Obama Administration To Reward Student Loan Company Accused Of Cheating Troops

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Nothing is off limits these days. Healthcare, education, there is no sacred ground from our corporate overlords. War on the poor and middle class at all cost.

Instead, Duncan's department is expected to announce as early as Friday that it will require more college students to deal with Navient, rather than the department's numerous other loan servicers, according to people familiar with the matter. As a result, more taxpayer funds will flow to Navient. The company already handles 5.8 million student loan accounts under its contract with the Education Department

Let's reward them for their misdeeds. It's like putting a police officer on paid vacation after dumping a few clips I to someone walking their dog.

In May, the Justice Department and the Federal Deposit Insurance Corp., a federal bank regulator, accused Navient of intentionally overcharging troops on their federal student loans and willfully obtaining default judgments against service members over an eight-year period, in violation of the Servicemembers Civil Relief Act. The FDIC alleged the companies illegally told troops they had to be deployed to receive entitled benefits and improperly required them to meet other tests.

I'm disgusted.

That's all I have to say just disgust.

This is the worst form of predatory lending in American history and this needs to be main stage. We are taking advantage of our students for pursuing a higher education it's sickening.

All I'm going to say is the US is out of control and under the current puppet it's gotten worse. Many expected this though, we're not surprised by what they do.

Not surprised Obammy is doing this. Gotta keep the vets mind off of being a pawn or scapegoat in a private war about resources. Do you know they send their bills to them frontline now? There is no debt forgiveness for them while in active duty, even though that 450 a month is already gone; half goes to their "care". so 225 a month gets garnished, and the survival continues.

Then to stop their "we need help" campaign a mysterious shooting at a highly isolated fort occurs; gotta love hope and change.

originally posted by: onequestion
This is the worst form of predatory lending in American history and this needs to be main stage. We are taking advantage of our students for pursuing a higher education it's sickening.

The easy money policies of the past decade and half by the Federal Reserve have allowed people, including students, to borrow money at historically low rates which has helped cause a paradigm that convinces people they need to go to college to be successful. This influx of students has effected the free market the same way other industries operate; demand went up so prices went up.

Stop giving away money and people who really should not be going to college will stop attending and the price will concurrently come down and leave the debt ratio of graduates lower than it is at this time.

a reply to: AugustusMasonicus

This is only half true. The bank can lend at low rates but that low rate isn't passed onto students. Interest rates on student loans are very high, and if you're like the 50% of graduates that can't find a job you default, take a penalty, and they go even higher.

originally posted by: Aazadan
Interest rates on student loans are very high, and if you're like the 50% of graduates that can't find a job you default, take a penalty, and they go even higher.

What is your definition of 'very high'? They are, like housing loans, at historical lows, with percentage rates below 5% easily obtainable and many much lower than that.

originally posted by: AugustusMasonicus

originally posted by: Aazadan
Interest rates on student loans are very high, and if you're like the 50% of graduates that can't find a job you default, take a penalty, and they go even higher.

What is your definition of 'very high'? They are, like housing loans, at historical lows, with percentage rates below 5% easily obtainable and many much lower than that.

The direct PLUS loans my school spams me with are 7.21% right now. There's also a hidden factor with student loans. Your loan interest ticks up from day one but it's not until 5 years later (or 6-7 in the typical job market) that you're actually able to make the first payment.

A housing loan on the other hand is typically made to someone who can start paying it back from day one and starts at a lower rate.

Then throw in what happens when you default (and MANY students default), in a house loan you simply lose the house. With a student loan you pay an automatic fine and then pay a much higher interest rate... when you default because you couldn't afford the current rate in the first place.

A housing loan always has a way out, you simply lose the property. With student loans there is no way out, if it's not repaid while you're alive your estate will be taken and it will be repaid in death.

a reply to: Aazadan

Oh they won't care it's not affecting their pension.

originally posted by: onequestion
a reply to: Aazadan

Oh they won't care it's not affecting their pension.

They'll care when their mutual funds get raided because the banks are so overextended with loans that they'll collapse unless everyone pitches in. We saw it in Greece, we very nearly saw it with the subprime mortgages. The student loan bubble is even worse than that.

The only problem is, when it comes to that things are going to be too late. I would rather not see older generations lose their homes and retirements, but that means doing something about the problem right now.

originally posted by: Aazadan
The direct PLUS loans my school spams me with are 7.21% right now. There's also a hidden factor with student loans. Your loan interest ticks up from day one but it's not until 5 years later (or 6-7 in the typical job market) that you're actually able to make the first payment.

As I said, there are many available below 5% which is extremely low. Additionally, you are not prevented from making payments ahead of time to begin paying down the loan prior to the maturity date.

Then throw in what happens when you default (and MANY students default), in a house loan you simply lose the house. With a student loan you pay an automatic fine and then pay a much higher interest rate... when you default because you couldn't afford the current rate in the first place.

Losing your residence and all the attendant equity is a much more catastrophic financial situation. If people cannot afford the rate ahead of time, and know this, they should not be borrowing the money.

A housing loan always has a way out, you simply lose the property. With student loans there is no way out, if it's not repaid while you're alive your estate will be taken and it will be repaid in death.

Losing your residence is not a simple thing that people easily revived from. There are also instances in default where the equity does not cover the outstanding balance and the homeowner is obligated to make restitution.

originally posted by: AugustusMasonicus
As I said, there are many available below 5% which is extremely low. Additionally, you are not prevented from making payments ahead of time to begin paying down the loan prior to the maturity date.

Not in theory, but in practice you are. A student loan comprises your entire income and it goes towards tuition, rent, and food. If you have a job (not a guarantee... classes take a lot of time) you're putting that money towards tuition so that you don't borrow in the first place. A person buying a home is only putting a portion of their income into the mortgage payment, they can use additional income to make extra payments. Not so with students because the excess income isn't there. Loans are taken piecemeal covering expenses from one semester to the next not unlike payday loans really. A home loan is a lump sum and is taken to purchase a single expensive item rather than attempting to cover all living expenses.

Losing your residence and all the attendant equity is a much more catastrophic financial situation. If people cannot afford the rate ahead of time, and know this, they should not be borrowing the money.

Losing your residence means that you at worst end up homeless. Chances are even if you lose the home you'll be able to pay rent. Student loans garnish your wages, often times not even taking enough to cover the interest because people don't make enough money.

Losing your residence is not a simple thing that people easily revived from. There are also instances in default where the equity does not cover the outstanding balance and the homeowner is obligated to make restitution.

Again, you have a way out. If nothing else you can declare bankruptcy. You cannot do that with student loans.

originally posted by: Aazadan
Not in theory, but in practice you are. A student loan comprises your entire income and it goes towards tuition, rent, and food. If you have a job (not a guarantee... classes take a lot of time) you're putting that money towards tuition so that you don't borrow in the first place. A person buying a home is only putting a portion of their income into the mortgage payment, they can use additional income to make extra payments. Not so with students because the excess income isn't there. Loans are taken piecemeal covering expenses from one semester to the next not unlike payday loans really. A home loan is a lump sum and is taken to purchase a single expensive item rather than attempting to cover all living expenses.

Regardless of the anecdotal circumstances postulated you are not prevented from paying down a loan early as you stated earlier. A part time job us not going to put you through college but it can be used to service the debt on a student loan and help defray the long term cost.

Losing your residence means that you at worst end up homeless. Chances are even if you lose the home you'll be able to pay rent. Student loans garnish your wages, often times not even taking enough to cover the interest because people don't make enough money.

More anecdotal circumstances. If you lose your home you lose your equity, there is no lost equity with a student loan default. Wage garnishment can also take place on property defaults as well.

Again, you have a way out. If nothing else you can declare bankruptcy. You cannot do that with student loans.

Your understanding of home mortgage defaults is inaccurate, bankruptcy is not always an available option and you can still be held personally responsible for the debt service.

originally posted by: AugustusMasonicus
Regardless of the anecdotal circumstances postulated you are not prevented from paying down a loan early as you stated earlier. A part time job us not going to put you through college but it can be used to service the debt on a student loan and help defray the long term cost.

A part time job means you're borrowing $900 rather than $1000. That $900 still has interest and it still ticks up. As a student if you need loans you will not be in a position to make any payments on the principal because those loans are what you're living off of.

More anecdotal circumstances. If you lose your home you lose your equity, there is no lost equity with a student loan default. Wage garnishment can also take place on property defaults as well.

Yep, you do lose your equity. I didn't say it was a good thing to lose your home. I said it's not as bad as defaulting on a student loan. If you lose your home it's gone and so is the money you put into it. If you default on a student loan you don't lose your education but your interest rate shoots way up and you pay an automatic penalty. When the home loan defaults most or all of your debt goes away too. When your student loan defaults you fall even further into debt.

Your understanding of home mortgage defaults is inaccurate, bankruptcy is not always an available option and you can still be held personally responsible for the debt service.

Not always compared to never. Student loans are the one type of loan which can never be discharged.

originally posted by: Aazadan
A part time job means you're borrowing $900 rather than $1000. That $900 still has interest and it still ticks up. As a student if you need loans you will not be in a position to make any payments on the principal because those loans are what you're living off of.

You are generalizing with your numbers and this is irrelevant. You have obviously never paid a loan off as you can specify where you want extra payment applied; principal, interest or both.

Yep, you do lose your equity. I didn't say it was a good thing to lose your home. I said it's not as bad as defaulting on a student loan. If you lose your home it's gone and so is the money you put into it. If you default on a student loan you don't lose your education but your interest rate shoots way up and you pay an automatic penalty. When the home loan defaults most or all of your debt goes away too. When your student loan defaults you fall even further into debt.

The debt is only satisfied if the auction value is greater than the debt remaining to be serviced. If not, the homeowner can still be liable for the debt.

Not always compared to never. Student loans are the one type of loan which can never be discharged.

I would personally rather default on a student loan, which typically have a lower dollar value, then a home mortgage where I could lose my home as well as years of hard work and equity.

originally posted by: AugustusMasonicus
You are generalizing with your numbers and this is irrelevant. You have obviously never paid a loan off as you can specify where you want extra payment applied; principal, interest or both.

You're missing the point... if you're needing to take student loans you don't have the income to make any loan payments in the first place. A home loan finances purchasing something... you can start paying it off from day one, a student loan finances your tuition and your living expenses, if you had the income to make payments on the loan you would have the income to avoid taking the loan in the first place.

Not always compared to never. Student loans are the one type of loan which can never be discharged.

I would personally rather default on a student loan, which typically have a lower dollar value, then a home mortgage where I could lose my home as well as years of hard work and equity.


If you default on a $40,000 loan (which btw is one year of tuition at an average priced university) you get an automatic penalty usually around $25,000 but the penalty goes as high as $50,000, your interest rate jumps to 30%, 15% of any payment you make is automatically taken in collection costs and not applied to any part of the debt, and the really great part? Schools will no longer release your academic records if you're in default which means you can't actually prove that you have the knowledge to get a job to one day repay it. Then of course there's the 25% wage garnishment. That $40,000 which you'll normally have to pay around $360/month if you default jumps to $828 once you default. If you can't make the $360 how will you ever pay the additional cost? Instead it just builds up as more and more debt.

Losing a home is nowhere near as financially devastating.

Crap. I just looked at an email from last month. I'm now a Navient "customer." I better get on this...

originally posted by: Aazadan
You're missing the point...

No, you are missing the point. A student loan does not preclude you from having a job during college and paying down the interest and/or principal early. To claim anything else is dishonest.

If you default on a $40,000 loan (which btw is one year of tuition at an average priced university) you get an automatic penalty usually around $25,000 but the penalty goes as high as $50,000, your interest rate jumps to 30%, 15% of any payment you make is automatically taken in collection costs and not applied to any part of the debt, and the really great part? Schools will no longer release your academic records if you're in default which means you can't actually prove that you have the knowledge to get a job to one day repay it. Then of course there's the 25% wage garnishment. That $40,000 which you'll normally have to pay around $360/month if you default jumps to $828 once you default. If you can't make the $360 how will you ever pay the additional cost? Instead it just builds up as more and more debt.

Losing a home is nowhere near as financially devastating.

You are citing the most extreme instances of default, this is absolutely not the norm and even cursory checks will show this is not the case. The majority of times the lender is willing to work with you to recover the funds.

originally posted by: AugustusMasonicus
No, you are missing the point. A student loan does not preclude you from having a job during college and paying down the interest and/or principal early. To claim anything else is dishonest.

If you have a job that allows you to pay down the principal you're not taking loans in the first place, and thus you're never in the position to be paying them down.

You are citing the most extreme instances of default, this is absolutely not the norm and even cursory checks will show this is not the case. The majority of times the lender is willing to work with you to recover the funds.

No, those are the usual instances of default on student loans. Student loans recover over 80 cents on the dollar in cases of default. That's because they never go away, they cannot be dismissed, they grow to where they can't be paid off, and even in death they will take anything you may have owned. Only after that do they disappear. Private loans such as for mortgages (which all default far less often) recover less than 20 cents on the dollar... there is far less liability involved in that debt.