Man there are great journalists out there and Shahien Nasiripour has been crushing it in the student loan segment.
Shahien is reporting that the Department of Education has been trying to collect on student loans it promised to forgive under the Borrower Defense to Repayment strategy. Under this approach, students with federal student loan debt would not only have the federal student loans forgiven but also be refunded for all the student loan payments they had made. This program is designed for students who had be defrauded by their school.
This article is focused on students who attended one of the Corinthian Colleges schools but it is indicative of a bureaucracy where a clear process is just plain broken.
Bloomberg is reporting, “Even though the Obama administration presumes Corinthian misled these borrowers, as many as 80,000 of them are in default and battling draconian collection efforts—wage garnishments, the seizure of tax refunds and federal benefits—on behalf of the Education and Treasury departments. Others are paying off debt they aren’t aware they don’t owe.”
But the article mentions problems with the student loan forgiveness and collection process that I’ve heard from others as recently as yesterday.
“Even when borrowers do apply for relief, they face the prospect of what appear to be baseless rejections. Education Department employees have erroneously told some borrowers there’s no federal right to debt cancellations. (The department issued an apology.) Some borrowers say they never hear anything at all. “To this day I have heard nothing,” said Ann Bowers, 56, of Paris, Tenn. Bowers, a former Corinthian student who served on a government advisory committee grappling with student debt, applied for debt relief herself nine months ago.”
One person told me yesterday they finally heard back on their Borrower Defense claim and the response was “we see no record of your claim.” Imagine waiting 6-9 months to only hear your paperwork has been lost.
Under the Borrower Defense program the Department of Education says it will cease collection activity for claims that have been submitted but as the article shows, that’s not happening for all claimants. Julio Gonzalez was getting collection calls every few minutes, he says. “Although the Education Department states on its website that it will cease collection efforts on Corinthian borrowers’ disputed debt, experiences like Gonzalez’s are common. There may simply be too much money at stake.”
Shahien knocked this investigation out of the park. I urge you to read the rest of the article, here.
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I filed a Borrower defense claim in Oct 2015 and the only response I got was my loans being placed in administrative forbearance 2 weeks later. After hearing nothing for 3 months, in Feb 2016, I started emailing their contact email. After 3 weeks, I got a reply from that email address of “Yes, we got your paperwork and it’s in process.” No signature, no name of the rep who answered, no personal email address, just that sentence.
Starting in May, after still hearing nothing, I started emailing and writing a letter asking about my status and asking if I could provide additional info, since the media had reported they added additional rules to the process. In August, 7 weeks before my forbearance was to end, I started emailing them weekly. Still never got a response. Finally, in October, a rep from Navient confirmed they had my paperwork, but are “backed up” and they reissued a forbearance for another year.
I thought maybe the CFPB could provide some help, so I filed a claim with them. After a week, they closed my claim and said I could not file a complaint against another government agency, that I had to talk with an Ombudsman with the Dept of Ed. I played phone and email tag with an ombudsman rep for 3 weeks, before she emailed and said, “I might as well tell you by email, even though we’re only supposed to tell you by phone: we cannot facilitate or speed up the process. There is nothing we can do and I’m closing your case with us.”
So, here I am stuck over a year later with no clear answer, accruing interest on a loan I cannot afford.
I’m sorry to hear about your experience and it worries me because it was an outcome I predicted when this flood hit the Borrower Defense to Repayment claim stage. I think the flood of crummy claims just slows things up for the vast number of people that have valid and good claims to process.