&SNG to generate phone numbers triggers the TCPA’s ATDS definition under Facebook. The defendant in that case was using a number generator to create IDs to track unique texts for campaign purposes. Despite the fact that the system was plainly using a number generator in connection with texts, the Court had no trouble distinguishing between that sort of number generation and the generation of telephone numbers to be dialed. As the system was not generating telephone numbers, the text messages being sent to lists of customers were simply not sent using an ATDS.

Next, in Brickman, Case No. 16-cv-00751-WHO2021 U.S. Dist. LEXIS 175700 (N.D. Cal.  September 15, 2021) the court denied a motion for leave to file a second amended complaint. At issue in that case were birthday text messages being sent automatically by a popular social media site. (I wonder which one.) The Court determined that since the texts were being sent based upon an occurrence—i.e. a birthday—they were not being sent using a R&SNG. The Court had no trouble reaching this conclusion despite the Plaintiff’s arguments that the order in which texts were being sent was determined via a random or sequential process.  As the numbers receiving the texts were not randomly or sequentially generated, even if the text sequence were determined using an R&SNG is not enough—only the use of an R&SNG to generate phone numbers is sufficient to trigger TCPA.

Lastly, in Jovanovic v. Srp Invs. Llc, No. CV-21-00393-PHX-JJT2021 U.S. Dist. LEXIS 175631 (D. Az.  September 14, 2021) the court granted a motion to dismiss an ATDS claim holding that the receipt of a personalized text message from a long code is inconsistent with ATDS usage. With 10DLC registration around the corner the use of long code will continue to be a popular communication channel by legitimate businesses—one that a court in Arizona just blessed as potentially TCPA-proof.

I’ll note that these are just three district court-level opinions—and not binding precedent—but they basically prove I was right all along. Text communication—particularly triggered texts of the sort used in Brickman—is the safest post-Facebook TCPA communication channel (along with human selection dialers.)