Days after a report on federal student loans revealed a double-digit rise in defaults, President Trump’s administration revoked federal guidance Thursday that barred student debt collectors from charging high fees on past-due loans.

The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.

Student Loan Forgiveness: President Trump’s Plan

On October 13, Trump proposed an income-based repayment plan that allows borrowers to cap their monthly student loan payments based on their income and then have their student loans forgiven after a certain period of time.

Under Trump’s plan, if you are a student loan borrower, your monthly student loan payments would be capped at 12.5% of your income. After 15 years of monthly payments, your remaining student loan debt would be forgiven.

While Trump’s proposal raises the monthly payment cap from 10% to 12.5% of income, his proposal forgives the remaining student loan balance five to 10 years sooner than the current income-driven repayment plans.

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 If you Apply for Student Loan Relief, you might be eligible for benefits that include:

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Program Placement Specialists are available to help with Benefit options Monday through Friday From 8:00 a.m. PST – 8:00 p.m. PST. Call 1-844-236-3332 to learn more.

At the end of last year, 42.4 million Americans owed $1.3 trillion in federal student loans – other types of financing add to the figure – and nearly 10 percent of borrowers were in default. Some of them are avoiding their obligations, but millions don’t earn enough money to add student-loan repayment on top of their living costs.

Last month, the Trump administration eliminated protections against charging high fees on past-due loans made through the Federal Family Education Loan Program, which accounts for nearly half of the student loans in default. To add to the problem, a recent Consumer Federation of America study found that loan servicers fail to help borrowers find the repayment plans that would help them.

To President Donald Trump and Education Secretary Betsy DeVos, $37,000 or even $150,000 is small change, but after earning a bachelor’s degree, students average more than 20 years paying off student loans – if they can. For many, that debt is an impediment to being able to purchase a home, start a family or to work in a small town for a salary less than a city job would pay. That hampers rural America.

College costs are rising much faster than wages, and for too many, a degree is no longer a viable upward path. That’s a problem that needs to be solved nationwide, because the United States needs well-educated citizens everywhere, not just in cities. Lenders deserve to be repaid, but adding fees that can then be written off as losses only digs the hole deeper for borrowers who already are struggling.

The Trump administration must consider ordinary citizens, not just corporate income, as it seeks a better way.

Who we can help:

√Struggling borrowers just looking to lower their monthly student loan payment and apply for long term Loan Forgiveness

√People in default on their student loans (even if your tax refund is being garnished)

√Students who were misled or lied to by their school and need their Federal Loans discharged

√Those who attended a school that closed on it’s own, or forced to close by Federal agencies

√Employees of government agencies, non-profit organizations, public schools and public servants that need to enroll in the 10 year loan forgiveness program

√Permanently disabled borrowers that qualify for immediate loan forgiveness

Your Name (required)

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Your Do you work for a Federal, State or Non-Profit Organization? (required)
YesNo

Type Of Student Loans (required)
FederalPrivateBothI Don't Know

Program Placement Specialists are available to help with Benefit options Monday through Friday From 8:00 a.m. PST – 8:00 p.m. PST. Call 1-844-236-3332 to learn more.

The action does not affect any borrowers whose loans are held by the Education Department, according to the department. It could, however, impact nearly 7 million people with $162 billion in FFEL loans held by guarantee agencies.

Nearly half of the total outstanding student debt in default comes from the FFEL program. There has been a fairly steady increase in the total amount of past-due debt in the program, even as the number of borrowers has declined, suggesting that interest charges and other fees are being tacked on to balances.

On Monday, Sen. Elizabeth Warren (D-Mass.) and Rep. Suzanne Bonamici (D-Ore.) sent a letter urging the Education Department to uphold the Obama administration’s guidance on the collection fees, which they said “results in an unnecessary financial burden on vulnerable borrowers.”

“Congress gave borrowers in default on their federal student loans the one-time opportunity to rehabilitate their loans out of default and re-enter repayment,” the letter said. “It is inconsistent with the goal of rehabilitation to return borrowers to repayment with such large fees added.”

The withdrawal of the Obama administration memo arrives the same week as a report from the Consumer Federation of America (CFA) showing that millions of people had not made a payment on $137 billion in federal student loans for at least nine months in 2016, a 14 percent increase in defaults from a year earlier. Though the number of borrowers defaulting for the first time in the direct loan program slowed last year, tens of thousands of people are defaulting for at least a second time.

“The administration’s first move on the student loan default crisis will do nothing to stop the tidal wave of defaults that is sweeping across the nation,” said Rohit Chopra, a senior fellow at CFA and a former student loan ombudsman at the Consumer Financial Protection Bureau. “With more than 3,000 Americans defaulting on a student loan every day, this just adds insult to injury.”

CLASS Financial Service fees: We work on a case by case basis and are not affiliated with the Department of Education. Our document preparation fee schedule is based on a sliding scale and is determined at the time of your consultation. The Typical Fee Schedule rages from $350.00 – $1250.00 depending on your individual circumstances & associated debts. The tedious application process, vast program options and time consuming document preparation has left many Americans struggling to determine which direction to go. We will help you find out what options you qualify for and walk you through the consolidation application process. We have services in all 50 states, and there is no up-front fee or obligation to pay for the services if you decide not to use them. You can file these papers yourself at no cost, but for a small fee our experts can assist you in choosing the best programs to apply for, to ensure you get the maximum debt reduction, avoid credit report hits or collections, or any other issues that may arise in the consolidation process.

Source: https://www.washingtonpost.com/news/grade-point/wp/2017/03/17/trump-administration-rolls-back-protections-for-people-in-default-on-student-loans/?utm_term=.479782d9d3d3