NEW FORGIVENESS REGULATIONS MIGHT OPEN UP STUDENT LOAN FORGIVENESS
Student loan forgiveness sounds great, but it has not always been as achievable as students would like it to be. In fact, many of the programs have a lot of strict requirements that must be met and if you miss a payment or you are late on a payment, you can actually hurt your chances of receiving the forgiveness. In addition, you will find that the Public Loan Service Program requires you to make payments for 10 years before you are eligible and other programs such as income-based options require you to make payments for 20 or 25 years before you reach eligibility.
Fortunately, new student loan forgiveness regulations may actually open up student loan forgiveness for more students and may make it easier for students to receive the forgiveness they have been trying so hard to reach.
Obama’s administration announced in late October that new rules were being put into place that would help students to have their federal student loan forgiven if there was any type of misrepresentation by the school the student attended or any type of fraud by the school.
These new rules and regulations are in place to help students, but students may still face a bit of a struggle to try and receive the forgiveness they so desire. Below, we will take a look at what these new rules and regulations mean for you and your student loans.
Closing of For-Profit Colleges
Crackdowns from the new regulations have caused Corinthian Colleges all over the country to close down. This was a surprise to many students, especially those who showed up to attend classes only to find out that their college’s doors have been shut and locked for good.
For-profit colleges have always been a cause for concern because many of them do not hold up their promises and many of them do not have the accreditations needed to allow students to transition into the careers they desire.
These colleges prey on students who want flexibility and affordability, but the problem is that these colleges do not actually offer any type of affordability. For example, there are plans in place to sell the Le Cordon Bleu Colleges of Culinary Arts. There was a total of 16 campuses that enrolled over 10,000 students. The for-profit college brought in a total of $178 million dollars in revenue in one year alone.
In addition, ITT Tech recently closed its doors to students and ended enrollment for any new students due to the federal crackdown. This for-profit college received over $580 million dollars in federal money last year (2015) alone. Once ITT Tech was told they would no longer receive any type of federal aid, they quickly closed their doors and stopped enrollment at all of their campuses.
The new federal regulations required ITT Tech to not only stop receiving financial aid, but required the college to increase its cash reserves to $247.3 million dollars from the $94.4 million dollars it was previously required to carry.
The New Regulations and What They Mean
The new regulations come as relief to many students who feel they have been deceived by for-profit colleges all over the country. Unfortunately, many of these colleges do make promises that they cannot keep and they use deceptive practices to have students borrow federal student loans.
The regulations are designed to provide student loan borrowers with the defense they need against these deceptive practices. Often times, students find themselves stuck in a predicament because these for-profit colleges persuade the students to borrow money for their education. Often times, money they do not need.
Prior to 2014, there were not many claims about these types of acts until some of the for-profit colleges started closing down and leaving students without a degree, without classes, and a ton of student loan debt.
Ted Mitchell the U.S. Under Secretary of Education said that these new regulations are in place to help protect students and to deter institutions from using predatory practices to expose the government to any type of risk. He goes on to say that students who have been affected by an institution’s bad conduct should be able to find relief, use their rights, and sue the school.
These new federal regulations provide students with an automatic discharge of their student loan debt if their school was closed on or after November 1, 2013. Students cannot have re-enrolled in another school within the past three years. Another stipulation is that the schools are not allowed to require students to say that they will not sue the school.
Are There Any Problems with These New Regulations?
As with any regulations, there are always possible problems that may arise. The biggest problem with these new regulations is that many students may not actually receive the relief and the student loan forgiveness that they deserve. This is in part because these students simply do not know that they have been defrauded by their school or they do not know that the relief is available to them.
It is important for the Department of Education to pursue and help these students uncover whether or not they have been defrauded and then see to it that they receive the relief that they are entitled to.
Final Thoughts on New Student Loan Forgiveness Regulations
The new student loan forgiveness regulations are important and they do offer a lot of insight into how badly students have been defrauded by for-profit schools. It was a good move on the government to make these new regulations because students do not deserve to be in thousands of dollars of debt due to the negligence and misrepresentation of their schools.
Students who know they have been defrauded by their school or believe they have been, should speak with their loan provider to find out what steps to take next to file the correct paperwork needed.
These new federal regulations are a move in the right direction for the students and student loan forgiveness.