[dragonwriter]

> But Lambda already forgoes loan repayment if the student doesn't get a job making at least $50k.

No, it doesn’t, ever, for the California Retail Installment Contract at issue.

Their ISA, defers for five years and then discharges.

[imgabe]

What does it mean that it defers for five years and then discharges?

To me, defers means you are not required to make payments during that time.

Discharges means that the obligation is removed and you never have to make any payments.

So...if you go five years without getting a job that makes 50k, the ISA defers ... and is then discharged? You never pay it back?

How is that different from what I said?

[dragonwriter]

> How is that different from what I said?

Its different from what you said (or alternatively, what tou said is a nonsequitur to the discussion of the article, hard to tell which) because it applies only to their ISA, which for legal reasons isn’t used in California and is not what they are in trouble for lying about.

They are in trouble for misrepresenting the Retail Installment Contract, which is used exclusively in California, and which is deferred when income is under $50K, but is never discharged/forgiven except by full payment.

[imgabe]

So basically, California specifically forced them to create a special contract, different from the one they use everywhere else, that couldn't be discharged and then censured them for not clearly enough stating that the special California contract couldn't be discharged?

Sounds very California.

[dragonwriter]

> So basically, California specifically forced them to create a special contract, different from the one they use everywhere else, that couldn't be discharged and then censured them for not clearly enough stating that the special California contract couldn't be discharged?

No, not at all.

They choose not to automatically discharge the California contracts after 60 months of deferment for low income (I believe as a backhanded protest against the fact that they got in trouble with ISAs in California, IIRC because there was no up-front pricing; the up-front statement that $30,000 is the price is specific to California.) They got in trouble for lying and saying the California contracts were “qualified education loans” under federal law, with the associated restrictive terms for discharge in bankruptcy.

[pbreit]

So basically, California specifically forced them to create a special contract, different from the one they use everywhere else, that couldn't be discharged and then censured them for not clearly enough stating that the special California contract couldn't be discharged?

Sounds very California.

[kelnos]

I get the feeling you're arguing in bad faith here due to some axe you have to grind with California, but I'll try to clarify.

Lambda was deceptive about the terms of their ISA (the one they now use everywhere but CA). CA's laws require lenders to disclose certain things to their customers, and Lambda didn't want to do that.

So, being the childish dicks they so clearly are, they retaliated by creating new terms that are worse for CA-based students. No one forced them to do this; they could have kept the same contract but properly disclosed the things they were required to disclose. And on top of that, they lied about whether or not their loans could be discharged in bankruptcy. This particular regulatory action is solely about this last thing.

[dragonwriter]

> So basically, California specifically forced them to create a special contract, different from the one they use everywhere else, that couldn’t be discharged

No, again, the specific lie that they are getting in trouble with is claiming that the California contract was a “qualified education loan” which could not (easily) be discharged in bankruptcy when, in fact, it was a regular unsecured loan which can easily be discharged in bankruptcy.

[pbreit]

I think you're right. The California regulator forced Lambda to make the agreement much worse for California students. Can we fine the regulator (which is totally useless, btw)?

https://www.forbes.com/sites/prestoncooper2/2020/08/21/calif...