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.
2 current trends within student loans for the week of June 14, 2021
1. President Biden’s regulatory agenda proposes amendments to student loan forgiveness programs
President Biden laid out his regulatory agenda on Friday, a twice-yearly document that outlines short- and long-term goals for the administration. The agenda underscores promises made in Biden’s annual budget proposal to reform programs like total and permanent disability discharge and borrower defense to repayment, both of which offer borrowers student loan forgiveness.
The agenda says that Education Secretary Miguel Cardona plans to “amend regulations to improve borrower eligibility, application requirements and processes.”
How this affects student loans
Borrowers who are totally and permanently disabled, have attended a school that has recently closed or have been defrauded by a university could benefit from revisions the Biden administration is proposing. These programs promise to cancel student debt for qualifying borrowers, but strict eligibility requirements or confusing applications have led many borrowers to be denied loan forgiveness.
The Biden administration has already made amendments to the student loan forgiveness programs that fit the specified criteria in the agenda, but any next steps could make these programs more streamlined for borrowers.
2. A revised application process has led to more progress toward PSLF for borrowers, new data finds
The Department of Education has released new Federal Student Aid (FSA) data regarding borrowers’ progress to receiving loan forgiveness through Public Service Loan Forgiveness (PSLF). PSLF is a federal program that grants borrowers full forgiveness of their student loans after working in a public service career and making qualifying payments for 10 years.
PSLF has been criticized over the years due to the application demands and processing methods that have caused many qualifying borrowers to miss out on forgiveness. To address this, FSA created a form that combines the certification and application elements of PSLF, simplifying the application process. Since the new form was introduced in November 2020, almost all of the applicants with completed and processed applications (99.7 percent) met the necessary requirements to receive credit toward PSLF.
This data also provides a better idea as to why millions of borrowers aren’t meeting the necessary requirements to receive loan forgiveness. “For most borrowers, it’s simply a matter of timing,” the report says. Of the borrowers enrolled in PSLF, 82 percent have been in repayment for less than 120 months, rendering them ineligible for forgiveness at this time.
How this affects student loans
The data highlighted in the new report shows some encouraging signs, the FSA says, “as almost all borrowers with a complete, processed application are receiving some credit toward ultimate forgiveness.”
FSA is also exploring how additional data can provide more insight about application processing times, reasons for incomplete forms, borrower resubmissions and other potential stumbling blocks for borrowers that have led to low approval rates. With a refined application process, it may be easier for borrowers in the future to qualify for student loan forgiveness.
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.