Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.
Supreme Court could get last word on student loan rules
With complaints against student loan servicers mounting, more and more states have stepped in to regulate.
As we’ve reported in the past, some state are enacting new rules for educational loan lenders. In other cases, the states have taken servicers and lenders to court — for example, multiple states’ attorneys general have joined a federal suit against Navient for allegedly steering borrowers away from programs that could have helped them (a charge that Navient denies).
But, as MarketWatch reported this week, the student loan companies are pushing back, claiming that they are governed by federal law rather than state law, making states’ complaints invalid. Several cases testing this legal theory are currently winding their way through the court system, and the report quotes Washburn University law professor David Rubenstein as saying the issue looks likely to end up at the Supreme Court for review “in the foreseeable future.”
While the ultimate outcome is anyone’s guess, the report also cites Dan Zibel, the vice president and chief counsel for the National Student Legal Defense Network (NSLDN), a borrower advocacy group, as saying he’s “cautiously optimistic” judicial review of the question will come down on the side of the plaintiffs.
How it affects YOU: If you feel you were misled by your lender or servicer, or you otherwise have an interest in one of the suits against them, then you’ll definitely want to follow this story. While resolution of these cases may still be many months (but hopefully not years) away, you can reach out to your elected representative’s office of constituent services for information. And if you have a special situation in which you feel you were wronged by your servicer or lender, you could also speak with a student loan attorney, and in some cases, can provide legal aid for free.
Also in the news …
- While we noted last week that some Democratic Party candidates running for president are looking at the idea of helping provide tuition-free college, Politico quoted former New York City mayor Michael Bloomberg — who is also considering joining the presidential race — as opposing the plan, calling it “totally impractical.”
- Not only is Navient facing government lawsuits, but it could now be in trouble with its shareholders. A judge ruled that a shareholder suit could proceed against the Delaware-based corporation over allegations it “pumped up its stock price by hiding serious problems with its loan portfolio and other risks from investors,” according to Delaware Business Court Insider.
- The Albany Times Union has a report out on how the student debt crisis is falling disproportionately on the shoulders of women, and how the ranks of student loan borrowers over age 60 is on the rise.
News can be useful, but if you want some deeper advice, take a moment to sign up for the Student Loan Hero weekly digest email and get valuable financial knowledge sent straight to your inbox … for free!
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.23% – 13.23%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 10.11%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|