In the ever-changing world of student loans, staying on top of current events and student loan rates is critical. Below are this week’s student loan trends that could affect your loans — and your wallet.
3 current trends within student loans for the week of April 26, 2021
1. Rhode Island Foundation offers to pay off up to $25,000 of student loans for educators of color
In an effort to increase the number of educators of color in Providence public schools, the Rhode Island Foundation has raised $3.1 million to help pay off new teachers’ student loan debt.
As stated in a recent press release, students of color represent 80 percent of students enrolled in the district, while just 20 percent of educators are members of minority groups. Neil D. Steinberg, Rhode Island Foundation president and CEO, cites student benefits as a driver for the program: “Research confirms that when taught by a teacher of color, students of color experience higher reading and math test scores, higher graduation rates, decreased dropout and discipline rates and increased enrollment in advanced courses.”
This program would offer an incentive to new full-time teachers who identify as Black, Asian, Indigenous, Latio or multiracial. New hires belonging to these groups are eligible to have up to $6,000 of their student loan debt paid off after one year of teaching, up to an additional $8,500 after year two and up to an additional $10,500 after year three.
How this affects student loans
Through the Rhode Island Foundation’s program, teachers of color can access a new avenue for repaying student loans — though note that current educators are not eligible for the program.
While the federal government provides a few avenues for student loan forgiveness for teachers, these programs have strict eligibility requirements and could be hard to qualify for. Programs like the one developed in Providence could help more teachers access student loan relief more quickly and more easily — particularly teachers in minority groups that have historically been most impacted by student loan debt.
If the Rhode Island Foundation’s program is successful, it could pave the way for similar programs in other states.
2. Austin-based Action Behavior Centers offers student loan debt assistance to employees
Action Behavior Centers in Austin, Texas, is helping thousands of children on the autism spectrum receive the therapeutic help they need by providing student loan relief for its employees.
Hersh Sanghavi, the CEO of Action Behavior Centers, told Austin 360 that the reason many families can’t get the therapy they need is because of the lack of qualified professionals. In order to become a board-certified behavioral analyst, a master’s degree and a number of technical training hours are required.
Sanghavi recognized that the lack of certified analysts wasn’t due to lack of interest in the profession, but rather the student loan debt that often accompanied the role. In response, he created a program that allows Action Behavior Center employees to refinance their student loan debt and offers $50 a month to those currently paying down their student loans — seemingly small changes that could add up to hundreds or thousands of dollars saved on employees’ loans.
How this affects student loans
Action Behavior Center’s program is just one model for how employers can relieve student loan debt in service of a greater goal — in this case, recruiting and retaining behavior analyst technicians who help kids with autism.
For behavior analysts without access to these programs, relief from student loan debt is still possible. Some behavioral analysts are eligible for Public Service Loan Forgiveness (PSLF), a federal program that allows borrowers in certain public service occupations to have their federal student loans discharged after 120 qualifying payments under an income-driven repayment plan. While it’s not immediate relief, it could be a way forward for people who have taken on thousands of dollars in debt from graduate school.
3. Only 124 military members have qualified for Public Service Loan Forgiveness
A recent report by the Government Accountability Office found that as of January 2020, just 124 members of the military had their student loan balance forgiven under Public Service Loan Forgiveness (PSLF), while 1,410 were denied. That’s an approval rate of just about 8 percent.
What’s more, of the nearly 177,000 active-duty military members who would qualify for the program, only 11 percent had submitted their initial certification request for PSLF. This means that thousands of service members could be missing out on the chance to have their student loan balances discharged.
How this affects student loans
The low acceptance rate of military members is hardly an isolated problem with PSLF. EducationData.org has found that just over 1 percent of applications for PSLF have been approved since the program began. The GAO cites not enough payments and incomplete applications as the main drivers of application denials, which is consistent with broader Department of Education data. The GAO recommends that the Department of Education share more information about the program to better set up borrowers for success, as many borrowers may not understand the full scope of the requirements.
A lack of clarity about programs and stringent eligibility requirements have been a hurdle for other federal forgiveness programs as well. For instance, in March, the Biden administration announced revisions to the total and permanent Disability (TPD) discharge program that made it easier for borrowers to qualify. In most cases, as with PSLF, the primary issue was not the eligibility requirements themselves, but rather the complex application process.
Whether you’re new to student loans or well into repayment, it’s wise to stay informed about how your student loan rates could change. As 2021 continues, more opportunities for cheaper loans or loan forgiveness could open up; keep an eye on the Bankrate student loans news hub for the latest trends.