Mellody Hobson Answers Your Student Loan Questions

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    Mellody Hobson answers some of the “Text Tom” questions our listeners have sent in.

    Today, let’s focus on the ones that came up around saving for college.

    “How do companies work that help with student loans in default and back taxes owed? They’re very popular and I am wondering if they’re real or a scam and possible alternative solutions.”
    Let’s start with the bad news: Recent college students are defaulting on federal loans at the highest rate in nearly two decades, reflecting “crisis” levels of student debt and a weakened economy with limited employment prospects.

    One in 10 recent borrowers defaulted on their federal student loans within the first two years, the highest default rate since 1995, according to annual figures made public last month by the Department of Education.

    Default can trigger serious debt-collection methods that include fees, wage garnishments, and withheld tax refunds from the IRS.

    When it comes to companies that work with loans in default or back taxes owed, it really depends. There are many who are reputable, but the bottom line is that private companies who deal with debt consolidation are not non-profits: They’re charging fees and/or interest to help you, so if you have the wherewithal to attack the red tape on your own, buckle down and do it. You can consolidate your loans on your own if you contact the Department of Education. It’s just about getting organized and communicating, and it starts with a simple phone call.

    As for alternatives, a lot of people aren’t aware that the government has programs that cap monthly payments based on borrowers’ incomes. The two-year default rate on student loans has doubled since 2005, and millions of potentially eligible borrowers appear unaware of programs that help borrowers manage debt burdens and avoid default.

    The administration’s three debt-relief measures are called Income-Based Repayment, Income-Contingent Repayment and Pay As You Earn. These programs shouldn’t be expected to avert every default, but many of the 600,000 borrowers who defaulted last year should have been able to benefit. Contact the Department of Education for more information about how to enroll.

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    8 thoughts on “Mellody Hobson Answers Your Student Loan Questions

    1. hey there and thanks on your info ? I have certainly picked up anything new from proper here. I did alternatively expertise several technical points the use of this web site, since I experienced to reload the website a lot of times prior to I could get it to load properly. I were wondering in case your hosting is OK? Now not that I’m complaining, however slow loading circumstances occasions will very frequently have an effect on your placement in google and could harm your quality ranking if ads and marketing with Adwords. Anyway I am including this RSS to my e-mail and can look out for a lot more of your respective intriguing content. Ensure that you update this once more very soon..

    2. Woah this web site is great i prefer looking through the articles you write. Remain in the great work! You know, a lot of consumers are looking spherical with this information and facts, you may make them greatly.

    3. MY DAUGHTER IS A FRESHMAN IN COLLEGE I WOULD LIKE TO NO HOW SHE CAN GET MORE MONEY SHE GET THE STAFFORD LOAN AND PELL GRANT SHE MORE MONEY FOR ROOM AND BOARD I CAN’T KEEP TAKING A LOAN OUT FOR HER, WHAT DO I DO THERE HAS TO BE A BETTER WAY.

      PLEASE TELL ME
      CAROLYN WILSON-CARR

    4. Discharging student loans in bankruptcy, recent successful examples:

      1. Michael Eric HEDLUND v. The Educational Resources Institute Inc. et al., case number 12-35258, in the U.S. Court of Appeals for the Ninth Circuit (May 22, 2013);

      2. In re Robert Jacob SCOTT and Sarah Jane Scott, Debtors. Robert Jacob Scott and Sarah Jane Scott, Plaintiffs v. U.S. Department of Education; Educap, Inc., The Education Resources Institute (TERI), et. al, Defendants. Bankruptcy No. 07-14317. Adversary No. 07-01367. United States Bankruptcy Court, W.D. Washington, at Seattle. September 25, 2009;

      3. Christian D. MENDOZA, Chapter 7, Debtor. Christian D. Mendoza, Plaintiff, Educational Credit Management Corporation; Hemar Insurance Corporation of America, Defendants. Case No.-01-53238-MM. Adversary No. 01-5283. United States Bankruptcy Court, N.D. California. June 20, 2007;
      4. In re Lorna Kaye NYS, Debtor, Educational Credit Management Corporation, Appellant, v. Lorna Kaye Nys, Appellee. No. 04-16007. United States Court of Appeals, Ninth Circuit. Argued and Submitted February 15, 2006. Filed April 26, 2006. 446 F.3d 938; and

      5. Krieger v. Educ. Credit Mgmt. Corp., No. 12-3592 (7th Cir. Apr. 10, 2013).

      The Hedlund case in 2013 and Scott case in 2009 are significant. These two cases clearly expand the law in favor of student loan debtors who reside in the nine western states. Both Hedlund and Scott were in their 30s, healthy, well educated and employed, and they successfully discharged most of their student loan debt in bankruptcy.

      This is a trend that the mainstream media has not picked up on.

      Also, see the excellent law review article by Jason Iuliano, Ph.D., “An Empirical Assessment of Student Loan Discharges…”, American Bankruptcy Law Journal, September 2012. He makes the case that millions of debtors could successfully discharge their student loan debt if they merely tried.

      Finally, the excellent book Bankrupt Your Student Loans and Other Discharge Strategies, 3rd Edition (2009), by Chuck Stewart, Ph.D., publisher Stewart Education Services. This book makes the case that the Department of Education will significantly reduce a debtor’s student loan debt, in an out of court settlement, if the matter is brought to bankruptcy court. Dr. Stewart’s own case can be found at California Central Bankruptcy Court case LA04-19681ER, filed August 2004.

    5. Hi, Mrs. Mellody, I am a Grandmother, of 2 wonderful, grandchildren, that, are attending, different, colleges. My daughter, is a single, Mom…struggling, to find, help, to continue, to support, her son and daughter, to stay, in their, chosen, professions(in college) with student loans. I thank you for the Scholarship information, that, you gave to our listening, audience, on the Tom Joyner show, on Monday morning. I listen, to you every Monday, because, of your, expert knowledge, to help, in your field, of Money questions, from Tom Joyner. I will pray, that, my grandchildren, will be able to benefit, from the Billions of dollars, in Scholarship, money that is out there….unclaimed. I will tell my daughter, knowing, she will be so happy, to know, there is hope(I pray)that, will help solve, the college tuition, of my grandchildren. Mrs, Mellody, “thanks”, again, for the wonderful, job, that, you have with CBS and sharing, your expert, knowledge…to so many listeners, like me.

    6. Hi miss mellody my name is lloyd I reside in new
      Orleans la i want to ask a question its not about student loans but this is about government loans my wife is a immigration from Jamaica we trying to see about going to get a immigration government loan any help on questions thank
      Lloyd

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