ID Theft — Requirements for Student Loan Discharge

~ Scot Williams, EDFUND Ombudsman

The identity theft epidemic that is sweeping other financial services industries in the United States has not spared student loan lenders and the guarantors who insure them against loss. When I am asked to comment about the current trends in student loans today, the increasing number of identity theft discharge requests immediately comes to mind.

Although those inside the student loan industry understand the requirements for having a loan discharged because of identity theft, student loan borrowers who suspect they may have been a victim often have no idea what they need to do to qualify for the discharge.

The Higher Education Act and subsequent federal regulations require the following to consider discharging a student loan:

• A "crime" of identity theft must have occurred.
• The individual who is the named borrower of the loan must obtain a local, state or federal judicial determination that conclusively specifies that the theft was committed by an identified individual named in the determination.
• The judicial authority who conducted the criminal prosecution must have concluded that the student loan(s) in question were the result of the crime.

In the past ten years, I have rarely encountered a borrower whose circumstance qualified. For one thing, very few student loan borrowers who claim to have been a victim of identity theft, ever file a criminal complaint. This is a necessary first step.

So, where does that leave those who are being held responsible for repaying student loans they believe are the result of someone illegally using their identities? There isn't a single answer to this question. In future issues of EDFUND LINK, I will explore some of the strategies the Ombudsman's Office, in collaboration with EDFUND's Post-default Services Unit, has developed for researching and responding to the various claims of identity theft that make their way to our offices.

More from EDFUND – Protect Your Identity

Cohort Calculations  

First, what is a cohort? A cohort is a group of people. A cohort default rate calculation means determining how many people from the group defaulted on their loans in a specific time period. For 2007, the group of people (cohort) is defined as all borrowers from your school who entered repayment between 10/1/06 and 9/30/07 (the 2007 cohort, or group). Once it is established, no new borrowers can enter that cohort.

To determine your cohort default rate, determine how many people out of your cohort actually defaulted within the same year they entered repayment, or defaulted within the next year (through 9/30/08 ). The calculation would look something like this:

Number of borrowers in 2007 Cohort = 800
Number of those 800 borrowers who defaulted on or before 9/30/08 = 40

  Turn this into a fraction of 40 ÷ 800 = 5.0 percent

For the 2008 cohort period, borrowers will enter repayment beginning 10/1/07 through 9/30/08. Once this group is established, these borrowers will be monitored to determine defaults occurring on or before 9/30/09.

Financial Aid Calendar for Students and Parents

If they haven't done so already, remind parents to complete their federal tax return.

This is a tip for high school seniors for February. EDFUND provides other tips for the rest of the year, to share with high school seniors and juniors to help them plan and pay for college.

Financial aid tips for January — February

Financial aid calendar for the whole year — Tips and links for 10^th and 11^th grade, 12^th grade and for parents.

This Week in D.C. 

~ Jack Gorman, EDFUND Government Relations

A Look Back…

2007 brought about significant changes in Washington, to financial aid programs and especially to the Federal Family Education Loan (FFEL) Program.

Students are seeing a host of additional benefits; new “sunshine” requirements were put into law, subsidies for lenders and guarantors declined and new rules issued by the Department of Education limit the role FFEL participants can plan in preventing delinquency and defaults. The full implications of these changes are only just beginning to be felt.

Congressional Democrats took control of both chambers of Congress for the first time in more than a decade.

On the House side, Democrats came into power with a significant “to do” list comprised of promises made in the 2006 campaign. The First 100 Hour Agenda, as they called it, contained three significant provisions:

• a promise to raise Pell grants,
• a promise to cut student loan interest rates in half, and
• a promise to pay for any “new” spending with corresponding reductions in other federal spending.

At the same time that Congress began looking at these areas, we also began to hear rumblings from New York Attorney General Andrew Cuomo about alleged improprieties in the loan programs that were under investigation by his office.

The importance of the timing of these investigations can't be understated. The investigations by Mr. Cuomo, which also led to a number of Congressional investigations, created “a perfect storm” for the Democrats to be able to move through legislation with little resistance from the financial aid community and student loan industry. The legislative vehicle pushed through that open door was the College Cost Reduction and Access Act (CCRAA).

• EDFUND CCRAA Resources

The CCRAA is undoubtedly one of the most significant pieces of financial aid legislation to become law in many years. On one side of the equation, students will see significant increases in Pell Grants, a reduction in subsidized Stafford Loan interest rates, expansion of eligibility requirements and a host of new loan forgiveness and repayment programs.

On the flip side, reductions in lender and guarantor subsidies promise to dramatically change the landscape of the marketplace and will likely result in fewer borrower benefits from lenders and guarantors.

What's Ahead for 2008?

Having completed so much in 2007 it may seem like there isn't much left to do in 2008. The first indicator of things to come will be provided by the President in his 2009 Budget Request to Congress where he will lay out his priorities for his final year in office.

Much as the Iraq War was the main focus of political battles in 2007, it appears that the economy will be the focus of attention for 2008. Indicators of how the Administration will attempt to deal with the struggling economy will surface in the President's budget request. Congress will then have to decide if they can support the President's strategy and whether they can agree on a solution for implementation in a timely enough manner to have an impact prior to the November elections. (Look for the next issue of EDFUND LINK for a primer on the federal budget process.)

While the CCRAA reauthorized a significant portion of the Higher Education Act (mostly Title IV), most of the Act continues to operate under an extension that is set to expire on March 31, 2008. In October 2007, the House Committee on Education and Labor passed a 740 page bill that seeks to complete the reauthorization process, HR 4137. As of now, House Democrats intend to take the bill to the House floor sometime in late February or early March for consideration by the full House. Once passed, House negotiators will meet with their Senate counterparts (the Senate passed its bill last spring) to hammer out a final reauthorization package.

  Getting the Most from Your Training

When attending a workshop, conference or any type of lecture you may find yourself feverishly trying to capture as much information as possible through your notes. Naturally, you want to be able to have something solid to review once the workshop is over.

When attending an EDFUND workshop, you are provided with a workbook as an accompaniment to the training. It is our hope that using the workbook will make the task of note-taking a bit simpler for you. In addition, the workbook serves as a reference and learning aid allowing you to focus more intently on what is being communicated by the trainer.

Here are some techniques to consider for more effective note-taking, courtesy of the Dartmouth College Academic Skills Center:

• Make your notes brief — Never use a sentence where you can use a phrase. Never use a phrase where you can use a word.

• Use abbreviations and symbols, but be consistent.

• Put most notes in your own words. However, the following should be noted exactly: formulas, definitions and specific facts.

• Use outline form and/or a numbering system. Indentation helps you distinguish major from minor points.

• If you miss a statement, write key words; skip a few spaces, and get the information later.

• You may want to list key terms in the margin or make a summary of the contents of the page.

For 2008, there is a vast array of training topics to choose from in both webinar and national in-person workshops through the EDFUND Institute.

Registration is now open!

EDFUND is committed to being your first choice for all your training needs.

Surge in College Degree Attainment for Young Women

Increasingly more young women than young men are earning bachelor's degrees, according to the latest statistics from the U.S. Census Bureau. In 1997, there were 3 percent more young women with bachelor's degrees than young men. In 2007 the gap increased to 6.8 percent.

Percentage of young adults ages 25 to 29 who have earned a bachelor's degree or higher

The 2007 U.S Census Bureau data also highlights the difference in earnings between those who attain higher education and those who do not.

Average annual salary of workers over the age of 18 in 2006

The statistics also reveal the differences in college attendance rates for young people according to race.

College-attendance rates of young adults ages 25 to 29

Educational Attainment in the United States: 2007 — U.S. Census Bureau

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