We previously wrote about our efforts to persuade the Department of Education to resolve a number of problems with policies and programs for financially distressed student loan borrowers. Unfortunately, not much has changed since we last wrote. A quick summary:
- Ensure that Borrowers Consolidating as a Way out of Default Can Select IBR
The Department tells us that they understand the problem, but still have not been able to fix it. This is shocking given that IBR has been around for a year now. Borrowers that select IBR when consolidating out of default, according to the Department, have the right to get IBR (assuming they qualify), but the Department does not have a process to get them into IBR. These borrowers will be placed in ICR, they tell us, and will later have to switch to IBR. However, these borrowers should not have to make three payments in ICR before getting into IBR. Please let us know your experiences if you are in this situation.
2. Disability Discharge Process
We have yet to receive information from the Department about how they plan to resolve problems with the disability discharge system. The mantra from the Department has been that they will implement changes when the new rules go into effect on July 1. Well, July 1 has now come and gone (just a few days ago). Where is the new discharge form that reflects the new definition of total and permanent disability? (Answer: not available yet). What about other changes to the system?
3. Communication with Attorneys
This issue is hardly worth updating since nothing has happened for years. Perhaps the General Counsel’s office will get a chance to finally finish reviewing the one page release form that allows the Department to speak with authorized third parties? We will post an update if this occurs.
4. Loan Rehabilitation
The Department has still not exercised its authority given by Congress in 2009 to address problems with sale of rehabilitated loans. The word is that they believe that the market has recovered sufficiently so that they do not need to use this additional authority to buy loans. If this is the case, why do many guaranty agencies continue to claim that they do not have buyers, particularly for borrowers who are making very low monthly payments? We urge the Department to take action, but the lack of action should not be used as an excuse by guaranty agencies to give inaccurate information to borrowers or otherwise pressure them to pay more than they can afford. Borrowers have the right to make reasonable and affordable payments with no minimum amount. Agencies should also ensure that these borrowers have a smooth transition into IBR if they qualify for this program.
5. The Manual for Private Collection Agencies
We have still not heard back from the Office of Postsecondary Education about the problems we noted in the Department’s 2009 manual for private collection agencies. To make matters worse, as we previously wrote, the Department decided to take the manual off-line. (You can still get a copy on the Student Lending Analytics blog site and on the Center for Public Integrity web site). The Department went even further and took the entire private collection agency site off-line. This occurred after news stories and blogs describing problems with the manual. We are told that some of the site will be back on-line soon, but we have been hearing that for a while. This is a valuable web site, especially for advocates seeking updates on Department of Education interaction with collection agencies. We have used this valuable resource for years without incident. Suddenly it is gone! If there are confidential items that should not have been posted, then take them off. However, most of the information should be public and restored to public view.
More developments soon!
