From my read on the reversal, the following from the NPR report helps explain.
"It's unclear why the department reversed its decision on allowing FFEL borrowers with commercially-held loans to consolidate and then qualify for debt relief.
In a statement to NPR, a department spokesperson says, "Our goal is to provide relief to as many eligi…
From my read on the reversal, the following from the NPR report helps explain.
"It's unclear why the department reversed its decision on allowing FFEL borrowers with commercially-held loans to consolidate and then qualify for debt relief.
In a statement to NPR, a department spokesperson says, "Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate. Borrowers with privately held federal student loans who applied to consolidate their loans into Direct Loans before September 29, 2022 will obtain one-time debt relief. The FFEL program is now defunct and only a small percentage of borrowers have FFEL loans."
The tell in that statement is "legally-available."
My read is that DOE is moving to get relief out where it can do so without having everything held up in lawsuits. Pay out where there is least likely challenge. Fight for the rest in the upcoming lawsuits and, probably Executive actions. I can't for the life of me understand why DOE put language in there on how to get relief by consolidating privately held loans. Nor can I imagine a scenario where banks would let go of a billion or so dollars of loans, with high fees and federal guarantees against loss, that that consolidation option would represent. Where could they find another profitable loan portfolio to replace student loan debt? They would be next in line to sue DOE.
And all this would be unnecessary if we had free or affordable higher education available, which many other countries have. It's very short sighted to burden people with debt at the beginning of their careers. There are many more creative ways to both unburden them and enter into agreements with those who want to provide services to low income areas.
Agree completely with your point about affordable high education (including college as an option). Our university went from 87% state support when I joined it to under 13% and dropping in my last decade on staff. Salaries most often followed or fell below CPI. I think it sometime okay to extend a helping hand to some of the people by all of the people. Doing so give hope or establishes a precedent to help of some others.
It's also better for the whole society if people are more educated. They can then contribute much more to that society and are less likely to engage in criminal activity as a way to support themselves.
"Nor can I imagine a scenario where banks would let go of a billion or so dollars of loans, with high fees and federal guarantees against loss, that that consolidation option would represent. Where could they find another profitable loan portfolio to replace student loan debt? They would be next in line to sue DOE."
Where could they still find a more profitable portfolio? Were you around in 2008 and watched what they were doing with derivatives to which banks were allowed to partake in gambling on Wall Street thanks to the Gramm-Leach-Bliley Act? Everybody is a bank now because that was the only way the Fed and the Gov could save them. What happened with AIG and Goldman Sachs? Goldman called in its markers and AIG had to pony up in the CDS market. Pennies on the dollar in reserves.
Do you know what SLABs are? Tranching of student loans by risk the same as they did with mortgages. "Because of the inherent similarities between the student loan market and the sub-prime mortgage market, there is rampant fear that the student loan industry will be the next market implosion to trigger a financial crisis." Do we really want to go there again?
Simple question, other than loan sharking; what other loans exist like student loans where there is no way out?
From my read on the reversal, the following from the NPR report helps explain.
"It's unclear why the department reversed its decision on allowing FFEL borrowers with commercially-held loans to consolidate and then qualify for debt relief.
In a statement to NPR, a department spokesperson says, "Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate. Borrowers with privately held federal student loans who applied to consolidate their loans into Direct Loans before September 29, 2022 will obtain one-time debt relief. The FFEL program is now defunct and only a small percentage of borrowers have FFEL loans."
The tell in that statement is "legally-available."
My read is that DOE is moving to get relief out where it can do so without having everything held up in lawsuits. Pay out where there is least likely challenge. Fight for the rest in the upcoming lawsuits and, probably Executive actions. I can't for the life of me understand why DOE put language in there on how to get relief by consolidating privately held loans. Nor can I imagine a scenario where banks would let go of a billion or so dollars of loans, with high fees and federal guarantees against loss, that that consolidation option would represent. Where could they find another profitable loan portfolio to replace student loan debt? They would be next in line to sue DOE.
And all this would be unnecessary if we had free or affordable higher education available, which many other countries have. It's very short sighted to burden people with debt at the beginning of their careers. There are many more creative ways to both unburden them and enter into agreements with those who want to provide services to low income areas.
Agree completely with your point about affordable high education (including college as an option). Our university went from 87% state support when I joined it to under 13% and dropping in my last decade on staff. Salaries most often followed or fell below CPI. I think it sometime okay to extend a helping hand to some of the people by all of the people. Doing so give hope or establishes a precedent to help of some others.
It's also better for the whole society if people are more educated. They can then contribute much more to that society and are less likely to engage in criminal activity as a way to support themselves.
Assuming they don't go into banking or real estate management. 😅
Oh yes, there are plenty of opportunities to legally fleece people, aren't there? I'd add working in insurance.
How could I forget number one?
"Nor can I imagine a scenario where banks would let go of a billion or so dollars of loans, with high fees and federal guarantees against loss, that that consolidation option would represent. Where could they find another profitable loan portfolio to replace student loan debt? They would be next in line to sue DOE."
Where could they still find a more profitable portfolio? Were you around in 2008 and watched what they were doing with derivatives to which banks were allowed to partake in gambling on Wall Street thanks to the Gramm-Leach-Bliley Act? Everybody is a bank now because that was the only way the Fed and the Gov could save them. What happened with AIG and Goldman Sachs? Goldman called in its markers and AIG had to pony up in the CDS market. Pennies on the dollar in reserves.
Do you know what SLABs are? Tranching of student loans by risk the same as they did with mortgages. "Because of the inherent similarities between the student loan market and the sub-prime mortgage market, there is rampant fear that the student loan industry will be the next market implosion to trigger a financial crisis." Do we really want to go there again?
Simple question, other than loan sharking; what other loans exist like student loans where there is no way out?