Thread: Trump administration rescinds Obama guidance on student loan defaults: report

Trump administration rescinds Obama guidance on student loan defaults: report

BY MAX GREENWOOD -
03/17/17 06:30 PM EDT

The Trump administration on Thursday rolled back Obama-era guidance that forbade student loan debt collectors from charging high fees to defaulted borrowers, The Washington Post reported.

In a “Dear Colleague” letter, the administration tells agencies that collect on defaulted loan debt to disregard guidance prohibiting them from charging borrowers who default on their payments fees of as much as 16 percent of the loan’s principal and accrued interest.
It also says that the initial guidance handed down by the Obama administration in 2015 should have been subjected to public comment before it was issued.

“The Department thinks that the position set forth in the [Obama administration guidance] would have benefited from public input on the issues discussed in the [guidance letter],” the Trump administration’s directive reads.“The department will not require compliance with the interpretations set forth ... without providing prior notice and an opportunity for public comment on the issues,” it continues.

The decision to rescind the guidance came two days after the Consumer Federation of America issued a report that finds that the number of people defaulting on their student loan payments is on the rise.

The Trump’s administration’s letter affects 7 million people with loans through the Federal Family Education Loan Program that are held by guaranty agencies. Individuals whose debt is held by the Department of Education are not impacted by the decision.

The amount owed in student loan debt has surpassed that of credit card debt — about $1.2 trillion.

http://thehill.com/policy/finance/32...efaults-report

The amount owed in student loan debt has surpassed that of credit card debt — about $1.2 trillion.

Wow. That's a lot of debt. Holy Moly. Geez. What is going on??!!!

It is a lot of debt. They take these loans and much of it is used to by food, booze, clothes, phones, vacation, whatever they want. 100% of it should go directly to the school to by books and for education only.

NO STUDENT LOAN DEBT FORGIVENESS. I DO NOT WANT TO PAY FOR YOUR PARTY TIME.

Lower the interest...stretch out the term of the loan. I do not care if they pay $100 a month until they are 95 years old. If you do not want to pay it back...do not sign for the loan.

Beezer wrote:

100% of it should go directly to the school to by books and for education only.

YES!! I totally agree. In fact, it should only go for tuition and housing and both should be capped to control the costs of both. What is going on with these student loans is a national disgrace. Most of these young students don't have sense enough to come in out of the rain, they can't take out student loans in their own names. You get those parents to take out the loans and you'll see a whole new ball game in town. And any parent who thinks their kids are going to get great jobs and pay off that loan for them? Well, think again. Most won't.

You get these illegal aliens out of our colleges and universities, cut back on foreign student loans, and you'll see some price reductions in the "cost of college" in the United States. Putting Americans in competition with rich foreigners for seats in our colleges and universities is a SIN against our own futures. STOP IT NOW.

Trump will straighten out this mess. He just needs time to get to it. This is actually a good way to start to question the legality of the cap on collection fees. No one will spend the time to collect on these loans until it pays their costs to do so and renders profit.

Just give Trump time to work it around. It's a huge problem, and one that must be solved in everyone's best interest. Are taxpayers on the hook for these loans? I think it comes from one of the government-backed loan institutions, Fannie Mae or Freddie Mac.