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Federal Loan Servicer Mohela Forces Default of Student Loans

DeeMan — Wed, 01 Nov 2023 04:34:19 +0000

Mohela Creates Default Status for Hundreds of Thousands

According to the Federal Education Department Mohela the Federal Loan Servicing, a dot com company, forced nearly a million students into default status. With hundreds of thousands more on the verge of default. Many argue that the action is intentional with an eye on generating revenue. Faith-Seeds.org was made aware of a string of reckless violations made by Mohela. In response notified various agency watch dog groups, who verified multiple policy breaches. Consequently the Education Department announced on Monday that over two millions borrowers were not properly billed this month. October marks the first official billing month after the three-year, Covid-era student loan pause, which ended in August. Forcing over 30 million borrowers back into repayment simultaneously.

How we got here

The US Federal Student loan program has restarted loan collection. The program had been postponed on two fronts.

COVID Pandemic
President Joe Biden’s effort to seek loan forgiveness through the legal channels.
Active Student loans holders were sent into default status without being billed.

The COVID Pandemic has ended and the Presidents efforts were not successful. The US Department of Education outsourced the collection of the loans to a “dot com” company “Mohela”. This is where the issue begins.

Faith-Seeds.org kept track of the proposed loan forgiveness by the current administration as it weaved its way through the court systems. Ending at the US Supreme court which ruled against the proposal.

The return to student loan repayment is not going smoothly. The Biden administration revealed massive billing problems this week that are even more widespread than previously known. The Education Department is asserting its oversight by imposing a penalty on a key federal student loan servicer.

The billing problems are just the latest issue in a cascading series of problems borrowers have been facing after the student loan pause ended this summer.

Who is Mohela and How did they Fail ?

Mohela, a non government commercial contract loan servicer, has been accused of intentionally forcing loanees into a default status.

October of 2023 marks the billing restart. However Mohela failed to mailed billing notices to the loanees. By law, It is required for all businesses to send a bill showing the account information, payment amount and date due. However Mohela has avoided normal billing process. This led to Mohela forcing loanees into default status. If you are unaware of the bill; then there is a very high percentage chance that you not pay it. Which will result in default status.

Leveraging Students Loans into default could be seen as strategy used by the dot com Mohela. If true It is unethical, and illegal. In a word, it is wrong.

Mohela has been aware, (as has most of student loan recipients ) for many months prior to the October restart. Financially Mohela could make millions by forcing default. Students on a payment plan which enters default, loses reduced payment status immediately. Activating the highest possible payment scenario. A loan repayment with monthly installments at $250 could instantly become a $3000 or more while in default. In some cases require payment in full. The remedy to default is very laborious and should be avoided.

The FEDS Take Action

The Department of Education announced Monday that it is withholding millions of dollars in payment to the student loan servicer Missouri Higher Education Loan Authority (MOHELA) over billing statement errors it made.

The department said MOHELA “failed to meet its basic obligation” of getting the statements out in a reasonable time frame, resulting in 2.5 million borrowers getting late statements. Some of the borrowers got their bill days before their payment was due. As a result, more than 800,000 borrowers transitioned into delinquency status under MOHELA.

The department is withholding $7.2 million in its October payment to MOHELA due to the error and told the student loan servicer to put all borrowers affected by this issue in forbearance until it is resolved. Any borrower on an income-driven repayment plan won’t have the months counted against them.

We took immediate actions to protect borrowers from the fallout of this error and hold the responsible servicers accountable, including “withholding $7.2 million in payment from one servicer,” Education Secretary Miguel Cardona said.

“The actions we’ve taken send a strong message to all student loan servicers that we will not allow borrowers to suffer the consequences of gross servicing failures. We are committed to fixing our country’s broken student loan system, and that includes strengthening oversight and accountability and taking every step possible to improve outcomes for borrowers,” he added.

Additionally, the department found “a small number of borrowers” received billing statements with incorrect payment amounts, and people on the Borrower Defense program were incorrectly put back on repayments. Those borrowers have also been placed on forbearance until the issue is corrected.

Trade School Training Leads to home ownership

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Legacy Admissions: Affirmative Action for the Wealthy

Staff — Sun, 16 Jul 2023 20:36:59 +0000

Economic Battle Grounds

While the battle ground over access to higher education was seated in the Supreme court ruling on Affirmative Action, the real issue may be one of access and economics. The shot fired around the world was the Supreme Court’s decision to end any discussion of race in college acceptance consideration. This decision could be hurtful to non Asian, low income racial minorities. African Americans and Hispanics are the least represented in the highest ranked Universities and Colleges.

Statistically proven, a College degree goes far in creating opportunities and pathways to over coming economic impoverishment. Here are the median lifetime earnings of full-time workers by level of education:

less than high school – $1.2 million
high school diploma – $1.6 million
some college, but no degree – $1.9 million, equal to about $47,500 annually
associate’s degree – $2 million, or about $50,000 per year
bachelor’s degree – $2.8 million, the equivalent of $70,000 annually
master’s degree – $3.2 million, or $80,000 annually
doctoral degree – $4 million, equal to $100,000 per year
professional degree – $4.7 million, or an average of $117,500 annually.

Distribution

These numbers are also skewed when observing the annual pay along racial lines:

Among high school graduates, white workers earn a median of $1.7 million. Compared to $1.4 million for Asian, Black, and Latino workers.
White workers with an associates’ degree earn a median of $2.1 million. Compared to $2 million for Asian workers. $1.9 million for Latino workers. And $1.7 million for Black workers.
At the bachelor’s degree level, white and Asian workers each earn a median of $2.9 million. Compared to $2.3 million for Black and Latino workers.
At the master’s degree level, Asian workers earn $4 million. Compared to $3.2 million for White workers, $3 million for Latino workers. And $2.7 million for Black workers.

The Fall Out From the Supreme Court Decision

When the Supreme Court gutted affirmative action, it may have inadvertently created an opening to spotlight another controversial college admissions program. Which has been in use for about a century now: legacy admissions, aka “affirmative action for the wealthy.”

It’s been a common practice since the 1920s, with higher education institutions initially using it as a way to limit Jewish applicants and eventually Black students too. Legacy students made up 36 percent of the class of 2022, according to a Harvard Crimson survey. And documents from the Students for Fair Admissions v. Harvard College case revealed that nearly 70 percent of Harvard’s donor-related and legacy applicants are white.

Supreme Court PBS/News

Oren Sellstrom, litigation director at Lawyers for Civil Rights, has been eyeing legacy admissions for some time. He believes that now is the moment to challenge it. He filed a complaint with the Department of Education over Harvard’s practice of legacy admissions. Citing widespread violations of Title VI of the Civil Rights Act of 1964 on behalf of the Chica Project, the African Community Economic Development of New England, and the Greater Boston Latino Network.

“Our complaint stands on very firm legal footing. The issues that we’ve presented are clear both from a fairness perspective and from a legal perspective. Obviously, in light of the Supreme Court’s recent decision on affirmative action. It is even more critical to remove unfair and undeserved barriers that stand in the way of equal opportunity for students of color. Our complaint is based on long-standing federal anti-discrimination law that makes clear that if there are barriers that have a disproportionate impact on students of color, they need to be dismantled, unless the institution can provide an adequate justification for them.”

In the case of Harvard, it’s clear that donor and legacy preferences have a significantly disproportionately harmful impact on applicants of color, and there is no educational necessity for them. Harvard is not the only institution practicing legacy admissions—one report estimates that 787 colleges and universities reported using legacy preference in 2020.

Getty Pictures

“Our hope is that once the Department of Education has investigated Harvard, that it will also turn its eye and turn the power of the federal government on to all other institutions of higher learning that receive federal funding, and that also have these unfair and undeserved preferences. Many colleges and institutions at this point have done away with legacy preferences and donor preferences or have never used them in the first place. Particularly over the past eight to 10 years, we have seen significant movement away from those unfair and undeserved preferences.”

College Attendance is Dropping in Large Numbers.

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Huge Decline In College Enrollment

DeeMan — Sun, 16 Jul 2023 02:43:21 +0000

Big Drop in College Enrollment

The annual student enrollment in ” higher education” has significantly diminished across America. Young student are making a concious choice not to attend College.

Undergraduate college enrollment is continuing its years-long decline, though at a much less drastic rate than during the pandemic. According to data released Thursday, Feb. 2, U.S. colleges and universities saw a drop of just 94,000 undergraduate students, or 0.6%, between the fall of 2021 and 2022. This follows a historic decline that began in the fall of 2020; over two years, more than 1 million fewer students enrolled in college.

“I certainly wouldn’t call this a recovery yet,” said Doug Shapiro, who leads the research center at the National Student Clearinghouse. “There’s bad news and good news here.”

The declines in undergrad enrollment were concentrated at four-year public schools. Private non-profit enrollment stayed essentially the same as fall 2021.

More than 1 million fewer students are enrolled in college now than before the pandemic began. According to new data released Thursday, U.S. colleges and universities saw a drop of nearly 500,000 undergraduate students in the fall of 2021. Continuing a historic decline that began the previous fall.

How we got here

Cha Pornea for NPR

Compared with the fall of 2019, the last fall semester before the coronavirus pandemic, undergraduate enrollment has fallen a total of 6.6%. That represents the largest two-year decrease in more than 50 years, Shapiro says.

The nation’s community colleges are continuing to feel the bulk of the decline, with a 13% enrollment drop over the course of the pandemic. But the fall 2021 numbers show that bachelor’s degree-seeking students at four-year colleges are making up about half of the shrinkage. In undergraduate students, a big shift from the fall of 2020, when the vast majority of the declines were among associate degree seekers.

The biggest factor for the years of decline is the strong economy. The last time U.S. college enrollment went up was 2011, at the tail end of the recession. As the economy gets better, unemployment goes down — it’s currently at 3.5 % . And more people leave college, or postpone it, and head to work.

When the recession hit a decade ago, the reverse happened: Many people, especially older adults, returned to college. That bump in college enrollment set records. And in some ways the current downturn is simply “colleges returning to more historic levels of enrollment,” Shapiro says.

U.S. demographics are also shifting. The number of high school graduates is flat — and in some cases declining — because of lower birth rates about 20 years ago. Those numbers are also projected to decline, so the trend of fewer students coming from high school isn’t going away anytime soon.

Long-term economic, social consequences

And finally, there’s the cost of college. States are putting less money into higher education, and that’s led to an increased reliance on tuition. As tuition goes up, and grants and scholarships don’t keep pace, that’s pushed the cost of college down to students and their families. Without state investment, institutions are strapped, and so are American families.

Education experts and economists are starting to think about the long-term effects if the drop continues. Some warn the decline could affect the U.S. as competing nations like China greatly increase their college attendance.

HBCU Howard University

Jason Lane is the leader of the College of Education, Health and Society at Miami University in Ohio. He called it a “crisis” that is not widely recognized.

With fewer people going to college, “society is going to be less healthy,” Lane said. “It’s going to be less economically successful. It’s going to be harder to find folks to fill the jobs of the future. There will be lower tax revenues because there won’t be as many people in high-paying jobs. It will be harder for innovation to occur.”

The growing gap in educational attainment could also worsen existing divisions over politics, socioeconomic status, race and national origin, said Adriana Lleras-Muney, an economist at UCLA.

Expectations

“What does that mean for the modern American family? There are implications here that just go miles and miles and miles,” said Monty Sullivan, president of the Louisiana Community and Technical College System. “We have a million adults in this country that have stepped off the path to the middle class. That’s the real headline.”

Overall, enrollment in undergraduate and graduate programs has been trending downward since around 2012, but the pandemic turbocharged the declines at the undergrad level. When fewer students go to college, fewer students graduate, get job training and move on to higher-paying jobs, meaning all this could have huge ramifications for the U.S. economy.

“It’s very frightening,” says Doug Shapiro, who runs the nonprofit research center at the heart of the study. “Far from filling the hole of last year’s enrollment declines, we are still digging it deeper.”

“College is the best chance you have to get into well-paying jobs in this economy,” says Shapiro. “It’s not the only path, and it’s certainly not a guarantee. But it’s the best path we have right now. And so, if more students are thrown off that path, their families and communities suffer. And our economy suffers because businesses have fewer skilled workers to hire from.”

Looking for new ways to make extra money ?

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Student loan forgiveness plan struck down

Staff — Wed, 16 Nov 2022 09:21:25 +0000

A federal judge in Texas declared President Joe Biden’s student loan forgiveness plan unlawful and vacated the program.

U.S. District Judge Mark Pittman issued the order in response to an October lawsuit filed by two plaintiffs against the U.S. Department of Education. Biden announced his plan in August, but another federal court last month issued a temporary stay blocking debt cancellation while legal issues raised in a joint suit by six states are reviewed.

Response from the white house

The White House said the U.S. Department of Justice has appealed the ruling.

“We will never stop fighting for hardworking Americans most in need – no matter how many roadblocks our opponents and special interests try to put in our way,” said White House Press Secretary Karine Jean-Pierre in a written statement.

Biden said his decision will lift a debt burden that prevents many from buying a home, starting a family or launching a business.

“I believe my plan is responsible and fair. It focuses the benefit on middle-class and working families. It helps both current and future borrowers and it will fix a badly broken system,” he said.

Critical Questions

The president press release says package intent was to remove up to $10,000 in federal student loan debt for borrowers with an annual income of less than $125,000. Or households with an annual income of less than $250,000. Pell Grant recipients would receive up to $20,000 in forgiveness.

However many critics are arguing that the administration never intended to provide relief through loan forgiveness. They cite the timing of the process was intentionally announced near midterm election with the understanding that the process would time out after the election.

Other Critics point out that ” Pell Grants” are grants and don’t need to be repaid. Noting that the Pell Grand add in to the forgiveness package was by design misleading.

Conservatives add the package is too costly for taxpayers and will worsen inflation.

Key numbers of student loan debt in Georgia:

Graduate Student Loan Icon

1,639,600 — the number of borrowers who live in Georgia, which ranks seventh nationally.

$41,600 — the average borrower balance, which is third nationally, behind Washington, D.C., and Maryland.

15.4% — the percentage of Georgia residents with student loan debt.

9% — the percentage of Georgia borrowers in 2021 who had past-due accounts greater than 90 days. The national average is 8%.

70,700 — the increase in Georgia borrowers since 2016. Only Texas and Florida have had a larger increase in borrowers.

68,000 — the number of borrowers in Georgia who are 62 or older.

Sources: Federal Reserve Bank of New York Consumer Credit Panel/.

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