Higher education, loans, student rights
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Katherine Mercurio Gotthardt
Published: July 18, 2008
While the media has been covering the student loan “crisis,” advertising the fears of the banking industry that they will be put out of business by the newest market and government trends, few people are
continuing to discuss issues from the student borrower side.
Student loans continue to lack basic consumer protections. For example, in Canada, excessive, long-term student debt and fees on loans can be discharged through bankruptcy. In the United States,
however, most lawyers will not even request discharge since courts rarely recognize any claims of extreme hardship on the part of the borrower; this includes petitions by the elderly and disabled whom
the Department of Education has refused to acknowledge as legitimate borrowers enduring hardship.
In order to qualify under the Department of Education’s disability standards, the borrower must be deemed permanently disabled and experiencing lifelong hardship. Even then, recipients of social security
have had their meager payments or pensions garnished.
Other stories of student plights have been overshadowed by the banks’ claims of crisis: students paying on loans but continuing to be charged excessive fees; students whose loans have been put into
default when in fact, they are not in default; students who are denied rightful deferment and instead are put into forbearance or immediate payment status; students assessed collection agency fees
contradicting previously agreed upon terms; students marked late or delinquent on credit reports when in fact they have paid on time; students charged higher fees and interest rates because they are
minorities; students assessed fees compounded on other fees with no recourse for paying back only what is owed. The list goes on.
Though some attorneys are working on class action suits against loan giants such as Reston based Sallie Mae, most student borrowers and their families continue to struggle under the weight of
excessive debt that lasts a lifetime.
Higher education does not have to be free. However, when student borrowers are denied the basic rights of even credit card holders, there is something seriously wrong with the system.
KATHERINE MERCURIO GOTTHARDT
Bristow
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Reader Reactions
Posted by ( beautifulwmn ) on July 19, 2008 at 10:53 pm
Kudos to Katherine for getting this started. I never heard of the ombudsman until years later. I contacted the Dept of Education, and got nowhere when I informed them that Sallie Mae had illegally capitalized $900 onto my loan. To get away from Sallie Mae I sold the loan to the US government. After awhile I mistakenly thought that if I put Citibank on my credit report and paid them the loan that would look good. To my horror, Citibank illegally changed the loan from a subsidized loan to an unsubsidized loan, and starting reporting me delinquent to all credit agencies within weeks of consolidating with them. I can never recover my credit. They illegally defaulted the loan behind my back. I sent letters to the Ceo of Citibank, and after several threats they changed the loan back but at this point, my credit was ruined and four years of extreeme hardship was caused. I was unable to rent or even get a job and I had to leave los angeles in order to not become homeless.
They refused to make reasonable payment arrangements and kept sending $400 bills. Finally they defaulted a second time. I contacted the ombudsman and I have the letters he sent to the loan guarantee people. He lied and treated me like a second class citizen and said that I did not have anything to complain about. I will refuse to pay one cent until they rectify this. I do not care. I have no credit, no bank account nothing. I will never collect social security or file a tax return either. I would like the IRS to take me to court, because I will bring in the whole newsmedia to explain and expose this absolute fraud they are committing against students. The state of new york already went after citibank for fraud which involved student loans.
Keep posting. One of these days, someone will notice.
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Posted by ( kgotthardt ) on July 19, 2008 at 1:14 pm
Thank you everyone for your comments and for substantiating this letter (which is hard to do in under 400 words). I have been working with http://www.studentloanjustice.org to help raise awareness. For those struggling, are not alone, which is both a travesty and somewhat of a comfort.
Does anyone know who the Ombudsman actually represents? I’ve been told they actually work for the guarantee agencies or lenders. I know I had no success with their office in my own loan disputes.
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Posted by ( Doak Angel ) on July 19, 2008 at 9:37 am
As a practitioner for Social Security claims I can say that the Department of Education is involved in a purposeful fraud. All claims go the state departments Disability Determination Division, and they turn almost everyone down. That’s good for me but not for those who are truly disabled and wait a year for a hearing. Mentioned in this article is the federal DoE also turns down those who have been declared disabled by a physician ( usually board certified). WHY?
The motto of the DoE is that anyone can be rehabilitated, and that’s how they justify funding Vocational Rehabilitation. So in their eyes virtually no one qualifies as disabled unless they are terminally ill, quadriplegic, or blind.
That’s why social security recipients get turned down for a disability discharge.
I have personally compiled a lengthy and complete medical review for a client only to be informed by the Ombudsman that the information was insufficient. So a 60 year old man injured in an accident who can barely walk due to neuropathy was turned down. His loan was for a “truck driving school” and he can no longer do that, and really has no realistic change of other employment. They 15% of his SS benefits leaving him to live on less than $750 a month.
As they say, Only in America.
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Posted by ( Kimbalee ) on July 18, 2008 at 10:17 pm
It’s great to see any article about the plight of student loan borrowers. However, there is much more to this story. I signed for a student loan of $2,650 in 1989 to attend dealer’s school in Las Vegas. As far as I know the money was paid directly to the school; all the paperwork was done at the school and I never met with anyone from the bank. It was several years later that I discovered that the loan amount on the promissory note had be altered without my initials, thereby voiding the loan. It has never appeared on any credit bureau’s report in all these years. I have a document of indemnification from a VP of Sallie Mae acting as agent for USA Funds stating the Secretary of Education deemed my loan uncollectable due to the altered loan amount. In 2006 Progressive Financial Services, one of the contracted collection agencies of the Dept of Ed suddenly began garnishing my wages with no notification, no opportunity to dispute the loan, and they refused to furnish me a copy of the original note or the name of the last known holder of the loan as required by federal law. They also refused to inform me how I could possibly owe anything much less the nearly $19,000 they said I owed. I called dozens of offices of the Dept, Sallie Mae, USA Funds and everyone I spoke with referred me to the collection agency. Nobody has the loan because it never legally existed. I did contact one woman who worked for the Dept in Atlanta GA which was the address on the wage garnishment authorization document that my employer furnished me. She told me that the individual who had signed that authorization hadn’t been employed by the Dept in more than 2 years. She also told me that the Dept gives stacks of presigned wage garnishment authorization documents to the collection agencies contracted by the Dept of Ed. I then sent letters and a request for discharge of the nonexistent loan, including copies of the altered loan document and the indemnification document, to 17 different offices of the Dept. After three months I’d received no response so resent them. Only after filing a third complaint with the FTC did I receive a response. One response. It was a letter from FSA advising me of the results of my wage garnishment hearing. I lost. I had not been notified of the hearing nor was I allowed to participate. The woman who sent me that letter failed to include any contact info, such as a return address, email, or a phone or fax number. I deduced from the postmark that she was in Chicago so I found her email address on the Dept’s website and asked if she had perhaps attended the Alberto Gonzales school of law where she was taught that there is no due process in this country. No response. The only recourse I have is to file suit in Federal Court. Finding an attorney to represent me has thus far been an exercise in futility. None know anything whatsoever about student loan laws. The wage garnishment continues. For a loan that never legally existed and which by the way I repaid in full in 1991. Oh yes, and the Dept’s Ombudsman’s office didn’t even get the name of the originating bank or the school I attended straight even though I had furnished them that info. They do use very nice (and expensive) stationery though. As did the woman from FSA.
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Posted by ( RonCharest ) on July 18, 2008 at 4:44 pm
Great letter Katherine!
I’ve learned from my wife how higher education works in China; They basically have a three tier setup. Children graduating in the top 10% of (equivalent to) High School get their pick of any state-run college, tuition free.
The second 10% of students get a subsidized college education second pick, but the student (usually parents, with contributions from other family and even neighbors) pays room/board books and incidentals.
The remaining students have to pay full tuition if they want to attend college, and they have last pick after the subsidized students.
Not saying this a great system, or that we should adopt it here in this country. My point is that if even China can provide tuition-free college for their best and brightest, we should be able to also. I think it’s a disgrace that people are graduating college with ten or hundreds of thousands of dollars in student loans, hoping to land a job that pays well enough to pay those loans off.
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Posted by ( fitetobefree ) on July 18, 2008 at 4:20 pm
Great article!! We need more public awareness on this issue. If the majority of our citizens cannot afford higher education and others become afraid of sallie mae lending practices, what kind of society will we have in the future? It is so wrong to force seniors to take out second mortgages or have to deplete their savings in order to pay for tuition 4x over the amount borrowed. (which is my case)
What is the incentive for kids to finish highschool with little to no hope for further education? Aren’t we already importing teachers to teach math and science? perhaps next we can seek foreignors to be our counselors, nurses, paralegals and editors just to name a few.
How humiliating for our country to be pushing for democracy around the world and then have the majority of our own citizens end up in dire poverty, ignorance and the desperation. How can you be free without choices? We must make higher education affordable.
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Posted by ( Godsaveus ) on July 18, 2008 at 9:03 am
In the United States, the public education at its maximum level is High School. After our kids end High School, if they want to receive higher education, parents and kids have to do enormous sacrifices in order to do that. In other countries where the education is a priority, the government provides public education also in Universities. During my years in Peru where my father was a consultant I attend to a public University during the first two years; I meet brilliant students from different social status but with one common goal, to be professionals. The only requirement was 2 years of public service after the graduation. This is a great country and the government should provide more public education.
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