Top student loans trends for the week of May 31, 2021: Wilberforce University forgives student loan debt for recent graduates

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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 31, 2021

1. Wilberforce University forgives institutional student loan debt for class of 2020 and 2021

Wilberforce University announced on Saturday that it will cancel all student loan debt owed to the university by 2020 and 2021 graduates. The forgiven amount — totaling more than $375,000 — was made possible through institutional and outside funding from programs like the United Negro College Fund (UNCF).

How this affects student loans

Wilberforce University is the second historically Black university or college (HBCU) in recent weeks to cancel graduates’ student loan debt; in early May, Delaware State University forgave more than $730,000. In both cases, students will see their institutional debt forgiven, although they are still responsible for paying back loans from the federal government and private lenders.

In response to disparities in funding for HBCUs, President Biden has also proposed increased financial support for HBCUs, tribal colleges and universities (TCUs) and minority-serving institutions (MSIs) in his annual budget proposal. The discretionary funding allocated toward these universities will be used to make a college education more affordable for these students.

2. Michigan lawmakers propose new bill exempting federal student loan forgiveness from state income tax

Lawmakers in Michigan have proposed a new bill that would make federal student loan forgiveness free from state income tax. The new bill, led by Rep. Sarah Anthony, has been backed by more than a dozen Democratic lawmakers.

How this affects student loans

Earlier in the year, Biden rolled out legislation that makes federal student loan forgiveness free from federal income tax through 2025, but any forgiven amounts are still subject to state income tax. If this bill were to pass, Michigan residents would not have to pay federal or state income taxes on their forgiven balances — saving borrowers potentially thousands of dollars.

Next steps

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.

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Written by
Hanneh Gundersen
Student loans reporter
Hanneh Gundersen specializes in everything related to student loans and helping you finance your next educational endeavor. She aims to help others reach their collegiate and financial goals through making student loans easier to understand.
Edited by
Student loans editor