President Obama announced new executive action to ease student debt Monday. The plan is intended to reduce student loan payments and to try to ease the economic drag that massive student loan debt has created. The action helps borrowers by capping repayments at 10 percent of their monthly income.
Mr. Obama’s main action will be to expand on a 2010 law that capped borrowers’ repayments at 10 percent of their monthly income. The intent is to extend such relief to an estimated five million people with older loans who are currently ineligible—those who got loans before October 2007 or stopped borrowing by October 2011. But the relief would not be available until December 2015, officials said, given the time needed for the Education Department to propose and put new regulations into effect.
Also, Mr. Obama will announce that the department will renegotiate contracts with companies that service federal loans to give them additional financial incentives to help borrowers avoid delinquency or default. The Education and Treasury Departments are to work with the nation’s largest tax-preparation firms, H&R Block and Intuit Inc., to ensure that borrowers are aware of repayment options and tax credits for college tuition.
- The White House released a fact sheet on the proposal.
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Council tax arrears become most common debt case at Citizens Advice
More people now approach the charity over council tax bills than over difficulties with unsecured loans or credit cards.
In the first three months of this year, the charity helped 27,000 people who had fallen behind with council tax bills, a 17% increase on the same period of 2013, and one in five of those reporting debt problems had an arrears issue. The charity said the increase had come in the wake of the abolition of council tax benefit in April 2013, and its replacement with new support from local councils. Levels of help vary from council to council, and as of March this year, 244 out of 325 councils in England required all working-age households to make some contribution, regardless of income.
The first wave of changes drove up the number of council tax arrears cases Citizens Advice dealt with to the point that they overtook problems with credit cards and unsecured personal loans for the first time.
Of those contacting the charity about council tax arrears, 42% were employed and 28% unemployed. The rest were full-time carers, or similar.
Of those seeking help with debt generally, one in five had problems with an unsecured loan and the same proportion had a fuel debt issue. One in six had problems with a credit or store card and 5% were behind on a mortgage or secured loan.
Pennsylvania widow who lost $280,000 house over $6.30 tax debt loses appeal
A county court in Pennsylvania ruled against a widow who lost her house over a $6.30 late fee. The property was sold for $116,000 to cover the debt, in what the woman argued was an improper move by the authorities.
The home of Eileen F. Battisti, 53, was sold at a September 2011 tax sale to cover the paltry debt, which arose from an interest rate charge on Battisti’s 2009 tax bill. Beaver County auctioned off the house, with an estimated value of $280,000, selling it for $116,000 to SP Lewis.
“I paid everything, and didn’t know about the $6.30,” she told AP. “For the house to be sold just because of $6.30 is crazy.”
Battisti appealed the move, saying she didn’t know she owed the past due charge until she was notified that her home would be sold. Beaver Country court initially denied her evidentiary hearings on the case, but Battisti turned to the Commonwealth Court in Harrisburg, which in August 2013 ordered the county court to review the case.
Last week, County Judge C. Gus Kwidis ruled against Battisti, saying she had been properly notified of her debt and that the sale followed state law. In his six-page order, the judge said the former homeowner is entitled to $108,039 in proceeds from the sale after her tax obligations are met. Learn more here.