Every week, Student Debt Relief posts a roundup of the latest happenings in all things student loan-related. This week we have four articles, each covering a different aspect of student loans.
With default rates rising, obscure laws are now coming into the forefront of the student loan crisis and stopping people from working. In 19 states, the government can repeal professional licenses from residents who have defaulted on their student loan debt. The reported fields that have had licenses revoked are firefighters, nurses, teachers, lawyers, massage therapists, barbers, psychologists and real estate brokers. Essentially any job which requires licensing from the state can be at risk. These obscure laws being enforced is especially cruel because you are are kicking a person while they are already down. Someone with a defaulted student loan is clearly having financial issues and the state is saying that a solution to their financial troubles is to pour gas on the fire and take away their licensure and ability to work in their field. To make matters even worse, some states have decided that an appropriate action is to take away drivers licenses, fully stopping people from being able to travel to and from their workplace.
Citibank has been ordered to pay $3.75 million in restitution to consumers, and a $2.75 million civil penalty. Citi was accused of financial practices which led to borrowers making overpayments, as well as misleading borrowers about tax deductions on interest paid on their student loans. There were reported late fee charges being assessed to borrowers when they could still qualify to defer their payments, and Citi denied requests to release loan co-signers.
The Federal Reserve Bank of New York put together a great study on who is more likely to default on student loans. The main questions they wanted to answer were
- Do default rates differ by college type
- Yes, for-profit schools have default rates double that of non-profit schools.
- How do default rates compare between graduates and non-graduates
- Those with Bachelor degrees will default at less than half the rate of Associate degree holders.
- Does college major play a roll
- Yes, but there does not seem to be a major difference
- Does college selectivity matter for student loan defaults
- Yes, there can be a large difference in default rates based on the college selectivity
- Are students from less affluent backgrounds more likely to default
- Yes, there is nearly a 30 percentage point difference between default rates from those with advantages financial backgrounds and those without.
The Millennial Advocacy Council hosted a conversation to revolve around higher education, workforce development, and modernization. They discussed the rising national debt, decline in skill-based training and lack of autonomy teachers have to be creative at the local level. They talked about how students are going into debt with student loans because they believe without college it will be difficult to be employed in the future and earn a high standard of living. Kids in high school are taught to go to college no matter the cost, which may not always be the best advice. It was also brought up that even those who graduate from college are often left without the skills required to obtain a job, and that colleges should be more focused on the skills students will need in the future, not those needed in the past.
Be sure to check back every Friday at Student Debt Relief for our Weekly Roundup of the latest news and updates regarding the student loan industry!