Comment by rayiner | Hacker News Reader

Comment by rayiner | Hacker News Reader

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There is no reason anyone should ever default on an IBR loan. That’s the whole point of the income-based repayment. The reason people still do it is because they don’t follow the proper procedures for requesting IBR or requesting forbearance. That’s a damning indictment of our educational system, that a million students a year who have at least been accepted into college can’t figure out a simple administrative procedure. But it’s not the fault of the program itself, nor does it call for radical change.

Likewise, almost everyone who got rejected for the IBR forgiveness did so because they screwed up the administrative procedure: https://www.forbes.com/sites/zackfriedman/2019/05/01/99-of-b.... 73% didn’t meet the program requirements, and another 25% screwed up the application, not providing sufficient information. That’s not a sign of anything wrong with the program, it’s a sign of the total failure of our educational system.

I’m quite put out that these issues are being used to justify tuition-free college. In my view, the existing system is actually pretty good. If your college education ends up in you earning a lot, you pay back more to the federal government. If it doesn’t, then the federal government takes a hair cut on your loans. The people who earn more subsidize those who earn less. The total cost to the government ends up being pretty low (IBR will cost the government about $18 billion per year over the next decade, a tiny fraction of the cost free college would cost.) If what’s preventing that system from working well is that people attending college can’t figure out the administrative requirements, then I’m sorry I don’t think that’s an acceptable excuse.

>There is no reason anyone should ever default on an IBR loan. That’s the whole point of the income-based repayment.

Again that’s right in theory and what the banks report, however, individual law suits uncovered intentional efforts by the banks internally to force deferments and resetting the clock on IBR loan payers. Literally bank communications turned over in discovery on a number of lawsuits show instruction not to process annual financials, place the students in forebearance for a month, then process the documents so the clock reset.

Case in point the banks at no point inform loan holders when the IBR discharge clocks reset (sure student knew they were in forbearance for a month every year, but in these cases the students timely submitted the documents and students have no control over the bank processing times), it’s only when the students went for the discharge and were the students informed there clocks reset annually. Further bank communications showed this was also intentionally done so over the years the banks counted on the student losing their records and proof they timely submitted their annual financials.

And I’d argue that 98% (it’s actually 99.5%) of loan holders being denied discharge in IBR programs is proof the program is broken, but again the individual lawsuits against the banks/loan services broke this wide open. Then again we don’t need to look at the individual lawsuits either multiple state attorney generals have brought charges against the largest loan servicer for these acts and worse (continuing to collect on loans that were actually discharged), still it doesn’t seem that will help these students (like billion dollar fines against the banks didn’t help homeowners post 2008).

> Again that’s right in theory and what the banks report, however, individual law suits uncovered intentional efforts by the banks internally to force deferments and resetting the clock on IBR loan payers. Literally bank communication turned over in discovery on a number of lawsuits show instruction not to process annual reporting requirements, place the students in forebearance for a month, then process the documents.

There are no "banks" here. These are loan servicers acting at the federal government's direction.

If there is a problem with the loan servicers, then the federal government should retain different ones. That has nothing to do with whether the program works or should be different. (And if the federal government has failed to properly supervise the companies it hires to service its loans, why is the solution even more federal involvement?)

Here is a decent write about about 4 such student lawsuits...funny you mention the federal government, because as you will see in this article the Dept. Of Ed. Was involved in these efforts to reset the discharge clocks, because the program was going to cost them more than expected. Specifically right before the first batch of discharged loans the Dept of Ed changed their rules on the fly (in violation of the Act) to make students ineligible for discharge.

https://www.studentloanplanner.com/pslf-lawsuit/

Edit: I think In all 4 of these cases the Dept. Of Ed. Already approved these discharges, sent approval letters, then changed their rules and revoked the discharges. Again the rule changes were in violation of law and done because the costs of the program were so large.

If the government is can't be trusted to manage this I don't see how it can be argued that we need more government intervention to resolve the problem.

I don’t think I argued that government intervention was needed to resolve the problem.

However, going back to 7th grade civics our government is split into 3 branches to distribute power and provide checks and balances. In this very instance the judicial system (government) is the forum where these facts and bad acts of the government were uncovered and a judge (government employee) reinstated the discharge in 3 of the 4 cases cited.

> Judge Timothy J Kelly of the DC Circuit Court found that the original determination letters had language in them that seemed final, in contrast to the Department of Ed’s claim that it was provisional.

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