Follow-up Notes: Kevin Carey's "Student Debt in America: Lend With a Smile, Collect With a Fist'

On November 30th, I posted a short piece about Kevin Carey's "Student Debt in America" essay, one which originally appeared in the NYT Upshot section. His article highlighted another extreme example of someone with a high level of debt. While it is true that these situations are of importance, as Carey points out, these pieces also serve to diminish the seriousness of the millions of Americans who don't necessarily have excessive levels of student loan debt. These stories don't grab headlines, but they are worthy of consideration, as these debtors are oftentimes one paycheck away from calamity. In addition, the psychological burden they must endure, being cognizant of their precarious financial situation, is also worth further consideration and research. On another note, I was surprised to see Carey's article appear when it did. I mean, why now? What prompted the NYT to assign him this piece or publish it? I ask these questions because the article does little to contribute to the overall story regarding the student loan debt crisis.

Those are just a few additional thoughts I wanted to share about this publication.

Must Know: Court Ruling In Borrower's Favor - Pele v. PHEAA (aka destroyer of joy, happiness, and good mental health)

A recent court ruling in October of 2015 could potentially be useful for a number of borrowers who read this blog.

The case was Pele vs. PHEAA (Pennsylvania Higher Education Assistance Authority). PHEAA is in the business of making millions of Americans' lives miserable, which is otherwise referred to as student financial aid services. They apparently even make the lives of people miserable who never take out loans with them. That was at least the case with Mr. Lee Pele. 

Mr. Pele began receiving calls from debt collectors, demanding he pay $137,000 in student loan debt. However, Mr. Pele insisted it was not his debt and that the servicing company mixed him up with another individual, one they were hellbent on most likely destroying, because that is what student financial aid services generally enjoy doing and profit from doing. 

Mr. Pele was incensed by what PHEAA did to his credit. He also said they royally screwed up his plans to purchase an engagement ring for his girlfriend. Mr. Pele filed a lawsuit against the loan servicer. 

PHEAA claimed that they had "sovereign immunity," thus could not be sued by Mr. Pele. It turns out, the court disagreed with PHEAA. Instead, the Fourth Circuit of Appeals said Mr. Pele could pursue his case against the loan servicer and ruled that the company did not have sovereign immunity. So, shitty PHEAA could not ruin the life of Mr. Pele, but luckily they have millions of other people to destroy, so that's still good news for them and their profit margins. 

This victory is still significant. If the court had ruled in PHEAA's favor, establishing that the company did have sovereign immunity, then it and potentially other loan servicers - otherwise known as destroyers of happiness, contentment, and  positive, healthy, mental well-being - could have gotten away with way shittier things than what they already do. In this case, it would have made it next to impossible for consumers to pursue suits against them in court. 

That was not the ruling, however. Instead, it was a win for borrowers, meaning that those with grievances now have the ability to take legal action against state agencies and other non-profit entities, otherwise known as vampires who suck all joy and happiness out of their "customers" in order to make a profit from the sham we know as the financialization of debt.  

Furthermore, if borrowers are having problems with their loan servicers, they can also send their complaints to their Attorney General's offices (the majority of these offices have Consumer Protection Agencies who deal with such grievances). 

So, theoretically, millions of borrowers - as a result of this ruling - should have more protections. They should also not have to resort to suing, as they can pursue resolutions via their Attorney General's office. 

Sources:

http://www.citizen.org/documents/fourth-circuit-decision-pele-pennsylvania-higher-education-assistance-agency.pdf  

http://www.bloomberg.com/news/articles/2015-10-23/court-rules-that-student-loan-company-isn-t-above-the-law

David Halperin's Bad News Regarding For-Profit EDMC

In case you missed this news from David Halperin, the giant for-profit EDMC might receive a sweetheart deal from Congress in a provision in the highway bill conference agreement. Halperin explains that if this goes through for EDMC, it could result in the company remaining eligible for federal student aid money, which is essentially welfare. The company receives 80% of its revenue from taxpayers.

Read Halperin's piece in its entirety here.

Kevin Carey's "Student Debt in America: Lend With a Smile, Collect With a Fist'

Kevin Carey's piece, "Student Debt in America: Lend with a Smile, Collect with a Fist," was published this past weekend. There are a lot of things that could be said about this piece, some good, some bad.

I'll save those remarks for later, but for now wanted to share it in case anyone missed its publication.

If you have any thoughts on how it was framed, I'd be interested in hearing them below.

The Geopolitics of Student Loan Debt

What are the contributing factors of the student loan debt crisis that make it a geopolitical issue?