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 May 10, 2021
1. Democratic senators look to revise Public Service Loan Forgiveness
In early May, a large group of senators and Congress members signed a letter sent to U.S. Secretary of Education Miguel Cardona calling for student loan forgiveness reform. Led by Democratic Sen. Tim Kaine, Sen. Kirsten Gillibrand and Congressman John P. Sarbanes, the proposal highlights four ways that forgiveness could be more easily obtainable.
The letter states that those impacted by the COVID-19 pandemic have not received the loan forgiveness and assistance that they deserve due to the improper implementation of Public Service Loan Forgiveness (PSLF).
PSLF is a federal program that forgives student loan debt for borrowers working eligible public service jobs after 120 qualifying on-time payments.
The letter calls for four revisions:
- Expanding the definition of an “eligible loan” to make every type of federal student loan eligible for PSLF.
- Expanding the definition of an “eligible payment” by making all student loan repayment plans eligible for PSLF.
- Waiving the restriction that a borrower must work in a public service job at the time of forgiveness.
- Automatically qualifying borrowers for PSLF through data-sharing agreements, eliminating the need for borrowers to submit employer certification.
How this affects student loans
PSLF has been scrutinized because of its strenuous qualification requirements and required documentation, with the vast majority of borrowers being denied the forgiveness promised. If approved, these suggestions would allow students an easier route to full forgiveness through the program.
2. Press release focuses on Biden’s student loan proposals in first 100 days as president
A recent press release from the U.S. Department of Education highlighted the proposals – some of which have become legislation – that the Biden administration advocated for during Biden’s first 100 days in office.
During Biden’s time in office, millions of borrowers have already become eligible for forgiveness through the revision of existing federal forgiveness programs. Cheaper college has also recently been subject to a great deal of political discourse due to the American Families Plan.
The plan consists of multiple large-scale proposals aimed to alleviate the financial strain on many American families. A big portion of the plan, which was covered in the Department of Education’s release, focuses on higher education proposals like increasing the maximum Pell Grant award amount and offering tuition-free community college.
According to the release, here’s what the administration has proposed and enacted during Biden’s first 100 days:
- Extended the break on federal student loan payments until September 2021.
- Made student loan forgiveness tax-free through 2025.
- Revised borrower to defense repayment.
- Announced revisions to the Total and Permanent Disability (TPD) discharge program.
- Granted student loan relief to borrowers with defaulted FFEL loans in default.
- Proposed raising Pell Grant maximum award amounts to $1,800 through American Families Plan.
- Proposed two years of tuition-free community college through American Families Plan.
How this affects student loans
Much of what Biden has done in office has consisted of revising existing federal forgiveness programs, like TPD discharge and borrower to defense repayment. Biden still hasn’t made an official statement about mass student loan forgiveness or cancellation, but actions in his first 100 days demonstrate that the financial burden of college is a priority for his administration.
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.