Tag: restart

  • Debt Collection on Defaulted Student Loans to Restart in May

    Debt Collection on Defaulted Student Loans to Restart in May

    Borrowers in default could see their tax refunds or other federal benefits withheld once collections resume.

    J. David Ake/Getty Images

    The Education Department will resume collecting on defaulted student loans early next month, restarting a system that’s been on hold since spring 2020, the agency announced Monday.

    Starting May 5, the department will withhold tax refunds or benefits such as Social Security from borrowers who are in default. Later this summer, the department will begin garnishing the wages of defaulted borrowers, a move consumer protection advocates have criticized as out of control.

    About 38 percent of the nearly 43 million student loan borrowers are current on their payments, and a record number of borrowers are at risk of or in delinquency and default, the department said Monday. Borrowers default when they miss at least 270 days of payments.

    When the Biden administration restarted student loan payments in September 2023, it offered a one-year grace period for borrowers during which those who didn’t make payments were spared the worst financial consequences, including default.

    Research into borrowers who default and other data shows they typically fall behind on their payments because other loans take a higher priority or they can’t afford their payments, among other reasons. And borrowers in default usually don’t have the ability to repay their loans. A survey from the Pew Charitable Trusts found that unemployed borrowers were twice as likely to default compared to those who worked full-time. Additionally, borrowers who didn’t complete the education they took out loans to pay for are more likely to default than completers.

    “The folks who fall behind on their payments are those who are least well served by the higher education and repayment systems,” said Sarah Sattelmeyer, project director for education, opportunity and mobility in the higher education initiative at New America, a left-leaning think tank. “A lot of those folks did not receive a return on their higher education investment … These aren’t people who overwhelmingly do not want to pay their loans.”

    About 5.3 million borrowers have defaulted on their loans, and many have been in default for more than seven years, according to the department. Another four million borrowers are in “late-stage delinquency,” or 91 to 180 days behind on their payments. The department expects about 10 million or nearly one-quarter of borrowers to default by the fall.

    “We think that the federal student loan portfolio is headed toward a fiscal cliff if we don’t start repayment and collections,” a senior department official said on a press call Monday. “American taxpayers can no longer serve as collateral for student loans.”

    The official didn’t take questions, and a department spokesperson referred reporters to Education Secretary Linda McMahon’s recent op-ed in The Wall Street Journal. She’s also slated to appear on CNBC and Fox Business to discuss the restart in collections.

    In her public statements Monday, McMahon blamed the Biden administration and colleges for the current situation.

    “Colleges and universities call themselves nonprofits, but for years they have profited massively off the federal subsidy of loans, hiking tuition and piling up multibillion-dollar endowments while students graduate six figures in the red,” she wrote in the Journal.

    Beyond the immediate restart, the senior department official said the department is planning to work with Congress to fix the system so that students can afford their loan payments and to lower the cost of college.

    Former Biden administration officials, borrowers and debt-relief advocates have said that efforts to forgive student loans were a way to address systemic failures in the student loan system and to help vulnerable borrowers who were likely to never repay their loans.

    The department is planning a “robust communication strategy,” the senior official said, to spread the word to borrowers and share information about their options, such as enrolling in an income-driven repayment plan or loan rehabilitation.

    Currently, about 1.8 million borrowers have pending applications for an IDR plan, but the department intends to clear that backlog over the next few weeks, the official said. The department also is planning to email borrowers individually about their options. The outreach plan also includes extending the loan servicers’ call center hours on weekends and weeknights.

    Sattelmeyer, who worked in the Office of Federal Student Aid during the Biden administration, said it will be important to ensure borrowers have access to information and the tools such as IDR plans to either get out of or avoid default and then stay on track. She questioned whether the department has enough staff to restart collections effectively, given the recent mass layoffs at the agency.

    “The issue is that the system is in disarray right now and there have not been a consistent set of options available for borrowers at the same time that we’re turning back on collections,” she said. “At the end of the day, I think the most important thing is that it does not feel like we have the resources and the staffing in place to make this go smoothly and to ensure that borrowers have support and access to resources and tools.”

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  • Education Dept. allows some civil rights inquiries to restart

    Education Dept. allows some civil rights inquiries to restart

    After pausing most civil rights investigations, the Education Department’s Office for Civil Rights is resuming some inquiries, but only those related to disability-based discrimination, according to a memo obtained by ProPublica.

    Those involving race or gender will remain on hold, the nonprofit news organization reported.

    The investigation freeze, which had been in place for a month, forbade OCR staffers from pursuing discrimination complaints that had been submitted by thousands of students at schools and colleges across the country. In fiscal year 2024, the office received 22,687 complaints—37 percent of which alleged discrimination based on disability.

    “I am lifting the pause on the processing of complaints alleging discrimination on the basis of disability. Effective immediately, please process complaints that allege only disability-based discrimination,” Craig Trainor, the office’s acting director, wrote the internal memo that was sent to employees, most of whom are attorneys.

    A spokesperson for the department declined to respond to ProPublica’s request for comment.

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  • Wildfire aid coming to California schools as educators plan to restart learning

    Wildfire aid coming to California schools as educators plan to restart learning

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    Schools across Southern California impacted by devastating wildfires this month are working to ensure students, families and staff are safe and have basic needs — all while attempting to restart instruction and as-normal-as-possible school routines after school closures. 

    At least 335 schools from Los Angeles, San Bernardino, Riverside, Ventura and San Diego counties had closed temporarily when fires broke out last week, affecting more than 211,000 students, according to the California Department of Education. 

    Two schools in the Los Angeles Unified School District — Palisades Charter Elementary and Marquez Charter Elementary — will need to be rebuilt due to fire damage, LAUSD said in a Jan. 13 statement. 

    At an event Tuesday in Washington, D.C., to highlight U.S. Department of Education initiatives under the Biden administration, Deputy Secretary of Education Cindy Marten, who previously served as superintendent of San Diego Unified School District, said the area is close-knit and that people have been “deeply affected” by the destructive wildfires. 

    “What we know is that precious schools have burned down and communities are reeling,” said Marten, adding that the U.S. Education Department will provide training and funding to communities affected by the disaster.

    According to the California Department of Forestry and Fire Protection, known as CAL FIRE, 40,695 acres have burned and more than 12,300 structures have been destroyed. Several fires that started Jan. 7 or after still have not been fully contained. 

    Most schools in LAUSD — the second largest school system in the nation — reopened Monday after district employees cleaned schools and others worked “around the clock” over the weekend to ensure campuses were safe for students and staff, a Jan. 13 district statement said. By Wednesday, outdoor activities including P.E. and recess could resume at all campuses pending local conditions, and students at the two schools destroyed by fire were relocated to two other campuses, the district said.

    “We have a unique opportunity to show the strength and resilience of our community in the face of adversity,” said Pamela Magee, executive director and principal of Palisades Charter High School, in a statement Jan 13. “By coming together, we can ensure that our students can stay in their learning environment, with their friends and mentors, at a time when they need it most.” 

    Schools in Malibu are closed through at least Jan. 21, while Santa Monica schools are open, according to the Santa Monica-Malibu Unified School District. The district and its partners have organized optional gathering spaces for children and teens displaced by the fires and not in school.

    In the Pasadena Unified School District, more than 1,300 Pasadena USD staff members had homes within the burn zone, and the district is still determining the exact number of students and families impacted. That number is anticipated to be in the thousands, according to the California Department of Education. 

    The district is closed through Jan. 17, although students had access to optional, self-directed learning options, Superintendent Elizabeth Blanco wrote in a statement to the school district community Jan. 10. 

    “The health and safety of our PUSD community remain our highest priority as we navigate the significant impact of the fire on so many of our students, families, and staff,” said Blanco, adding that nearly half of the district’s employees live within the fire evacuation zone and that many staff, students and families lost their homes.

    Odyssey Charter Schools, South Campus, in Altadena, California, and authorized by PUSD, was destroyed by the Eaton fire on Jan. 8. The 7-year-old school served about 375 students in grades TK-8. 

    “While our campus is closed, Odyssey Charter Schools South continues and will move forward stronger than ever. We’ve already built this school from an idea to a full institution. Then we rebuilt it again online during COVID and we built it a third time when we had to relocate so we are a resilient community and we already weathered many challenges,” said a video showing the fire’s destruction to the campus.

    https://www.youtube.com/watch?v=/Q9sOZLdDcBg

    Providing basic needs, making adjustments

    With the widespread impact of the wildfires and ongoing firefighting, the focus on learning is taking a backseat to supplying students, families and school employees with basic needs.  

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