Tag Archives: loans

Federal Student Loan Borrowers KNOW YOUR RIGHTS!

Group of students standing in lineKNOW YOUR RIGHTS!  Student loan borrowers who are eligible for automatic Closed School Discharges are not receiving them.  If this sounds like you, you should apply for a discharge immediately.  Read the details below to see if you are eligible.

Students have long been eligible for a total discharge of their federal student loans (and refund of any amounts paid) if they: (1) attended a school at the time it closed (or withdrew less than 120 days before it closed) and (2) did not subsequently transfer any credits to a similar program at another school.  This type of relief is known as a Closed School Discharge.

Unfortunately, many students do not know what a Closed School Discharge is.  In fact, less than half of students who qualify ever apply to receive this type of relief.  For that reason, the Department of Education established a rule in 2016 that would grant automatic Closed School Discharges to eligible students.

Under the leadership of Secretary DeVos, the Department of Education has refused to grant automatic Closed School Discharges.  Then, in September 2018, a federal court ruled that the Department’s attempts to delay implementing automatic relief were illegal.

Unfortunately, even though automatic Closed School Discharge is now the law, HERA continues to hear from students who are eligible for relief, but are still paying back their loans.  These students are not receiving the automatic discharges to which they are entitled.

If you meet the criteria described above, it is important that you apply for a closed school discharge as soon as possible. Here is the Loan Discharge Application: School Closure.

If you have questions about this post, you can reach HERA at inquiries@heraca.org.

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Predatory Lending Class Action Against CashCall Opens New Chapter as Federal Courts Turn to California Supreme Court for Guidance

Senior Asian Couple At Home Relaxing On Sofa TogetherOakland, California, May 26, 2017- The nine-year marathon class action litigation attacking CashCall’s exorbitantly high interest loans entered a new phase last month when the federal Ninth Circuit Court of Appeals took the unusual step of requesting guidance from the California Supreme Court on relevant state law.

CashCall pioneered the high-interest $2,600 personal loan in 2005.  California’s usury law does not place fixed interest rate limits on personal loans in excess of $2,500. CashCall took advantage of this loophole to make $2,600 loans in California at interest rates as high as 135%. Other lenders followed suit, charging rates as high as 200% to Californians seeking short-term loans.

These loans are “subprime,” and typically offered to borrowers with low credit scores, uneven credit histories, and who are in financial distress. CashCall uses saturation TV advertising urging viewers to just get up and “make the cash call.” CashCall’s website says you can “APPLY IN MINUTES & GET CASH TODAY!” with an easy online application.

The class action, filed in June 2008, challenges CashCall’s loans under California’s “unconscionability” law.  This law empowers courts to strike down loans that are unreasonably one-sided or unfair. The case ended up in the federal Court of Appeals after a San Francisco federal judge ruled the courts do not have the authority to invalidate consumer loans or to provide relief to borrowers.

In April 2017, the Ninth Circuit Court of Appeals issued a decision invoking the unusual procedure of certifying a question of state law to the California Supreme Court. The federal appeals court asked the California Supreme Court whether loans over the dollar amount of the usury limit ($2,500) can be invalidated under California’s unconscionability doctrine.

Plaintiffs in the case are hopeful that the California Supreme Court will take advantage of this opportunity to issue a ruling protecting California borrowers against predatory loans and validating court power to curb unconscionable lending in California.

HERA’s Director of Litigation, Arthur Levy, is co-lead counsel in the CashCall case with four other law firms.

For more information please contact, Maeve Elise Brown Executive Director, Housing and Economic Rights Advocates, at melisebrown@heraca.org or (510) 271-8443.