The Reasons to Be Wary of Reports About 'Forgiven' Student Loan Debt

iStock
iStock

The New York Times created a considerable stir in July 2017 by detailing a widespread student loan repayment crisis. According to the paper, one of the largest holders of private loans, National Collegiate Student Loan Trusts, had been struggling to provide documentation that proves it owns the $5 billion in delinquent accounts that it was attempting to collect. Without that paperwork, dozens of lawsuits brought against defaulting borrowers were being dismissed.

In September 2017, the Consumer Financial Protection Bureau settled with National Collegiate and ordered them to refund payments and penalties made by borrowers whose debts National Collegiate couldn't prove were owed. An auditor was then hired to evaluate the Trust's outstanding loans to see if they were collectable.

A lack of a paper trail is never a good thing for the plaintiff in attempting to collect a debt, and some student loans may wind up being fully "forgiven" as the audit continues. But these types of headlines shouldn't give you high hopes that your outstanding loan will be erased. Here’s why.

First, it’s helpful to understand how a typical chain of custody works for private student loans. (Federal loans, which typically have more forgiving terms, are a separate issue entirely.) Banks and other lenders offer loans to applicants, then turn around and sell bundles of those loans to a depositor. That depositor will offer the loans to an umbrella organization like National Collegiate, which is comprised of 15 private trusts holding the paper on more than 800,000 loans.

This lengthy chain of custody is where the problems begin. Because loans pass through several hands, it’s not always clear who has retained the documentation needed by courts to prove that National Collegiate is the owner of the debt they’re attempting to collect from a borrower in default. As a result, judges tasked with these cases often have no choice but to dismiss them.

That led to a series of headlines about $5 billion in “forgiven” debt, which may sound comforting to someone burdened with a towering student loan at exorbitant interest rates. However, as several attorneys speaking to the media have pointed out, it’s not that simple. The cases that have been dismissed were in court because the borrower was already in default. In situations where National Collegiate can prove ownership of the debt, those debtors are facing wage garnishment and a negative impact on their credit score. Simply defaulting on a loan and hoping you happen to be one of the people whose paperwork is incomplete is a dangerous form of wishful thinking.

In the event you had no choice but to default and might benefit from National Collegiate's poor record-keeping, you may not walk away unscathed. According to debt relief attorney Daniel Gamez, a student borrower who sees his or her case dismissed is not facing a clean slate. National Collegiate is fighting so many defaulted loans that they may choose to drop cases based on logistical issues like witness scheduling. Still, even if the lawsuit is dropped, National Collegiate may have the option to refile it at a later date—this time armed with the documentation and resources they need. And any debt, even if it’s been declared unenforceable, may still affect your credit score.

Ultimately, whether or not National Collegiate can produce paperwork doesn’t change the fact that a borrower has a student loan that they’ve agreed to repay. As a creditor, National Collegiate is likely to take every legal measure available in order to collect on that debt. While those amounts may be “forgiven” in court, they’re not likely to be forgotten.

If you happen to be struggling with private loan repayments, it's not a good idea to hope some misplaced documents might spare you financially. Instead, try to be proactive. A growing number of student debt clinics are popping up across the country to advise those who are burdened by outstanding balances. Organized by the American Federation of Teachers, these classes simplify the complexities involved in loan forgiveness options and can help you plan a course of action. And while federal loans typically have the most flexible methods of lowering balances, you can still cope with private loans via refinancing that can lower interest rates, monthly payments, or both.

Celebrate the Holidays With the 2020 Harry Potter Funko Pop Advent Calendar

Funko
Funko

Though the main book series and movie franchise are long over, the Wizarding World of Harry Potter remains in the spotlight as one of the most popular properties in pop-culture. The folks at Funko definitely know this, and every year the company releases a new Advent calendar based on the popular series so fans can count down to the holidays with their favorite characters.

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Right now, you can pre-order the 2020 edition of Funko's popular Harry Potter Advent calendar, and if you do it through Amazon, you'll even get it on sale for 33 percent off, bringing the price down from $60 to just $40.

Funko Pop!/Amazon

Over the course of the holiday season, the Advent calendar allows you to count down the days until Christmas, starting on December 1, by opening one of the tiny, numbered doors on the appropriate day. Each door is filled with a surprise Pocket Pop! figurine—but outside of the trio of Harry, Hermione, and Ron, the company isn't revealing who you'll be getting just yet.

Calendars will start shipping on October 15, but if you want a head start, go to Amazon to pre-order yours at a discount.

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Want to Fall Asleep Faster? Try This Breathing Technique

Andrea Piacquadio, Pexels
Andrea Piacquadio, Pexels

Struggling to fall asleep can feel like a hopeless battle. It often seems like the harder you try turning your brain off, the less likely it is to happen. One way to trick yourself into falling asleep fast is finding something to concentrate on other than how long you've been awake. For nights when your thoughts just won't stay quiet, try the 4-7-8 technique.

According to Simplemost, the 4-7-8 breathing method is meant to combat anxiety, restlessness, and other enemies of a good night's sleep. The actual technique is simple: Just inhale for four seconds, hold your breath for seven seconds, and exhale for eight seconds. Like counting sheep, measuring out your breaths gives your brain something to do that isn't obsessing about your hectic day or the day ahead.

Taking slow, deliberate breaths has also been proven to reduce stress. Neurons that influence calmness have been found in the breathing control centers of mouse brains. In humans, deep breathing has long been central to mindfulness practices like yoga and meditation. The 4-7-8 breathing technique functions as both a distraction from your thoughts and a way to combat any anxious sensations that may be keeping you awake.

The next time you find yourself tossing and turning at night, try anywhere between three and eight rounds of this breathing technique to calm your body and mind. And to get the best rest possible, make sure you're settling into the best sleep position for your health.

[h/t Simplemost]