The second reason for my bet has to do with the extent to which the servicers are beholden to others. Several for- and not-for-profit loan servicing companies have successfully securitized portions of the government-backed and private student loans they currently administer. So when seriously troubled loans require restructuring (extensions of repayment terms) or modification (reduction in principal balance, abatement of interest rate), it would be fair to speculate that the servicers are reticent to take actions that run contrary to their investors’ interests. This situation is likely to deteriorate even further as new firms stream into the so-called servicing-rights marketplace, which is all the more reason for a national standard to govern the administration of these debts. Student-loan borrowers are suffering through substandard customer service, half-baked solutions that are crammed down their throats and one-sided contracts that limit their recourse.
The trend makes sense, according to Mark Kantrowitz, senior vice president of educational resources company Edvisors Network. Its profitable. Even if a bank lowers the rate just by a few percentage points, its still a good deal for them and the consumer. Its an easy sell. Credit unions have been leading the charge in both issuing and refinancing college loans since 2008, according to Vincent Passione, CEO of LendKey, a private student-loan program that helps credit unions underwrite and price student loans. If you underwrite these loans correctly, there is an attractive return,” he says. “Lenders that want to look into refinancing student loans will have to look past the stigma.
31, $29.36 billion worth of student loans migrated into the past-due column, which, when divided by the approximately $600 billion of loans that are currently being repaid, amounts to an additional 5% of delinquency. There is also another category that doesnt get nearly enough attention: the loans that have been granted temporary relief in the form of payment deferments and other forbearance arrangements . These contracts are troubled, and accommodations of this type mask the extent to which the debts may be only temporarily relocated to current status from past due. All considered, it would not be surprising to learn that one-third or more of all education debts that are in repayment mode are troubled, particularly whenper the FRBNYs spreadsheetmore than $100 billion of student loan balances migrated into delinquency in each of the past few years. How We Got Here Anyone with reasonable experience in this field should rightly ask Why are so many loans deteriorating and why arent the servicers preventing that from happening? I can think of four possible answers. At least one-third of all the loans that were made should not have been approved in the first place.
2.How much of my tax refund can be seized?Up to 100percent of your tax refund can be taken, and you can still be subject to anoffset even if your wages are being garnished as well. Funds can be taken without your permission, but you will receive information regarding the amount and date of your offset. 3.Can I stop the offset?You may be able to avoid the tax offset if you set up a satisfactory repayment arrangement and begin making payments before the deadline outlined in the warning notice. Payments made under a redirected voluntary payment plan are often lower than the amount taken through garnishment and can lead to resolving the default altogether through rehabilitation or consolidation. Contact your loan holder to get started. You can find this information by going to the National Student Loan Data System .
According the The Washington Post, student loan debt is harming the slowly recovering housing market. Says David H. Stevens, chief executive of the Mortgage Bankers Association, Student debt trumps all other consumer debt. Its going to have an extraordinary dampening effect on young peoples ability to borrow for a home, and thats going to impact the housing market and the economy at large. As reported by Time, it seems that student loans are not only harming those who have them, but may be dragging down the economy as a whole. If students are spending the majority of their money on loans, they have less to spend on consumer purchasing. For those who did not graduate , or cannot find work in their chosen profession, student loans can be a heavy weight to bear.