NACBA Washington Update

NACBA’s Washington Update- 4/13

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Read NACBA’s Last Washington Update of 2017!

 

Take a moment to read NACBA’s last Washington Update of 2017! Stay informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.

ON THE HILL  Earlier this month, Congressman Tom Garrett (R-VA) introduced H.R.4584, the Student Security Act. H.R. 4584 is described as a completely voluntary program, that would empower borrowers who opt in to receive $550 in student loan forgiveness (or roughly the average cost for 1 credit hour at a public university) in exchange for raising a participant’s full-retirement age for Social Security benefits by 1 month with a maximum amount of $40,150 in debt relief and a corresponding 6 years, 1 month raise in retirement.

Two House Democrats sent letters on December 18th to four of the largest student loan servicing companies, seeking information about their policies and procedures for collecting. Reps. Emanuel Cleaver (D-MO) and Pramila Jayapal of (D-WA) say they’re concerned about “the rising rate of student loan defaults and continuous claims of fraudulent practices in lending, servicing, and collecting” of student loans. The two lawmakers urged the companies to take steps to improve customer service and focus more attention on “high risk” borrowers. Read the letters they sent to the leaders of Navient, Nelnet, Great Lakes and FedLoan Servicing.

On Wednesday, December 13th House Republicans passed a partisan revision of the Higher Education Act that would restructure federal student loans and reduce accessibility to higher education by limiting financial aid options. The bill consolidates the six current federal student loans into three and removes the Graduate PLUS and Parent PLUS loan options. PLUS loans offer no limit and cover the entirety of the institution’s cost of attendance. Under the House’s revision, all federal loans would have maximums, with annual and lifetime loan caps.

IN THE AGENCIES The Education Department announced Wednesday, December 20th a reversal of the Obama administration policy of wiping out student debt. This means that students who were defrauded by the for-profit Corinthian Colleges may not get their loans forgiven entirely. Under President Barack Obama, tens of thousands of students deceived by the now-defunct schools had more than $550 million in federal student loans canceled in full. But Education Secretary Betsy DeVos announced Wednesday she is putting a new process in place that she says is more efficient and fair. The department will now look at average income for specific programs to determine if the loans should be forgiven fully or partially.

California Attorney General Xavier Becerra filed a lawsuit on December 14th against the U.S. Department of Education and its Secretary, Betsy DeVos, for refusing to process debt relief claims submitted by tens of thousands of students who took out federal student loans to attend Corinthian Colleges, Inc. (Corinthian). Students became eligible to apply for this relief after the courts found that Corinthian defrauded these students in violation of California consumer protection laws. More than 1 in 4 of those students with pending debt relief claims resided in California.

FROM THE INTEREST GROUPS Americans for Financial Reform (AFR) strongly condemns the Department of Education’s announcement that they have denied relief to 8,600 borrowers who applied for debt discharges through borrower defense to repayment. The Department has not specified—but must immediately supply—the reasons for those denials, and how many of them came from Corinthian or ITT, schools that closed under the weight of their own illegal and abusive acts. “The news of the Department’s scheme to grant only partial relief to scammed students is just one more piece of an abundance of evidence that the Trump Administration and the DeVos Department of Education care more for the proprietary institutions that break the law than they do for the students they defraud,” said Alexis Goldstein, Senior Policy Analyst at Americans for a Financial Reform. “For Secretary DeVos, it’s predatory companies first, students last.”

 

Feedback should be directed to Krista.DAmelio@NACBA.com

Stay Informed With NACBA’s Washington Update!

Stay updated on the significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks in today’s NACBA’s Washington Update.

ON THE HILL On Friday, December 1st House Republicans proposed a sweeping overhaul of a federal lawthat governs almost every aspect of higher education, a plan that would eliminate some popular student aid programs and impose restrictions on others. The legislation seeks to reshape higher education by limiting the federal role in a way that will make colleges and universities more responsive to the needs of employers while reducing taxpayers’ stake in the financing of education. The bill is the first significant step in the reauthorization of the Higher Education Act of 1965.

IN THE AGENCIES The U.S. Department of Education is convening a negotiated rule-making panel to try and create rules around student loan consumer protections. The panel will hash out two rules that were already negotiated previously: borrower defense to repayment, which was slated to be updated last July, and gainful employment, which was put into effect during the Obama administration but has not been fully implemented.

OTHER Amendments to the Federal Rules of Bankruptcy Procedure became effective December 1, 2017.

 

Feedback should be directed to Krista.DAmelio@NACBA.com

Stay Informed With NACBA’s Latest Washington Update

Happy Veterans Day to all those who have served and continue to serve our country. NACBA appreciates your service!

Stay informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks with NACBA’s latest Washington Update.

ON THE HILL Congressman Bob Goodlatte (R-VA), Chairman of the House Committee on Judiciary, announced on Thursday, November 9th that he will not seek reelection in 2018. Goodlatte extend his deepest thanks to the people of Virginia’s Sixth District and advised that there is much he hopes to accomplish in the next year, including simplifying the tax code in order to stimulate job growth, enacting criminal justice reform, repealing Obamacare, and advancing protections of the freedoms and liberties enshrined in our Constitution.

The House passed H.R. 2201, the Micro Offering Safe Harbor Act, on November 9th. This Act is said to build on Congress’ commitment to give startup businesses the room to grow. By clarifying the rules of the Securities Act to exempt nonpublic offerings—such as funding from family and friends—from unnecessary regulatory burdens, new private companies can operate without fear of unintentionally running afoul of the law.

The House Republicans’ Tax Cuts and Jobs Act calls for eliminating a number of special interest deductions — including those for medical expenses, adoption, and student loan interest. This means that millions of Americans would lose the ability to deduct up to $2,500 in student loan interest under the Republican tax bill, a proposal that education advocates say will make college less affordable. Supporters of the measure say the loss will be offset by other provisions in the bill. In 2015, according to the most recent government data available, 12.2 million taxpayers took the student loan deduction, which phases out at higher incomes. Repealing the provision would mean that the cost of student loans for borrowers would increase by some $24 billion over the next decade, according to the group, which represents 1,600 public and private colleges and universities.

On November 1stPresident Trump signed a repeal of the Consumer Financial Protection Bureau’s (CFPB) rule on forced arbitration, winning praise from banking and business groups. Trump approved the resolution to repeal the CFPB rule, meant to prevent banks and credit card companies from blocking customers from joining class-action lawsuits against them, in a private Oval Office signing. Democrats and the CFPB criticized Trump, claiming he sides with banks over consumers. They’ve long called for action on forced arbitration, which they say denies fraud victims basic legal rights, and the CFPB rule was the most ambitious effort to regulate the practice.

SPECIAL VETERAN UPDATES ON THE HILL On November 7th the House passed seven Veterans Bills all aimed to help veterans find jobs and receive the health care they need. The seven pieces of legislation that passed are: H.R. 918, Veteran Urgent Access to Mental Healthcare Act, H.R. 1133, Veterans Transplant Coverage Act, H.R. 1900, National Veterans Memorial and Museum Act, H.R. 2123, Veterans E-Health and Telemedicine Support (VETS) Act, H.R. 2601, Veterans Increased Choice for Transplanted Organs and Recovery (VICTOR) Act, H.R. 3634, Securing Electronic Records for Veterans Ease (SERVE) Act, and H.R. 3949, Veterans Apprenticeship and Labor Opportunity Reform (VALOR) Act.

IN THE AGENCIES The Trump administration has signaled to members of an Education Department rulemaking panel that the administration opposes a complete ban on colleges’ use of mandatory arbitration agreements. The department’s negotiated-rulemaking committee is slated to meet next week for the first time to begin hammering out the Trump administration’s replacement for an Obama-era regulatory package known as “borrower defense to repayment.” The rules are aimed at protecting student loan borrowers defrauded by their schools and were halted by Education Secretary Betsy DeVos amid the upcoming rewrite. Consumer advocates and congressional Democrats had advocated for the Education Department’s ban on those practices, which are common at for-profit colleges. Proponents of the ban argue that arbitration can put students at a disadvantage in resolving their complaints and keeps allegations of misconduct against the college secret. Department officials argued in an issue paper on the topic that banning mandatory arbitration agreements and class action waivers violate the Federal Arbitration Act and suggested that the Higher Education Act doesn’t empower them to create such a ban. They also pointed to a resolution President Donald Trump signed last week that overturned the CFPB’s mandatory arbitration rule.

Feedback should be directed to Krista.DAmelio@NACBA.com

Stay Informed With NACBA’s Latest Washington Update

NACBA’s Krista D’Amelio keeps you updated and informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.  Take a look at what’s happening in DC in the latest Washington Update.

ON THE HILL On October 11th Rep. John Garamendi (D-CA) and Rep. Brian Fitzpatrick (R-PA) introduced the bipartisan Student Loan Refinancing and Recalculating Act, H.R. 4001, to address the ballooning student loan debt crisis in America that cripples over 40 million Americans and their families. This legislation would allow students to refinance their student loan interest rates, lower future student loan interest rates, eliminate origination fees on student loans, delay student loan interest rate accrual for low-income and middle-class borrowers while they are pursuing their education, and allow for borrowers in medical or dental residencies to defer payments until the completion of their program.

Chief Deputy Whip Patrick McHenry (R-NC), the Vice Chairman of the House Financial Services Committee introduced H.R. 4028, the Promoting Responsible Oversight of Transactions and Examinations of Credit Technology Act of 2017, or the PROTECT Act, on October 12th. Following the data breach at Equifax that exposed the personal data of over 140 million Americans, this bill would require the federal government to create uniform cybersecurity standards for credit bureaus and submit them to onsite examinations. The bill would also create a national framework for credit freezes so that victims of identity theft, active military personnel, people over 65 years of age, and children are protected. Finally, the bill would stop the credit bureaus from using Americans’ Social Security Numbers as a basis for identification by 2020.

IN THE AGENCIES The U.S. Department of Education recently released data on the national student loan FY 2014 cohort default rate. The rate increased slightly from 11.3 percent to 11.5 percent for students who entered repayment between fiscal years 2013 and 2014. During the tracking period for the FY 2014 borrower cohort (Oct. 1, 2013 to Sept. 30, 2016), more than five million borrowers entered repayment, and 580,671 of them—or 11.5 percent—defaulted on their loans. Those borrowers attended 6,173 postsecondary institutions across the nation.

The Consumer Financial Protection Bureau (CFPB) finalized a rule that is aimed at stopping payday debt traps by requiring lenders to determine upfront whether people can afford to repay their loans on October 5th. These strong protections cover loans that require consumers to repay all or most of the debt at once, including payday loans, auto title loans, deposit advance products, and longer-term loans with balloon payments. The Bureau found that many people who take out these loans end up repeatedly paying expensive charges to roll over or refinance the same debt. The rule also curtails lenders’ repeated attempts to debit payments from a borrower’s bank account, a practice that racks up fees and can lead to account closure.

FROM THE INTEREST GROUPS On September 27, 2017 following the U.S. Trustee Program’s (USTP) recently issued guidelines for natural disasters, NACBA and NCLC wrote a joint letter urging for approval of a waiver of credit counseling requirements in the areas of Texas, Florida, and Puerto Rico affected by Hurricanes Harvey, Irma, and Maria. NACBA and NCLC received a response on October 4th from the USTP. Specifically, the response letter calls to light the action of acting US Trustee Guy Gebhardt issuing a temporary waiver of credit counseling and debtor education requirements for the areas in Puerto Rico and US Virgin islands affected by Hurricanes Irma and Maria.

NCLC released findings on October 11th that reveals discretionary pricing and racial disparities in auto add-on products sold by car dealers. Their report:  Auto Add-Ons Add Up: How Dealer Discretion Drives Excessive, Arbitrary, and Discriminatory Pricing, is an analysis of a national data set of three million add-on products sold from September 2009 through June 2015. Key findings include: add-ons lead to unreasonably high and inconsistent pricing, and Hispanics pay higher prices than non-Hispanic customers for the same product.

Feedback should be directed to Krista.DAmelio@NACBA.com

NACBA’s Latest Washington Update

 

Read the latest update from Washington, designed to keep NACBA members informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.

ON THE HILL  A vote in Senate on the Consumer Financial Protection Bureau’s arbitration regulation is imminent. Republican leaders are considering whether to bring to the Senate floor a bill that would kill the arbitration regulation finalized by the CFPB this summer using a special legislative tool that allows them to avoid a Democratic filibuster if they act within 60 legislative days of implementation. Senators Johnny Isakson (R-GA) and David Perdue (R-GA) are cosponsors of the legislation in the Senate. The debate comes three weeks after a public outcry compelled the Atlanta-based Equifax to quickly drop so-called forced arbitration language from the terms of service of the free credit monitoring service it was offering its customers after its massive data breach. The House of Representatives already passed a “resolution of disapproval” to revoke the CFPB’s arbitration rule. A total of 23 Senate Republicans filed a resolution at the end of July to rescind the CFPB rule. Senator Sherrod Brown (D-OH), ranking member of the Senate Committee on Banking, Housing, and Urban Affairs, has promised to fight to keep the rule.

IN THE AGENCIES On September 14th, Clifford White, Director of the Executive Office of the U.S. Trustees addressed the National Association of Bankruptcy Trustees at the 35th Annual Convention. He discussed topics that included chapter 7 trustees, guidance on natural disasters, marijuana assets, and stale debt claims—to name a few. Amongst things he noted for natural disaster guidelines were: the US Trustee Program (USTP) will not take enforcement action against debtors who are unable to file or produce documents required by the Code as a result of a natural disaster, if they otherwise are eligible for relief; USTP will not move to dismiss under the “means test” if income loss, increased expenses, or other consequences of a natural disaster constitute “special circumstances” sufficient to rebut the presumption of abuse; and even if conditions do not justify a United States Trustee granted statutory waiver of the credit counseling requirements for a district, USTP will exercise prosecutorial discretion in considering whether to take action to dismiss the case of a debtor who, as a result of a natural disaster, experiences difficulty in obtaining a credit counseling certificate or whose filing was delayed beyond the 180-day period following the debtor’s receipt of credit counseling.

The Federal Trade Commission launched a web page highlighting the work of the agency’s new Military Task Force, which is aimed at identifying the needs of military consumers and developing initiatives to empower servicemembers, veterans, and their families, including through law enforcement actions. The Military Task Force, comprised of a cross-section of agency representatives, is part of the FTC’s ongoing and collaborative effort to provide resources for the military community. Servicemembers, like all consumers, are potential targets for fraudsters. Certain scams are more likely to target the military community because those families may relocate frequently and because many service members are living on their own and earning a paycheck for the first time.

FROM THE INTEREST GROUPS Following the U.S. Trustee Program’s recently issued guidelines for natural disasters mentioned above, NACBA and NCLC wrote a joint letter urging for stronger relief for bankruptcy debtors in Texas, Florida, and Puerto Rico proportionate to the serious problems those hurricane victims are now facing. Specifically, NACBA and NCLC request USTP approve a waiver of credit counseling requirements in the areas of Texas, Florida, and Puerto Rico affected by Hurricanes Harvey, Irma, and Maria.

OTHER A report was recently published that analyzed issues of bankruptcy and race in America. Interested parties can access the report online.

 

Feedback should be directed to Krista.DAmelio@NACBA.com