The U.S. Department of Education is warning student loan borrowers of a trend involving predatory lending practices targeting U.S. veterans. Here’s what you need to know about this week’s news and how it could impact your student loans.
1 current trend within student loans for the week of March 28, 2022
1. Biden administration warns U.S. veterans of predatory student loan lending practices
Following the release of a federal review, the U.S. Department of Education issued a warning stating that many service members and veterans have been misled about their financial aid options by their schools.
Veterans claim that college advisors led them to believe that the U.S. government would cover the entire cost of their college education through the GI Bill, which is not always the case; while the bill may cover up to 36 months of expenses at public in-state universities, tuition assistance at private or foreign colleges is capped at $26,381.37 for the 2022-23 academic year.
Veterans Education Success reported that whistleblowers at predatory college companies were allegedly told to hide the fact that tuition costs at private institutions were higher than what the GI Bill covers. Many borrowers also say that they were pressured to start classes that didn’t qualify for military benefits or take out student loans partway through their education — and some discovered that they were responsible for student loans that weren’t authorized.
How this affects student loans
This warning comes from the Education Department’s Enforcement Office, which was reestablished earlier this year in an attempt to monitor U.S. schools and protect borrowers from misleading practices.
The bulletin warns that colleges engaging in predatory lending to U.S. veterans could be terminated or limited from the Education Department’s federal student aid program. Borrowers who feel that they have been misled are also entitled to apply for borrower defense to repayment, which discharges any student loan debt taken out for those schools, which the schools could be responsible for repaying.
Here’s how you can get prepared
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. During 2022, 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.