Baker College Student Loan Forgiveness

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Student Loan Forgiveness Under Limited Pslf Waiver Ends In October 2022

Public service loan forgiveness rejects 99% of applicants

But the Limited PSLF Waiver program is set to end on October 31, 2022. After that, absent any further changes, the program would revert back to the original PSLF rules, which were far more restrictive. The Education Department is working on overhauling the PSLF regulations to enact more permanent changes, but any final regulations would not be effective until later in 2023.

Earlier this month, student loan borrower advocacy organizations called on the Biden administration to extend the Limited PSLF Waiver program beyond the October 31 deadline. Citing data suggesting the program may be underutilized, the Student Loan Borrower Protection Center urged the Education Department to push out the programs end date.

We’ve only scratched the surface of relief under PSLF, saidSBPC executive director Mike Pierce in a statement earlier this month. “Secretary Cardona needs to recognize that you can’t have too much of a good thing extend the waiver now and deliver debt relief for millions in the future.”

Education Department Approves $81 Billion In Student Loan Forgiveness Under Expiring Program Will Biden Extend It

US President Joe Biden speaks at the White House in Washington, DC, on June 23, 2022.

AFP via Getty Images

The Biden administration announced on Friday that it has approved over $8 billion in student loan forgiveness for 145,000 borrowers, under a temporary expansion of the Public Service Loan Forgiveness program. But the initiative is set to end in just a few months. And advocates are calling on Biden to extend it.

Here are the details.

Baker Spends More On Marketing Than Student Aid

In the 2019-20 school year, Baker Colleges marketing spending outstripped what it devoted to financial aid.

In 2019, Chief Operating Officer Jacqui Spicer gave a rare response to critiques of Baker when residents in Ferndale, outside Detroit, pushed back against the colleges plan to move its main campus there. Some complained at public meetings about Bakers academic reputation and called the school predatory.

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Being predatory, I dont think thats the way in which we operate, Spicer told a reporter at the time, adding: We always put our students first, and I think its just disappointing people think that were predatory, because we really do have the students theyre top of mind for us.

Baker began as a for-profit school in 1911 but became a nonprofit in 1977, then entered a period of rapid growth. Since the recession, however, enrollment has been in a tailspin.

Competition in the online education market contributed to the erosion, as did its own decisions to close campuses, including those in historically industrial communities like Flint and Allen Park, while eliminating most certificate and associate degree programs. It is now Michigans second-largest four-year private college by enrollment, after Davenport University.

Your path to your dream career begins at Baker College, the ad declares.

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Resources For Borrowers Seeking Student Loan Forgiveness Through Borrower Defense

For more information on the Sweet v. DeVos case and the associated settlement, the Project on Predatory Student Lending which has been representing the student loan borrowers in the lawsuit has set up a detailed information website. The site includes a flow-chart illustrating who may benefit from the settlement agreement, as well as a comprehensive list of schools that are covered.

Borrowers looking to submit a Borrower Defense to Repayment application can do so via the Department of Educations website. The application is long and somewhat complex borrowers can check out this detailed guide on how to complete the application. Note that in some cases, schools can withhold transcripts for borrowers who are approved for relief through Borrower Defense to Repayment.

The Average Loan Amount For All Undergrads At Baker College Is $7827 Per Year

Is Student Loan Debt Forgiveness Real? Debunking The Myth

58.0% of all undergraduate students at Baker College utilize federal student loans to help pay for their college education, averaging $7,827 per year. This amount is40.3% higher than the$5,578 amount borrowed by freshmen.The fact that returning students borrow more than freshmen could indicate that the school front-loads financial aid packages, offering more aid to new students while expecting returning students to take on larger loans to continue their education.

Borrowing the average amount will result in loans of$15,654 after two years and$31,308 after four.

These numbers are based on borrowing the same amount each year and do not include any loans where the parent is the borrower,even though Parent PLUS loans are frequently included in financial aid packages.

Were you surprised by how much you are projected to owe by the time you graduate? Remember this is an average: some students will borrow more than this.

Is the debt worth it? Research return on investment.

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Student Loan Forgiveness Through Income

Just a few weeks ago, the Biden administration went even further than the Limited PSLF Waiver and announced a massive fix to income-driven repayment plans. IDR programs which include individual repayment plans like Income Based Repayment and Pay As You Earn use a formula to provide borrowers with affordable student loan payments tied to their income.

IDR plans are a required component of PSLF under the original PSLF program rules. IDR plans also have their own student loan forgiveness that kicks in after 20 or 25 years, depending in the specific IDR plan.

But just like with PSLF, IDR program requirements have historically been poorly communicated to borrowers. And the government has done a poor job overseeing the program and tracking borrowers progress. As a result, only a few dozen borrowers had qualified for student loan forgiveness under IDR, according to the Department of Educations statistics.

To address these issues, the Biden administration announced a broad IDR Adjustment whereby many past periods of repayment, forbearance, and deferment that would otherwise not count towards a borrowers repayment term can be retroactively counted. This will benefit millions of borrowers who are in IDR plans or otherwise have simply been in repayment for many years, as well as borrowers seeking student loan forgiveness through PSLF.

‘it Shouldn’t Have To Be This Hard’

On July 26, Baker received a letter informing her that she had finally qualified for loan forgiveness under TEPSLF.

And since she had in fact qualified in November 2019, Baker also got payments back from December 2019 to March 2020 she had made them in addition to her 120 required ones.

On August 20, Baker received a call from FedLoan telling her that her loans had been forgiven and that they were going to refund extra payments. Within two weeks, Baker got her refund, and her account balance said she owed $0.

I’ve had this hanging over me for so long, Baker recalled thinking. It took me awhile before I was like, ‘Oh my gosh, that’s really happening. I am not paying a thousand dollars a month for the loans for the next five years. This is amazing.’

However, a few weeks later, on September 7, FedLoan sent her another letter telling her that she actually didnt qualify and that the forgiveness call was a mistake.

Baker called FedLoan and was told that there was no reason why that letter was sent and that her balance was zero and her account was closed.

My worst fear would be that if for some reason … that cancellation was canceled, and all that debt came back, said Baker. We bought a house before we were married and only in my spouse’s name because I cant get a mortgage.

Fortunately, in late September, ED followed up with her to tell her that in fact her cancellation had gone through and her balance had actually gone from around $131,883.75 to $0.

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‘there’s This Entire Shift In The Financial Lives Of People’

There are also a host of financial benefits from loan forgiveness that would mostly accrue to low and middle earners but which can’t be captured in these data analyses, according to education experts.

Contrary to popular belief, borrowers with the smallest debts are the most likely to default on their student loans, said Susan Dynarski, an education professor at Harvard University. These tend to be low- and middle-income borrowers, she said.

Defaults negatively impact credit scores, which may then negatively impact homeownership, hurt job prospects and raise costs for other lines of credit, she said.

“All of this isn’t measured” in income analyses, Dynarski said. “I think it underestimates the benefits of forgiveness, especially for the small loans.”

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So, what to make of all this? In short: It’s hard to make definitive statements about what income groups will get what share of the benefits.

For one, each analysis uses different data sets that yield different results. The Penn Wharton estimate, for example, leverages data from the Education Department and the Federal Reserve’s Survey of Consumer Finances. Due to particulars of that Fed survey, while it factors in a parent’s student debt it perhaps wouldn’t capture the debt of a recent graduate living at home with those parents, according to economists.

Meanwhile, JPMorgan’s analysis uses credit bureau and Chase banking data. The analysis assumes all borrowers with $125,000 to $250,000 of income are married, for example the bank’s data suggests that’s true for the “vast majority” of these borrowers, but the assumption skews the distribution of benefits toward wealthier households, according to the analysis. Using data on bank customers may also leave out some lower earners, economists said.

“There’s no perfect data it doesn’t exist,” said Dominique Baker, an associate professor of education policy at Southern Methodist University. “Even the Department of Education doesn’t have perfect data.”

There’s also the issue of which “income” to consider for an analysis of the forgiveness benefits, according to Matt Bruenig, an economic policy analyst and president of the People’s Policy Project.

“We want to do an analysis we can’t really even do,” Bruenig said.

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Student Loan Forgiveness For Borrowers Covered By New Settlement Agreement

In a separate development, the Department of Education and a class of student loan borrowers announced a settlement agreement last week in Sweet v. DeVos, a lawsuit brought by borrowers against the Department several years ago over stalled Borrower Defense applications.

Under the terms of the settlement, any borrower who submitted a Borrower Defense to Repayment application before June 22, 2022 and went to one of the schools covered by the agreement would have their federal student loans cancelled and any payments refunded. Over 200,000 borrowers may benefit from the agreement. The covered schools include :

  • American Career Institute
  • New England Institute of Art
  • Ross University School of Medicine
  • University of Phoenix

The full list of covered schools can be found here. Importantly, the court must approve the settlement proposal before any student loan forgiveness can be implemented.

Even for borrowers who have not yet submitted a Borrower Defense application yet, its not too late. While only borrowers who submitted applications by June 22, 2022 would be covered by the automatic student loan cancellation benefits of the settlement, borrowers who submit a Borrower Defense application between June 22, 2022 and the date of final approval of the settlement would be entitled to a final decision from the Department of Education within 36 months if no final decision has been made by then, the borrower would be entitled to student loan cancellation.

What Is A Leave Of Absence

If you experience a serious medical, family or scheduling problem greater than two weeks, you can request a leave of absence, to avoid jeopardizing your financial aid. This leave is not to exceed 90 days per 12-month period. It is possible for more than one leave to be granted, provided the total days of leave do not exceed 90 days per 12-month period.

Your first step should be to contact Student Services immediately regarding a proposed schedule change. You must then request your leave of absence in writing before beginning your leave. Letters should be directed to the Financial Aid Office, and must bear your signature, per the requirements of the U.S. Department of Education. In emergency situations, we may accept your written request after leave has begun. Your loan repayment will not begin during this time period provided you have followed the steps necessary to gain an approved leave of absence. If you do not return from your approved leave of absence, we will use your last day of class attendance before your leave when calculating repayment scheduling.

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Student Loan Forgiveness Through Pslf

Last October, the Biden administration announced a broad initiative to expand access to the Public Service Loan Forgiveness program. PSLF provides student loan forgiveness to borrowers who work at least 10 years for qualifying nonprofit or public organizations. But until Bidens announcement, the PSLF program had very strict eligibility criteria and was plagued by administrative problems, resulting in a denial rate as high as 99%.

Through the new Limited PSLF Waiver program, the Biden administration is temporarily relaxing several core PSLF eligibility rules to allow many more borrowers to qualify, albeit temporarily. Under the waiver, the Education Department will be able to count past loan repayment periods that would have been rejected under the original PSLF framework, including payments made under ineligible repayment plans or on non-qualifying types of federal student loans.

Student loan borrowers who already have Direct-program federal student loans which are loans issued and owned directly by the federal government may not have to do much to qualify, other than submitting PSLF employment certification forms that confirm the borrowers dates of qualifying employment.

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The embattled PSLF program continues to yield an extremely low success rate in the single digits for years partly because many borrowers simply did not qualify.

In 2018, Congress provided the Education Department with $700 million to create the Temporary Expanded Public Service Loan Forgiveness Program .

As of April 30, the latest date for which federal data is available, both programs still have anemic outcomes: According to Federal Student Aid, PSLF had an approval rate of 2%. Only 3,458 out of 168,702 completed PSLF forms submitted met the requirements for loan forgiveness. TEPSLF had an approval rate of 3.4%, with only 224 forms out of 6,629 forms meeting the government’s requirements.

Projections by the loan servicer handling the PSLF program also indicate that only 22% of borrowers are on track for forgiveness in the next five years, according to records obtained by the SBPC.

Education Secretary Miguel Cardona promised to look into the matter. And earlier this month, more than 200 organizations representing millions of public service workers wrote to Cardona about fixing the PSLF program.

There seems to be a plan in place: On Friday, NPR reported that ED has planned to make a number of changes to the PSLF program, including the way it counts certain loans that are federally guaranteed but not owned by the government.

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White House Plan Assesses Individuals Not Households

The White House issued a chart breaking down the distribution of total dollars forgiven by three income groups. It shows that 87% of the money would go to those earning less than $75,000 a year. None would flow to individuals earning more than $125,000.

Leveraging this data, Biden said the plan would target poor and middle-class people “families who need it the most.”

This is true in at least two senses: The policy sets an income cap for forgiveness, ensuring the wealthiest households can’t participate. And recipients of Pell Grants, a type of financial aid for lower-income families, qualify for double the maximum relief, or $20,000, relative to other borrowers.

But the White House analysis measures income per individual, rather than at the household level. Let’s say each spouse in a married couple earns $70,000 a year they’d have $140,000 of joint household income, but would count among the group earning below $75,000 in the White House income analysis.

The Biden administration felt an analysis of individuals would be more accurate than households since U.S. Department of Education data doesn’t indicate if a borrower is married, according to a White House official.

Income Limits On Student Loan Forgiveness

The White House also appears to be nearing a final decision on imposing an income limit for its broad student loan forgiveness initiative, according to the The Washington Post. Loan forgiveness would reportedly be limited to single borrowers who earned less than $150,000 last year, or jointly-filing married borrowers who earned less than $300,000 last year.

Advocates had been calling on Biden to make any student loan forgiveness initiative universal and automatic so that the relief could be implemented quickly, and its impacts would be as broad as possible. But imposing any sort of income cap on student loan forgiveness could inevitably make implementation more complicated. Federal law restricts the ability of the IRS to share income tax data with other federal government departments, and the Department of Education has no mechanism to automatically ascertain a borrowers income. This may mean that borrowers would be required to submit a formal application for student loan forgiveness, which then would have to be reviewed and processed by Department of Education officials or the Departments contracted loan servicers.

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Student Loan Forgiveness: Students In Some States May End Up Paying $500 In Taxes On Debt Cancellations

The Old Chapel and W.E.B. Du Bois Library at the University of Massachusetts Amherst .

CORRECTION: MassLive has discovered the information put forward by The Tax Foundation incorrectly listed Massachusetts as one of the states student borrowers could end up paying additional taxes. Massachusetts law prevents this from happening.

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