The 2016 election is a cantankerous event. What surprises me most are the people that want to decide who to vote for based on what they see on social media or one political learning media outlet.
Strictly speaking from a consumer debt point of view, who to vote for isn’t even close.
And frankly, if you care about creditors being responsible for abusing consumers or you are drowning under student loan debt then there is only one candidate to vote for.
And speaking of voting, here is where you can register to vote.
The DeVos Department of Education has gone out of its way to punish student loan debtors at every opportunity. In fact, the level of aggressiveness by the Department has made it look like they want to punish all debtors and go back on the word of the government to help people to see light at the end of the tunnel.
Abusive Schools – The Department has removed or eliminated rules that require schools to be responsible for abusive practices and fraud that let to enrolling students who are then on the hook for federal student loans.
The Department of Education all but stopped processing valid claims for the elimination of federal student loans under the government policy that is known as the Borrower Defense to Repayment.
Student Loan Servicers
Student loan servicers have been allowed to give debtors poor advice, bad advice, or self-serving advice with little consequences. The Department has asserted that States can’t go after student loan servicers for abusive and deceptive practices. Since the servicers are acting on behalf of the federal government.
The first wave of debtors eligible to have their student loans forgiven under the President Bush initiated the Public Service Loan Forgiveness program, which came due under the current Department of Education.
Secretary DeVos has done a lot to prevent people from getting the promised forgiveness. Roadblocks and hurdles have been artificially created to prevent people from getting the forgiveness they worked towards for ten years. One of the more ridiculous measures was the position that even though a person is eligible for loan forgiveness after 120 payments, it was stated the person must continue in eligible employment for however long afterward it takes for the Department to review the application for forgiveness. Given the current delays, that could be a year or more stuck in a lower-paying job.
Another person ran into an issue where they made the payment the monthly statement from the loan servicer said to make and it was found the servicer statement was off by less than a dollar so none of the 120 payments were eligible to be counted towards forgiveness.
You can see the crazy things the Department has done in these past posts.
Sliding Scale Forgiveness
Even when a school was found to be fraudulent or deceptive and the Department of Education was supposed to forgive the debt, the Department came up with an arbitrary sliding scale of forgiveness that left students harmed by the school, to hold a life of debt. And these are for schools that the courts determined were fraudulent scams. The previous position of the Department of Education was to grant full forgiveness.
Bankruptcy Discharge for Federal Student Loans
The Department of Education has fought bankruptcy discharge for debtors that are clearly in hardship and distress. Even though they have a policy to not do this.
Instead, the current administration has wanted people to enroll in Income-Driven repayment plans that will never repay the debt but make it continue to grow. For more articles on this, see these posts.
A Bankruptcy Judge even said the lifetime of unpayable student loans creates a prison of emotional confinement. While students are left to struggle the schools that enrolled them face little to no consequences for putting the student in federal student loan debt.
The Judge said, “It is this Court’s opinion that many consumer bankruptcies are filed by desperate individuals who are financially, emotionally, and physically exhausted. Sometimes lost in the discussion that the bankruptcy discharge provides a fresh start to honest but unfortunate debtors is that, perhaps as importantly, it provides a commensurate benefit to society and the economy. People are freed from emotional and financial burdens to become more energetic, healthy participants.”
Through the Trump presidency, the Consumer Financial Protection Bureau has been under assault to gut their abilities, power, and protection of consumers. Efforts had been put forward to restrict the protection of consumers.
For example, the CFPB terminated the consumer advisory board members and then made meetings secret.
The CFPB Financial Law Taskforce claimed “to have established the Taskforce to obtain recommendations about how to improve and strengthen consumer financial laws and regulations. The Taskforce’s objective therefore goes to the heart of the Bureau’s mission—and positions the Taskforce to provide a blueprint for the CFPB to revise the laws that protect financial consumers across the United States.” – Source
“None of the selected Taskforce members has a background advocating for consumers, nor does any appear to believe that the CFPB should vigorously protect consumers from dangerous and confusing financial products.”
The meetings led by creditor representatives are closed and secret. Who knows what is going on.
If you want to see people go further in debt, live lives of student loan financial slavery, and have fewer protections against the interest of creditors and banks, vote Trump.
Since former Vice President Biden is not currently in office, I have to turn to what his policies state.
- Stop for-profit education programs from profiteering off of students. Students who started their education at for-profit colleges default on their student loans at a rate three times higher than those who start at non-profit colleges. These for-profit programs are often predatory – devoted to high-pressure and misleading recruiting practices and charging higher costs for lower quality education that leaves graduates with mountains of debt and without good job opportunities. The Biden Administration will require for-profits to first prove their value to the U.S. Department of Education before gaining eligibility for federal aid.
The Biden Administration will also return to the Obama-Biden Borrower’s Defense Rule, forgiving the debt held by individuals who were deceived by the worst for-profit college or career profiteers.
Finally, President Biden will enact legislation eliminating the so-called 90/10 loophole that gives for-profit schools an incentive to enroll veterans and servicemembers in programs that aren’t delivering results.
- Crack down on private lenders profiteering off of students and allow individuals holding private loans to discharge them in bankruptcy. In 2015, the Obama-Biden Administration called for Congress to pass a law permitting the discharge of private student loans in bankruptcy. As president, Biden will enact this legislation. In addition, the Biden Administration will empower the Consumer Financial Protection Bureau – established during the Obama-Biden Administration – to take action against private lenders who are misleading students about their options and do not provide an affordable payment plan when individuals are experiencing acute periods of financial hardship. – Source
More than halve payments on undergraduate federal student loans by simplifying and increasing the generosity of today’s income-based repayment program. Under the Biden plan, individuals making $25,000 or less per year will not owe any payments on their undergraduate federal student loans and also won’t accrue any interest on those loans. Everyone else will pay 5% of their discretionary income (income minus taxes and essential spending like housing and food) over $25,000 toward their loans. This plan will save millions of Americans thousands of dollars a year. After 20 years, the remainder of the loans for people who have responsibly made payments through the program will be 100% forgiven. Individuals with new and existing loans will all be automatically enrolled in the income-based repayment program, with the opportunity to opt out if they wish. In addition to relieving some of the burden of student debt, this will enable graduates to pursue careers in public service and other fields without high levels of compensation. Biden will also change the tax code so that debt forgiven through the income-based repayment plan won’t be taxed. Americans shouldn’t have to take out a loan to pay their taxes when they finally are free from their student loans.
For too many, earning a degree or other credential after high school is unaffordable today. For others, their education saddles them with so much debt it prevents them from buying a home or saving for retirement, or their parents or grandparents take on some of the financial burden.
- Providing two years of community college or other high-quality training program without debt for any hard-working individual looking to learn and improve their skills to keep up with the changing nature of work.
- Creating a new grant program to assist community colleges in improving their students’ success.
- Tackling the barriers that prevent students from completing their community college degree or training credential.
- Invest in community college facilities and technology.
We have a student debt crisis in this country, with roughly more than 44 million American individuals now holding a total of $1.5 trillion in student loans. One in five adults who hold student loans are behind on payments, a disproportionate number of whom are black. Thus, student debt both exacerbates and results from the racial wealth gap.
This challenge is also intergenerational. Almost one in ten Americans in their 40s and 50s still hold student loan debt. But, college debt has especially impacted Millennials who pursued educational opportunities during the height of the Great Recession and now struggle to pay down their student loans instead of buying a house, opening their own business, or setting money aside for retirement.
There are several drivers of this problem. The cost of higher education has skyrocketed, roughly doubling since the mid-1990s. States have dramatically decreased investments in higher education, leaving students and their families with the bill. And, too often individuals have been swindled into paying for credentials that don’t provide value to graduates in the job market. As president, Biden will address all of these challenges.
Biden’s plan to make two years of community college without debt will immediately offer individuals a way to become work-ready with a two-year degree or an industry certification. It will also halve their tuition costs for obtaining a four-year degree, by earning an associate’s degree and then transferring those credits to a four-year college or university. And, as a federal-state partnership, it will ensure states both invest in community colleges and give states some flexibility to also invest in college readiness or affordability at four-year institutions.
Make loan forgiveness work for public servants. Public servants do the hard work that is essential to our country’s success – protecting us, teaching our children, keeping our streets clean and our lights on, and so much more. But the program designed to help these individuals serve without having to worry about the burden of their student loans – the Public Service Loan Forgiveness Program – is broken. Biden will create a new, simple program which offers $10,000 of undergraduate or graduate student debt relief for every year of national or community service, up to five years. Individuals working in schools, government, and other non-profit settings will be automatically enrolled in this forgiveness program; up to five years of prior national or community service will also qualify. Additionally, Biden will fix the existing Public Service Loan Forgiveness program by securing passage of the What You Can Do For Your Country Act of 2019. Biden will ensure adjunct professors are eligible for this loan forgiveness, depending on the amount of time devoted to teaching. – Source
I would expect a Biden Department of Education to honor the promise of Public Service Loan Forgiveness for people under the past program.
- Make it easier for people being crushed by debt to obtain relief through bankruptcy.
- Expand people’s rights to take care of themselves and their children while they are in the bankruptcy process.
- End the absurd rules that make it nearly impossible to discharge student loan debt in bankruptcy.
- Let more people protect their homes and cars in bankruptcy so they can start from a firm foundation when they start to pick up the pieces and rebuild their financial lives.
- Help address shameful racial and gender disparities that plague our bankruptcy system.
- Close loopholes that allow the wealthy and corporate creditors to abuse the bankruptcy system at the expense of everyone else. – Source
Biden: You Give Him the Grade
So if student loan debt and consumer protections are important to you and if facts matter, then I welcome you to make your own informed decision based on the information above. But given what the positions and policies are, clearly, Biden would be the logical choice if these issues matter to you.
But here is the bottom line, if you vote for Trump, don’t complain later when your student loan servicer lies to you, your loans aren’t dealt with as promised, and you find yourself stuck in a life of debt without consumer protections.
You get what you vote for.