In case of debt struggles, you might feel alone and helpless. While your debt concerns can be significant, there are still some organizations that care about the well-being of student loan borrowers. Student Borrower Protection Center is one of those parties who find the problems in the student debt industry and help policymakers to design more effective solutions.
Although the SBPC does not provide direct solutions to struggling borrowers, it helps debtors to raise their voices and highlight their stories. Through research and investigation, the center detects the main flaws and tries to hold parties accountable to take action.
This guide explains what the SBPC is and what it does. Besides, we present strategies if you are dealing with debt struggles right now.
Student Debt Issue
Unfortunately, currently, a huge number of people- 45 million- owe around $1.7 trillion debt incurred for educational purposes. Even worse, around two of those debtors default on student debt every minute.
The Student Borrower Protection Center claims that student debt creates challenges both on an individual and macroeconomic level. Individually, borrowers face difficulties buying a house or improving their living standards while barely making monthly minimum payments. On the other hand, this issue leads to racial inequality and the wealth gap at the macroeconomic level. Besides, a solution to the student debt crisis is not readily available as it takes decades for a borrower to pay off a student loan debt.
Additionally, the center also notes that the industry is not properly regulated. Many players in the student debt market are big organizations like private lenders or debt collectors who profit by putting borrowers in financial distress. Even worse, when a debtor defaults, they use all pressuring techniques to collect the debt. As a result, single-parent families lose their wages, seniors lose their Social Security payments, or they revoke teachers’ licenses.
What is the Student Borrower Protection Center?
Student Borrower Protection Center is a nonprofit organization helping borrowers reduce their student debt burden. Although the organization does not guide or help borrowers with exact solutions, it allows debtors to raise their voices. Besides, they empower policymakers and advocates to take initiatives. In this way, the SBPC gathers attention on this massive issue- the student debt crisis. Here are some of their projects to better understand what the Student Borrower Protection Center does.
1. Justice Project
Partnered with State Attorney Generals, labor unions, State Banking departments, and consumer protection agencies, the Justice project aims to empower officials to protect borrowers’ rights.
For example, the project aims to hold parties accountable against laws and ethics. The Student Borrower Protection Center has briefed many lawsuits to help borrowers fight against the huge organizations. In this way, they supported public service workers when they accused PHEAA of mishandling Public Service Loan Forgiveness. They were also briefed in a lawsuit where the Kentucky Attorney General requested an investigation of PHEAA.
Besides briefing, they also join lawsuits where borrowers are victimized. In March 2020, the SBPC filed a lawsuit with Towards Justice and Berger Montague to demand some lenders stop debt collection as the government ordered due to the pandemic. Unfortunately, some of them still required debt collection and falsely reported missing payments to credit agencies.
Additionally, the center also tries to increase information flow. For example, they held a symposium on student debt and hosted attorneys to discuss strengthening government protection on borrowers.
2. Supporting Borrowers in Public Service Loan Forgiveness
Another focus area of the Student Borrower Protection Center is the Public Service Loan Forgiveness program. Although this program aims to help public service workers get debt relief, many applicants failed. The program’s success rate fell to around 1% due to enrolling in the wrong payment plan, having an eligible loan, or having a loan servicer who processed payments wrong. Unfortunately, the Public Service Loan Forgiveness requires at least ten years of payment, and any mistake causes loss of such a long time.
Hence, the center aims to help more borrowers understand the eligibility requirements and recent opportunities in the PSLF program. It is possible to find an FAQ section or watch different videos where the center explains the forgiveness program to increase awareness.
3. Protecting Civil Rights
As mentioned before, the Student Borrower Protection Center also claims that the student debt crisis has a macroeconomic impact due to generating wealth gap or racial inequality. The SBPC aims to explain how student debt creates unequal distress on people of color or creates economic disparity. The center prepared multiple reports where these consequences are more visible. Their findings were even highlighted in the news by NBC or the Washington Post.
4. Repayment during COVID-19
The Student Borrower Protection Center provides resources to keep debtors informed about the benefits regarding COVID-19. Currently, there is a non-repayment benefit which is expected to end in February 2022. The center has a separate FAQ section regarding the repayment process.
Besides, they provide contact points per state to help borrowers get more information. Yet, the non-repayment process does not apply for private student loans. Although the center has no solution provided to such borrowers during the pandemic, they take action for more meaningful student loan benefits in the future.
5. Investigation of Different Federal Programs
The SBPC investigates different federal programs, like Public Service Loan Forgiveness or income-driven repayment plans. The main goal is uncovering flaws and requesting changes for the well-being of borrowers. The Student Borrower Protection Center sheds light on failure and calls responsible organizations to action.
For example, one of their investigation areas is Income-driven repayment plans. This repayment option is supposed to help borrowers get affordable monthly payments. In addition, this program brings forgiveness for the remaining amount when the repayment period ends.
However, the center claims that the Income-driven repayment plan did not benefit borrowers as it promised. Instead, some illegal practices, combined with the program’s ineffective design, left borrowers in bigger challenges. You can find multiple analysis and investigation reports on the official website. Some of these reports are about how the repayment plan is ineffective for people of color or how the program failed to help millions of borrowers. Yahoo Finance and Money.com also shared the findings of these investigations.
6. Law Initiative
The Student Borrower Protection Center partnered with UC Irvine School of Law to create the nation’s first academic center for student debt and law. This center brings consumer law scholars together to stimulate academic research on student debt. The project offers grants to researchers and collects data to help participants find valuable insights.
How to Get Help from the SBPC?
The center helps different organizations to protect borrowers’ rights and influence policymakers to take action. However, it does not provide direct help to borrowers if they face difficulty in repayment. In other words, the Student Borrower Protection Center helps borrowers indirectly by finding their problems, highlighting loan stories, and partnering with various parties to develop solutions in the future.
Finding Solutions to Debt Challenges
If you need help or advice with your debt challenges, you will not benefit from the SBPC. However, in the following sections, we will explain how you can get help for your challenges and your options.
1. Contact Loan Servicer
Loan servicers are intermediaries between borrowers and the Education Department. They process the payments and guide if borrowers face challenges. If you face any difficulty, it is better to contact the loan servicer immediately. They can find solutions such as enrolling you in more affordable Income-driven plans to help you.
However, recently, there have been cases when borrowers accused loan servicers of improper service. The Student Borrower Protection Center also helps some of these lawsuits against the loan servicers for mishandling the payments. Allegedly, loan servicers failed to process debt payments or did not recommend the best solutions for borrowers. Hence, you should not only follow the instructions of a loan servicer. Instead, it is better to know your options and evaluate the loan servicer’s operations.
If you have private loans, you should contact the private lender instead of the loan servicer. Yet, there are not many debt management strategies that you can benefit from in case of difficulties. In most cases, your only option is paying the debt. Therefore, keep reading this guide as we will share some strategies for private loan borrowers in the following sections.
2. Get Expert Help
Another party that you can get help from is a student loan expert. Debt specialists, like those in Student Loans Resolved, have more knowledge and experience in debt management. For years, these experts listened to borrowers’ problems and worked together for a solution. Hence, they can analyze your finances and advise the most effective strategy.
What are Your Options?
Whether you get help for your debt challenges, you should have a prior background in debt management solutions. In this way, you can evaluate each option and choose the most effective one wisely.
Borrowers have different problems when it comes to student debt. Some struggle with repayment because they face financial challenges. Others were misguided and enrolled in worthless educational programs. As a result, they cannot find a well-paid job to pay off their debt obligations. Additionally, some borrowers can repay the debt, but they do not want to waste more money or time on repayment and look for faster ways to get rid of the debt concerns. In the following section, let’s get to know different solutions per debt issue.
1. Borrower Defense
Borrower Defense would be a great solution if the schools misled you. The Student Borrower Protection Center has programs to investigate for-profit schools and ensure students get what they are promised. Yet, many borrowers are still struggling because they got worthless degrees ( if they could ever get a degree).
The problem is that school officials can lie to prospective students to convince them to enroll. For example, they exaggerate job replacement rates after graduation or understate the real cost of education. In some other cases, the quality of education is not at promised level, or credits are not transferable although the enrollment officers claimed so. In short, if you were misled, you can raise a claim against repayment. This process is done through the Borrower Defense to Repayment program.
If you have federal Direct Loans, you can apply for the Borrower Defense program. Unfortunately, FFEL, Perkins loan borrowers, or private student loan debtors cannot qualify for this program.
The main requirement in this program is proving that if the school did not mislead you, you would not have chosen to study. As a result, you would not have a student debt to repay. Therefore, you should collect all necessary documents to prove this claim. For example, you can submit a brochure where false advertising strategies were used.
Alternatively, you can submit email communications. Besides, try to be as clear as possible when you organize your arguments. In this way, you can prove your case easily and get forgiveness for your debt challenges.
2. Income-driven Repayment
But what if you face financial difficulties? In this case, you have access to multiple solutions, which the Student Borrower Protection Center also helps debtors understand. One of these solutions is enrolling in an Income-driven repayment plan. This plan determines the monthly repayment amount based on income level and family size. If you earn less, your monthly payments get lower with this plan. Some borrowers could even qualify for $0 monthly payments in extreme financial situations. If you face financial challenges, you can request the loan servicer to change your repayment plan.
Another benefit of an Income-driven repayment plan is that you can get forgiveness for the remaining debt balance once the repayment period ends. Usually, these plans take 20-25 years to repay debt.
There exist several types of Income-driven repayment plans, such as the Pay as You Earn or Income-contingent plan. You can check each option in detail in our blogs or on the official Student Aid website. Each plan has different eligibility requirements, payback period, and rates. You can analyze these options and choose the most suitable one for your finances.
Income-driven repayment is a long-term solution. With affordable monthly payments, you can effectively pay off your debt and get rid of the remaining balance. However, if you want a short-term solution, you might seek forbearance or deferment.
3. Forbearance or Deferment
Loan forbearance or deferment allows borrowers to stop repayment for a short period, like a few months. During this non-payment period, you can focus on your financial challenges and resume payment when you finally solve them. However, not all borrowers can improve their finances in only a few months.
Besides, during forbearance, your interest payments can continue accruing. As a result, when it is time to repay debt, your interest payments will be added to the original debt balance, which will increase your monthly payments. Hence, loan forbearance and deferment can be risky, and you will end up losing more money. Therefore, consult a third-party debt specialist or a loan servicer before deferring payments.
This option can be used during economic difficulty. However, in other cases, when you go through cancer treatment, rehabilitation or you are in active service, you can request a deferment.
We have discussed several options to try if you face debt challenges. However, most of these options are only available to federal loan borrowers. Therefore, it is not surprising that the Student Borrower Protection Center also highlights the concerns of private debtors and brings them solutions in the future.
In case of difficulties, private student loan borrowers do not have many options. They are usually required to pay off the debt no matter the conditions. However, they can still refinance a student loan. This strategy can lower the monthly payments, help save money or simply allow borrowers to get rid of their annoying lenders.
Refinancing is the process when a borrower gets a refinancing loan and uses the money to pay off existing loans. As a result, there is a single loan to deal with, and the borrower has a new lender. In addition, the borrower can save money if the new loan has better terms, like a lower interest rate.
The eligibility requirement for refinancing is having a stable income source and good credit performance. Usually, applicants need a 650 or more credit score. In most cases, a co-signer is also required. Co-signers are close people with eligible conditions who agree to repay the debt if the original borrower cannot.
There exist many organizations or parties that protect borrowers’ rights. State Attorney Generals or Consumer Financial Protection are examples who fought against loan servicers or the ED to improve student loan borrowers’ conditions. Similarly, the Student Borrower Protection Center aims to help debtors by highlighting the issues in this industry. They do not actively find solutions to your debt challenges, but they facilitate information flow to stimulate policymakers to develop better solutions. If you need immediate help, you need to get familiar with your options and contact a loan servicer or a third-party debt specialist. We briefly presented some options for people struggling with debt repayment, but you should get more information about each solution before choosing one.