Frequently Asked Questions

What is the Debt Collective?

The Debt Collective is an organization that helps people in debt work together as a group to fight back against creditors and the Department of Education. Debt Collective organizers and students launched the first student debt strike in US history in 2015. We believe that individuals shouldn’t have to go into debt for basic needs like education or health care.

 

Does debt striking work?

Yes. After students from Corinthian College went on strike in 2015, the Department of Education was forced to acknowledge that students have a right to relief when their school breaks the law. Before the strike, the Department was planning to ignore students’ rights and many experts in the field thought that nothing could be done about it. The strike campaign won the support of policy makers, elected officials, and high-profile organizations. The fight continues for a complete debt discharge for all defrauded borrowers, but hundreds of millions of dollars in Corinthian students’ loans have been cancelled.

 

Wouldn’t discharging the federal loans of defrauded students be costly to taxpayers?

No. The argument that cancelling student debt is bad for taxpayers is a talking point developed by the for-profit college industry to avoid accountability for their crimes.

 

Nobody’s taxes will go up if the government cancels the debts of defrauded students. The government can spend money (or stop collecting debts) without raising taxes. Congress knows this. The ‘Defense to Repayment’ law they wrote is very clear: if students are defrauded they do not have to pay their student loans. It does not say “if students are defrauded, the Department of Education should only discharge the loans if they think it will not be too costly.”

 

It is true that not collecting student loans will reduce the tens of billions of dollars of profit the Department of Education makes each year. This is why they pretend that they are protecting taxpayers by continuing to collect debts. If the Department really wants to get back the money it will lose, it should go after the corporations and investors who profited from the scam.

 

It’s also important to recognize the deeper hypocrisy at work: the Department of Education has already spent billions of dollars in federal money on for-profit colleges. Student loans, Pell Grants, and GI Bill benefits--supposedly meant to benefit poor and middle-class families--have been used to enrich investors. Yet it is only now that students are asserting their legal right to a debt discharge that the Department is concerned about “protecting taxpayers”.  Regulators care more about the interests of the rich and powerful than those defrauded by predatory colleges.

 

Should I stop paying my federal student loans?

If you stop payment on federal loans without entering into an income-based repayment, forbearance or deferral program, then you are delinquent on your loans. If you are delinquent for 270 days or more, you are in default, which can result in serious consequences. You should know your rights before you stop payment. Protect yourself whenever possible: IBR, forbearance, and deferral can all allow you to stop payment without facing collections or hits on your credit report. Also, if you file for Defense to Repayment, your loans should eventually be placed in “administrative forbearance”. We do not recommend that people go into default on their loans individually, if they can help it. That said, many of us are in default. It is easier when we do it together and support each other. A debt strike is a collective action that people take together to support and protect each other. This is why our slogan is: You are not a loan.

See http://www.studentloanborrowerassistance.org/ for more information on how student loans work.

 

What is Defense to Repayment?

DTR is the federal law that says that if you were defrauded by your school you can apply to the Department of Education for a discharge of your federal student loans. The Department of Education has long ignored this rule, but in 2015 the Debt Collective created an application that allowed thousands of former for-profit students to submit DTR applications. This has forced the issue: now the Department is reforming its DTR process. The more people that submit DTR, the more pressure they will feel to make it work.

 

Should I stop paying private student loans?

For private student loans, there are no formal programs that allow you to stop payment without consequences. You might be able to negotiate with your private student loan servicer, but that depends on the servicer. Non-payment on private student loans can also come with consequences for your credit rating, although you would have to be sued before a private student lender can begin to garnish your wages or seize your assets.

 

See http://www.studentloanborrowerassistance.org/ for more information on how student loans work.

 

What if I don’t know if I am in default?

If you don’t know your payment status for Federal student loans, go to the Federal Student Aid website (if you need to, go here to reset your PIN).

 

What if I’m a veteran who used my GI Bill benefits to go to a scam school? What happens to them?

In general, once you’ve used your GI Bill benefits, you cannot get them back. This is true for schools that close or schools that have defrauded you. We are researching what can be done about this and bringing together vets to build a campaign.

 

What if I don’t have all the documentation from my school when I fill out the Defense to Repayment App?

You should provide as much information as you have on the DTR app, but you should not worry if you do not have, say, transcripts, or some other particular document. The Department of Education has extensive documentation of who went to which school when and how much everybody took out in federal student loans. They also have detailed evidence of wrongdoing. Filing DTR is a way to provide additional information, to make sure they know that you were wronged, as well as showing that students are paying attention.

 

What happens to my loans after I file for DTR?

You can file for DTR no matter your loan status. You can even file after you have already repaid your loans.

 

Once you file for DTR, your loans should be put into “administrative forbearance”. It will take some time for the Department of Education to do so--they should notify you once they have. If it takes a long time, email fsaoperations@ed.gov and tell them to get their rear in gear. Administrative forbearance means that you do not have to pay anything on your loans while they review your application. There is no time limit for how long you can remain on administrative forbearance, unlike regular forbearance. And administrative forbearance does not count against your limit on regular forbearance. As with regular forbearance, interest accrues on the loans.

 

If you would prefer to keep paying on your loans or to continue in a grace period or deferment or some other loan status, you can request not to be put into administrative forbearance.

 

Until your loans are placed in administrative forbearance, you are in the same loan status as you were previously to filing DTR.

 

Will getting my loans discharged mean I have to give up my degree or course credits?

No. Getting your loans discharged just means getting your loans discharged. You keep whatever credentials and/or credits you earned at your school. Whether those credits or credentials will be helpful and/or transferrable is another matter.

 

Somebody is offering to help me consolidate my loans/lower my loan payments. Should I take them up on their offer?

For federal student loans, consolidation or changing your repayment plan is free. As the Department of Education itself advises, if somebody attempts to charge you to consolidate, apply for income-based repayment, or some other adjustment on your federal student loans, DO NOT AGREE TO IT. You should never pay for these services. Anybody who charges you is trying scam you.

 

For private student loans, consolidation amounts to taking out a new loan from another company to pay off all of your existing private loans. Whether or not this is a good idea depends on your situation. Always be careful to make sure you understand all the terms of a loan, including interest rates and fees.

 

Some private loan companies like SoFi have begun to offer a loan product (generally to borrowers with high credit ratings). that converts loans from public to private with a lower interest rate. As discussed above, private loans are much harder to discharge and do not have many repayment options. If you think you might be able to get a loan discharge, you should not convert your public loans into private loans.

 

ITT Tech Collective © 2016 | Designed by Hangar Bay 94