The Consumer Financial Transactions Clinic Tackles the Student Debt Crisis

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Student debt currently exceeds $1.4 trillion dollars and affects more than 44 million borrowers.  In North Carolina, more than 1 million people carry student debt.  Of those borrowers, more than 17% are currently in default, with average debts exceeding $34,000. The Consumer Financial Transactions Clinic (“CFT Clinic”) at Carolina Law is turning its attention this year to this student debt crisis.

Some of the statistics on student debt might be surprising. News outlets report that older Americans (over age 60) are the fastest-growing category of student debtors. In North Carolina, for example, there are more than 87,000 borrowers over age 60 carrying student debt. Because they take on larger debt and have lower incomes, women owe almost two-thirds of the total United States student debt. And more than 40% of active duty servicemembers carry student loan debt. Although there are federal protections for active duty military, those benefits are not widely requested and servicemembers are heavily recruited to high-cost low-yield for-profit institutions. Because student debt is not dischargeable in bankruptcy, it has profound, often intergenerational, effects on people’s lives. The CFT Clinic students are studying these issues and working with the Self-Help Credit Union in Durham, North Carolina and the Marine Corps Installations East Legal Assistance Office at Camp Lejeune to decrease the information gap between lenders, servicers, and borrowers and to figure out ways to best serve their employees, members, and servicemembers. The Clinic, for example, is advising Self-Help on ways to support and advise its employees regarding managing student debt.

CFT Clinic students are also taking on individual representation of student borrowers. The student debt crisis in many ways mimics the mortgage foreclosure crisis; experts have discovered that loan servicers are not following the relevant regulations, borrowers are defaulting on their loans, and debt relief scams are becoming more and more prevalent. The CFT Clinic is pleased to take on some of those cases. We are currently representing, for example, vulnerable borrowers who have fallen prey to unscrupulous loan consolidation companies who have taken their money in exchange for little or no assistance on their student debt, leaving them in default and their credit in shambles. 

We are lucky to partner with state and federal agencies, accepting client referrals and hosting experts from the Consumer Financial Protection Bureau, the North Carolina Attorney General’s Office, and the Marine Corps Installations East in our classroom.

We are excited about this new undertaking!

Posted by Kate Sablosky Elengold on Thu. October 5, 2017 12:53 PM
Categories: Consumer Financial Transactions Clinic
UNC School of Law | Van Hecke-Wettach Hall | 160 Ridge Road, CB #3380 | Chapel Hill, NC 27599-3380 | 919.962.5106

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