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 24, 2021
1. Student loan cancellation is not included in annual White House budget
The White House annual budget, which is due at the end of this week, is unlikely to include student loan cancellation, reports the Washington Post. While President Joe Biden campaigned on the promise of forgiving $10,000 in federal student loan debt per borrower, the absence of student loan debt relief in the budget indicates that he’s unlikely to implement such a policy in the near future.
How this affects student loans
While student loan forgiveness through Congress is still possible, it will be a longer and more difficult process — and the proposed White House budget could indicate that Biden’s focus currently lies elsewhere.
With that said, his administration has made other moves to help certain borrowers find forgiveness, such as revising requirements for total and permanent disability discharge. Borrowers with federal student loans and defaulted FFEL loans can also take advantage of the payment and interest pause through Sept. 30, 2021, which could make paying off those loans easier.
2. Former Education Secretary Betsy DeVos must testify in student loan forgiveness lawsuit
U.S. District Judge William Alsup ruled last week that former Education Secretary Betsy DeVos must be present for a three-hour deposition involving the Trump administration’s alleged malpractice concerning student loan forgiveness. During this deposition, DeVos will be answering questions under oath about her handling of borrower defense to repayment claims during her time in office. A hearing is set for June 3.
The roughly 160,000 borrowers who brought the class-action lawsuit claim that they were defrauded by their for-profit colleges and were not granted forgiveness promised through the federal borrower defense to repayment program by the Trump administration.
Under DeVos’ leadership, the Department of Education allegedly ceased processing new applications for the federal program for 18 months starting in 2018 before dismissing most of the applications with little to no explanation as to why. As a result, thousands of borrowers received only partial forgiveness or no forgiveness at all.
How this affects student loans
Borrower defense to repayment has been under scrutiny in recent months. The rule promises to forgive some or all of your student loan debt if the college you incurred it from engaged in deceitful practices. In March, U.S. Education Secretary Miguel Cardona announced revisions to the Trump administration’s version of the program in order to streamline the path to forgiveness. These revisions could be ongoing in coming months, especially if the class-action lawsuit is ruled in borrowers’ favor.
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.