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The House Financial Services Committee will hold a hearing today at 10 a.m. EDT titled, "A $1.5 Trillion Crisis: Protecting Student Borrowers and Holding Student Loan Servicers Accountable." For more information, please click here. 

The issue of student loan debt and bankruptcy is the first problem addressed in the Final Report of the ABI Commission on Consumer Bankruptcy. Click here to download your copy. 

The House Financial Services Committee will hold a hearing tomorrow titled, "A $1.5 Trillion Crisis: Protecting Student Borrowers and Holding Student Loan Servicers Accountable." For more information, please click here. 

The issue of student loan debt and bankruptcy is the first problem addressed in the Final Report of the ABI Commission on Consumer Bankruptcy. Click here to download your copy. 

The owner of the now-shuttered Boston Language Institute misled customers and violated state consumer protection laws, Massachusetts Attorney General Maura Healey alleged in a lawsuit filed last week, the Boston Globe reported. Siri Karm Singh Khalsa, the owner of the language school, was aware of the dire financial situation facing the school in the weeks and months before it closed in mid-January, but he actively recruited students, encouraged them to pay in advance, and after the closure could not give them refunds, even though the company guaranteed them, Healey’s office alleged in court documents. “Boston Language Institute was on the brink of financial collapse, but the owner continued to enroll students and offer special discounts for classes that would never happen,” Healey said. “We are suing to get students their money back.” Khalsa disputes the allegation that he misled customers and said that he has been working to repay students who had enrolled and employees who were not paid when the school abruptly closed. The Kenmore Square language school was a longstanding institution in Boston. For 38 years it helped students learn Spanish, Vietnamese, and dozens of other languages, along with teaching English-language learners.

Students who say they were defrauded by colleges and want their education loans erased will have a tougher time seeking forgiveness under newly issued regulations from the Trump administration, the Washington Post reported. A 1995 law known as “borrower defense to repayment” gives the Education Department authority to cancel the federal debt of students whose colleges misled them about graduation or job placement rates to get them to enroll. The Obama administration updated the regulation to shift more of the cost of forgiveness onto schools, after the closure of for-profit giant Corinthian Colleges ushered in a flood of claims. The Trump administration on Friday finalized its rewrite of the Obama-era rules, after two years of trying to delay and then scuttle the regulations. Those efforts have spawned lawsuits, with the courts forcing the Trump administration to implement the 2016 rules and process a backlog of applications for debt relief. Still, more than 180,000 borrowers await answers. The Trump administration estimates the rules will save the federal government $11 billion over 10 years — loan payments that would have gone uncollected under existing rules. The regulations also hand a victory to for-profit colleges that derided the Obama rules as harmful to their programs. Most borrowers who seek relief from debt attended for-profit campuses. Read more. 

In related news, the House Financial Services Committee will hold a hearing next Tuesday titled "A $1.5 Trillion Crisis: Protecting Student Borrowers and Holding Student Loan Servicers Accountable." For more information, please click here. 

The issue of student loan debt and bankruptcy is the first problem addressed in the Final Report of the ABI Commission on Consumer Bankruptcy. Click here to download your copy. 

Senator Bernie Sanders is proposing to cancel an estimated $81 billion in past-due medical debt owed by Americans as he vies for the 2020 Democratic presidential nomination using a platform focused on health care Bloomberg News reported. The plan is still being formulated and details — including how it would be financed — weren’t addressed in an emailed release from the Sanders campaign on Saturday. The full proposal will be announced within a month. “Your financial life and future should not be destroyed because you or a member of your family gets sick,” the Vermont senator said in a statement. “I am sick and tired of seeing over 500,000 Americans declare bankruptcy each year because they cannot pay off the outrageous cost of a medical emergency or a hospital stay.” Under Sanders’ plan, the federal government would negotiate and pay off past-due medical bills in collections that have been reported to credit agencies. Sanders proposes to repeal what his campaign termed “the worst elements” of a 2005 bankruptcy reform law, and allow other existing and future medical debt to be discharged. The plan also would ensure that unpaid medical bills didn’t hurt people’s credit scores.

An Education Week analysis found dozens of posts on Facebook and Twitter targeting parents who might need a "back to school" loan. Some of these loans — which are personal loans and can be used for anything, not just school supplies — are considered predatory, experts say, with sky-high rates and hidden fees. "Any time there are expenses that are coming up in a family's life, whether it's back-to-school or Christmas, we tend to see a push from lenders to try to get people to come in and use their products," said Whitney Barkley-Denney, the senior policy counsel for the Center for Responsible Lending. "These loans are built on the premise of you taking out one loan after another after another, to keep people in that debt cycle." Families of K-12 students plan to spend, on average, a record $696 this back-to-school season, according to the National Retail Federation, with the most money going toward clothing and accessories, followed by electronics like computers and calculators, shoes, and school supplies ranging from pencils to backpacks. "Back to school expenses have you stressing?" one Facebook ad for the Tennessee-based company Advance Financial 24/7 read. "We can help." Clicking on the link in the ad brings people to an application page for flex loans, an open line of credit that allows borrowers to withdraw as much cash as they need up to their credit limit, and repay the loan at their own pace. But it's an expensive line of credit — Advance Financial charges an annual percentage rate of 279.5 percent.