Cohen’s website alone gets at least 200 contacts a month from young Americans caught in what promises to be a lifelong debt trap. Without expert legal advice, many would be doomed to a life of payments they cannot afford, harassing phone calls from debt collectors and no hope of ever repaying the money.
The Institute for College Access and Success estimates that two-thirds of university and college graduates leave school with an average student loan debt of approximately $26,000. About one percent have debts in the six-figure range.
All combined, the student loan debt in the US tops out at over $1 trillion. Although it is difficult to determine, the effect of millions of young Americans making bank loan payments rather than spending on consumer goods and services is believed to have a considerable drag on the economy, and will continue to for many years to come.
Most of the loans were made to students through the federal or the state governments. The rest of the loans were made to students through private lending institutions. Understanding the key differences between these two types of loans is one of Cohen’s strongest points and is critical to finding ways to solve a student debt problem.
“The private side is the scariest,” says Cohen. “The banks have lent huge amounts of money to people. If these loans were for any other purchase, for a house, or car, or any other tangible good, the bank would never, ever lend that amount of money to these people.
“I have a 23-year-old who graduated with a hundred thousand in private student loans and no co-signer. He will never ever pay that loan. His degree is in physical fitness. He is personal trainer at a gym and he makes 30K a year. He won’t even touch the principle on that loan. That’s what I call DOA. So now he is sitting on a default and his credit is garbage,” says Cohen.
“This is very similar to the sub-prime mortgage lending crisis where the banks were giving loans to people that couldn’t actually afford them,” says Cohen. “Fortunately, those people could file for bankruptcy, surrender their house and walk away. But people with private student loan debt are not allowed to do that. Congress needs to change the bankruptcy law so that these are dischargeable.”
The lenders and the debt collection agencies frequently use tactics that drive young borrowers into default. “They tell them ‘here, this is what you owe and this is how much you have to pay every month,” says Cohen. “But the law says the payments have to be affordable and there are ways to make them affordable. I know they are not doing this, because I am bringing suits against debt collectors all the time.”
And Cohen is winning, getting damages for borrowers they will use to pay their loans.
“I have sued debt collectors; I have sued lenders, and guarantee agencies. The only people I haven’t sued is the Department of Education. I am not saying I don’t have plans for it, I just have not found the right case yet,” he adds.
Another approach that Cohen uses for students with large federal debts and in default is getting them into the Income Based Repayment (IBR) program that caps the required monthly payments at an amount based on the borrower’s income and family size.
“The servicers screw up so the borrowers default and the debt collectors screw up so they stay in default. That’s the biggest problem from the federal side. If people just knew about IBR, many people would not default,” says Cohen.
Cohen, one of the few lawyers with these kinds of expertise, now teaches other lawyers across the US how to handle student loan debt issues. It’s a massive economic and social problem.
“I have had more than one person come in and say they were dumped because the person they were dating was afraid to marry them because of their debt load. That’s a real problem if you are a common property state. It’s insane,” he says.
Joshua Cohen is known as The Student Loan Lawyer. He holds a BA from Brandeis University (’96), an MBA from the University of Phoenix (’02), and a JD from Quinnipiac University School of Law (’07). He is based in Cromwell, Connecticut.
when i signed up for Devry in 1991-1993, it was to become a robotic technician. I got excited about the idea of building robots after watching Chuck Norris movie, Top Dog.
The "sleazy used car salesman" so called recruiter had me enroll in the Associates Electronic 2 year program and countless promises of making xyz amounts of money and
assistance from the college to help place me were all a lie. Grand illusions of making the "typical" $40,000 per each graduate was whispered in my ear.
By the time I graduated, there were no jobs available. I received an A+ on my final exam for the essay i wrote on Chuck E Cheese robots. I went to apply to Chuck E Cheese
with my shiny new diploma, and they hired me ! Only.....not to work on their robots. Making pizza, cleaning up the floors, and removing paper jams from the games. The pay
was an incredible $6.25 an hour. yayyyyyyy go meeee
I went from there to Texas Instruments to the wafer fab room, horrible conditions so it didnt last long. $8.50 and hour.
From there to work on copiers, $9.25 and hour.
After that, i never did use anything related again to electronics, and I was far from ever building robots.
My problem with Devry are several things. They lied about career placement. We were told a several occasions by the teachers, if we didn't pass, no big deal because they
had already gotten their money from Sallie Mae and failure was up to us as they had a new class coming in every semester. Assistants were hard to nail down to help tutor us
and they normally had a bad attitude as if we were inconveniencing them when we were promised they came with the package.
I still feel i was never placed in the correct field of study as building robots are more software engineering than technical applications.
My bill for the 2 years was $32,000 which was $7000 more than lower cost colleges due to the great assistance in career placement they had supposedly.
Now currently my bill is $80,000 due to penalties and interest of never paying those crooks. And why should i? I never got the teaching I needed to achieve the goal that
I signed up for, and I never got the career placement I was promised.
How many colleges are out there doing this to innocent YOUNG AND NAIVE students? When will this stop? I hear some say, "you chose it, now pay it". Well thats not entirely
fair when young people fresh out of high school are being lured into shady colleges that promise them the world and all the students get at the end is a whopping debt to
If we can't count on Congress to help us with student forgiveness of shady empty promises, God help us.
David "Marty" Werner
to make a long story short i have had numerous offsets and made payments on my loan and assumed that in 1995 my loan was paid in full.
fast forward to 1998 student loan comes to me and informs me that i now owe 7500.00(my original amount), i dispute the amount write letters to my local congress-person and even the president of the United States, all collection calls cease.
fast forward to 2010, i am informed that I once again owe 7500.00, and that my bankruptcy filing did not discharge my debt..I never filed a bankruptcy and the SS number that a bankruptcy was filed under is not mine...
Annie P. Ware