What to Expect with Student Loans this Year.
It will be brutal.
I’ve been looking closely at the Federal Student Aid Office (which administers federal student loans), the Servicers (formerly lenders), and the entire student loan industry since 2005.
For those who don’t know me, I’m the first student loan activist in the country. I published the first book to be critical of the student loan program. I’ve written hundreds of articles, done thousands of interviews, been featured on 60 Minutes, in the NYT, and practically every news network you can mention. I have lived and breathed this topic for over two decades now. Suffice it to say, I know about the federal student loan program. So please get some benefit from my wisdom:
I can say beyond a shadow of a doubt that going forward, we’re not only going back to the “bad old days” of 2016–2019, where 99% of the people trying for the various IDR’s and PSLF will be disqualified out of the programs. The minimal cancellations we’ve been seeing for the past couple of years will come to a screeching halt. But it will be much worse thatnjust this. Because of the unprecedented spike in defaults we’re going to see this year, COUPLED with the fact that the servicers/collection companies haven’t made much money at all during Covid, and during the “On-Ramp to Repayment” pause on collection activities.
We’ll see all manner of congressional attempts to end the President/Secretary’s power to broadly cancel federally held student loans. We’ll see attempts to end the existing Income-Driven Repayment plan. We’ll see attempts to sell off the federal portfolio to Wall Street. We’ll see (likely unsuccessful) attempts to eliminate the Department of Education. We’ll see attempts to make the lending program even more profitable and predatory.
More than anything, we’ll see a vicious, nationwide barrage of collection companies hounding borrowers- particularly defaulted borrowers- the likes of which this country has never seen. We’ll also see general, widespread chaos in the lending program (a sign of its inevitable collapse), with loans poorly/wrongly administered, transferred, modified, etc. All of this chaos will absolutely be to the benefit of the lending industry, and at the expense of the borrowers.
It is going to get EXTREMELY UGLY over the next year where NOTHING that the servicers, Department of Education, or the collection companies tell you about your loans will be at ALL trustworthy. Hanging on their every word is a HUGE MISTAKE. Taking anything that they tell you seriously is also a HUGE FOLLY, given all the nasty tricks that both Congress, and the lending industry are going to be springing on us. Here’s just a little bit of history about the IDR’s: This is what we’re headed back into and much worse, particularly for defaulted borrowers.
It makes me sad to see so many borrowers FLAILING around, banging your heads against wall after wall like lemmings, reading Forbes magazine, listening to “experts” and taking their advice. The entire ecosphere is overrun with CORRUPTED PLAYERS who are all a part of the student loan industry in one way or another. The advice they give that sounds reasonable today is virtually guaranteed to turn out to be HORRIBLE advice a few years, or even months from now.
How many people reading this signed up for the SAVE Plan because some expert, “student loan advocate”, or other organization told them to? How did that turn out? Do you REALLY think that somehow this sort of governmental chaos will magically cease to exist, and that the federal student loan system, and it’s players will keep their word going forward?
I truly hope you are smarter than that.
It’s the Wild West. NO ONE KNOWS how this is going to go. The PREDATORS (which includes the writers, “experts”, media, etc) know how they WANT it to go, and they write to those aspirations (they make MONEY by convincing people to consolidate, rehabilitate, or otherwise modify their loans). But truly, they have no clue.
Believing ANYTHING they say is a huge mistake. They count on your ignorance and your desperation. They thrive on it. Don’t give them this.
The “Debt Collective”, for example, are literally BUSINESS PARTNERS with the DEBT COLLECTION INDUSTRY. They have wanted- and have fought for- a mass default on student loans (ie a “Debt Strike”) in the continued absence of bankruptcy rights FOR THEIR ENTIRE EXISTENCE.
A mass default is a GOLD MINE for their business partners in the student loan collection industry, and they are now getting their long-held wish. Anything they say will be towards the end of keeping your attention, making your believe that they’re fighting for you, etc. Just don’t be surprised when they start trying to coax you into rehabilitating your defaulted loans, consolidating, etc.- just like they were encouraging people to sign up for the SAVE Plan a few months ago.
Similar for “Student Debt Crisis”. They are essentially PART OF THE STUDENT LOAN INDUSTRY. See here.
These ASTROTURF are completely disgusting, corrupted groups, and frankly, you ought to be ashamed of yourself going forward if you don’t recognize this, and instead allow your desperation to make you believe their soothing, coaxing words, and let yourself be led around by the nose. You need to be stronger and smarter than that.
The vast majority of student loan borrowers seem to be trying as hard as possible to NOT acknowledge the fact that we are COMPLETELY SCREWED by a blatantly unconstitutional and unjust loan scam. They try to find their own, personal, secret path through this minefield. It is a FOOL’S ERRAND. They are only being led like sheep to the slaughter. It truly is agonizing for me to watch the vast majority of borrowers running around like chickens with their head’s cut off- taking bad advice, signing onto this program or that, desperately convincing themselves that they’re doing the right thing, the best thing, when they are really only digging themselves deeper into the hole.
The bad guys see this, and laugh. And pinch themselves. They are ASTOUNDED that they were able to perpetuate this loan scam as long as they have. They’ve been expecting their scam to collapse for the past 15 years. That it hasn’t is stunning to them.
The ONLY good advice I can give anyone and everyone reading this is to help us fight for the return of bankruptcy rights to this debt. Only with the LEVERAGE of bankruptcy returned will all the games be forced to stop.
It is literally the only thing worth fighting for.
Until we get bankruptcy leverage returned, absolutely NOTHING GOOD will happen for the overwhelming majority of borrowers, and that I can say with very, very strong authority.
The ONLY thing StudentLoanJustice.Org will be fighting for going forward is bankruptcy leverage. When we get that leverage returned, without anyone having to file, then finally we will break the back of this loan scam, and they will be FORCED to cancel loans broadly, administer loans fairly, negotiate in good faith, and not abuse us. Until that happens, we are sharkbait.
I strongly suggest that if you want to solve the student loan problem, you need to spend at least SOME of the time you are wasting attempting to deal with your own loans on fighting with the group. That all starts with the Daily Actions.
This is going to get brutal, and it will get far, far, FAR worse as long as you sit on the sidelines, wait, watch, worry, wring your hands, and lurch from one piece of bad advice to another, and do NOTHING to fight…ACTUALLY fight…with us.
Please don’t forget this as the noise, chaos, and confusion overwhelms us all in the months to come.
