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The Federal Trade Commission is warning that personal information about high school and college students could be put at risk in the pending sale of property owned by ConnectEDU, which is going through a bankruptcy proceeding, InsideHigherEd.com reported today. ConnectEDU, which offered college and career planning services, filed for chapter 11 protection last month. In a letter to the bankruptcy judge on Friday, the FTC said that ConnectEDU's potential sale of its assets through the bankruptcy proceeding is not giving its individual customers "reasonable notice and the opportunity to remove personally identifiable data from the service," as the company's privacy policy has said it would.
http://www.insidehighered.com/quicktakes/2014/05/27/ftc-warns-student-p…

For more information and perspectives on student loan debt and bankruptcy, be sure to attend ABI’s Student Debt Symposium on Friday at the Georgetown University Law Center.
http://www.abiworld.org/SDS14

Seven Democratic members of Congress are pushing for clarity and lenience in how the Department of Education and its contractors forgive student loan borrowers who are bankrupt and unable to pay back their loan debt, the Chronicle of Higher Education reported today. "Because federal law treats student debt as nondischargeable in bankruptcy proceedings, borrowers can be burdened with this debt for a lifetime even if circumstances make it unlikely that the borrower will ever be able to repay," the members wrote on Friday in a letter to the education secretary, Arne Duncan. Under federal law, student-loan borrowers are unable to discharge their debt in bankruptcy unless they can demonstrate "undue hardship" in paying it back. Education Department contractors often block attempts to prove undue hardship, the letter argues, by "aggressively challenging" borrowers’ claims that they are unable to make payments. Signing the letter were Sens. Richard J. Durbin (D-Ill.), Jack Reed (D-R.I.), and Elizabeth A. Warren (D-Mass.), along with Reps. Steven I. Cohen (D-Tenn.), John Conyers (D-Mich.), Elijah E. Cummings (D-Md.), and Hank C. Johnson (D-Ga.).
http://chronicle.com/article/Education-Dept-Is-Urged-to/146679/

For further analysis and discussion of student loans and bankruptcy, be sure to attend ABI’s Student Debt Symposium on May 30 at the Georgetown University Law Center in Washington, D.C. To register, please click here: http://www.abiworld.org/SDS14

Sallie Mae, the giant student lender, and Navient, previously a loan servicing unit of Sallie Mae, have agreed to pay $97 million to settle allegations by federal regulators that military service members were charged excessive interest and fees on student loans, the New York Times reported today. The Justice Department said yesterday that beginning in 2005, the companies failed to cap interest on loans to military personnel at 6 percent — a ceiling they are entitled to as part of the Servicemembers Civil Relief Act. The department also asserted that the companies improperly obtained default judgments against service members.
http://www.nytimes.com/2014/05/14/your-money/sallie-mae-to-pay-fine-ove…

For more information on the Servicemembers Civil Relief Act, be sure to check out Bankruptcy and Debt under the Servicemembers Civil Relief Act available in the ABI Bookstore.
http://bookstore.abi.org/bankruptcy-and-debt-under-servicemembers-civil…

Midland Funding has a reputation of buying soured credit card debt and heading straight to court to collect, a tactic that consumer lawyers say scares people into settling, the Washington Post reported yesterday. The strategy has been so effective that in Northern Virginia alone Midland has recovered more than $27 million since 2003 — a year the firm filed a few dozen cases at most. But in the past four years, it has flooded courts from Loudoun County to Prince William County, Va. with nearly 11,000 lawsuits as companies overwhelmed by delinquent accounts have sold them for pennies on the dollar. And it’s not just happening in Northern Virginia. State attorneys general, judges and consumer lawyers nationwide are complaining of a broken debt collection system that allows companies such as Midland to file tens of thousands of cases built on flimsy documentation. The information Midland relies on is the same as is “used when credit card users call or get their balance online,” said Greg Call, general counsel of Encore, Midland’s parent company.

Two of the largest U.S. consumer debt buyers agreed to drop collections on about $16 million to settle allegations they pursued debtors in violation of New York law, an accord reached as federal regulators prepare to crack down on the growing industry, Bloomberg News reported yesterday. Portfolio Recovery Associates LLC, based in Norfolk, Va., and Sherman Financial Group LLC also agreed to pay a combined $475,000 in penalties, New York Attorney General Eric Schneiderman said yesterday. The firms, which buy mostly unpaid credit card debt at discounted prices and then get court judgments on the defaults, broke New York law by trying to collect obligations that were too old, the state said.

U.S. consumer credit recorded its largest increase in a year in March, boosted by growing demand for student loans and household borrowing to buy automobiles, Reuters reported yesterday. Total consumer credit increased by $17.53 billion to $3.14 trillion, the Federal Reserve said on Wednesday. That was the largest rise since February 2013. February 2014's consumer credit figure was revised lower to show a $12.99 billion increase rather than the previously reported $16.49 billion advance. Revolving credit, which mostly measures credit-card use, rebounded by $1.13 billion after falling by a revised $2.73 billion in February. The failure in March to recoup the prior month's decline suggests that households remain cautious about assuming too much debt. Non-revolving credit, which includes auto loans as well as student loans made by the government, rose $16.40 billion in March. February's figure was revised to show a $15.71 billion increase instead of the previously reported $18.91 billion surge.

More Americans than forecast filed applications for unemployment benefits last week as the Easter holiday period made it more difficult to adjust the data for seasonal variations, Bloomberg News reported today. Jobless claims increased by 24,000 to 329,000 in the week ended April 19, the most in a month, a Labor Department report showed today in Washington, D.C. The four-week average of claims, a less-volatile measure than the weekly figure, climbed to 316,750 from 312,000 the week before, the lowest since 2007. The number of people continuing to receive jobless benefits dropped by 61,000 to 2.68 million in the week ended April 12, the fewest since December 2007.

The Consumer Financial Protection Bureau (CFPB) said in a report today that some people who pay private student loans on time are being placed in default when the co-signer of their loans dies or declares bankruptcy, the Washington Post reported today. These “auto defaults” force borrowers to either immediately repay the full loan balance or ruin their credit, hurting their chances of getting a job, renting an apartment or buying a car. In its mid-year report on student loan complaints, the consumer bureau highlighted grievances that have emerged with more than 90 percent of private loans now being co-signed. Chief among the 2,300 complaints about private student loans submitted to the bureau in the past five months was the triggering of a default by the death or bankruptcy of a co-signer, even if the loan was being paid on time. To ease the burden on borrowers, the CFPB recommends that lenders consider alternatives to these defaults, such as giving the borrower the chance to find another co-signer. The bureau issued a set of sample letters that consumers could use to petition lenders to release a co-signer from the contract.

For further analysis of the student debt crisis, be sure to attend ABI’s Student Debt Symposium on May 30 at the Georgetown University School of Law. Please click here for more information.

The U.S. Department of Education is proposing new eligibility requirements for Parent PLUS loans, InsideHigherEd.com reported on Friday. Under draft regulatory language sent this week to members of the department’s negotiated rulemaking panel, parents would generally be barred from taking out PLUS loans if they have any type of debt exceeding $2,085 that is 90 or more days delinquent or that has been sent to a collection agency or charged off. The proposal also changes the look-back period for that “adverse credit” history from five years to two years. Under a separate policy change that goes into effect July 1, families that are denied a Parent PLUS loan because of an adverse credit history may appeal to the Education Department, which can then provide the loan if there are "extenuating circumstances."
http://www.insidehighered.com/print/quicktakes/2014/04/18/education-dep…

Click here to read the proposed requirements: http://www.insidehighered.com/sites/default/server_files/files/Issue%20…

For further analysis of the student debt crisis, be sure to attend the ABI Student Debt Crisis Symposium at the Georgetown University Law Center on May 30. For more information or to register, please click here: http://www.abiworld.org/SDS14

For rent and utilities to be considered affordable, they are supposed to take up no more than 30 percent of a household’s income, but that goal is increasingly unattainable for middle-income families as a tightening market pushes up rents ever faster, outrunning modest rises in pay, the New York Times reported today. The strain is not limited to the usual high-cost cities like New York and San Francisco. An analysis for the New York Times by Zillow, the real estate website, found 90 cities where the median rent — not including utilities — was more than 30 percent of the median gross income. In Chicago, rent as a percentage of income has risen to 31 percent, from a historical average of 21 percent. In New Orleans, it has more than doubled, to 35 percent from 14 percent. Zillow calculated the historical average using data from 1985 to 2000. Nationally, half of all renters are now spending more than 30 percent of their income on housing, according to a comprehensive Harvard study, up from 38 percent of renters in 2000.