Amazon announced plans to offer free college tuition to most of its employees through expanded education benefits. Additionally, new data shows that only one in five borrowers interested in Public Service Loan Forgiveness (PSLF) will receive full forgiveness through January 2026. Here’s what you need to know about this week’s trends.
2 current trends within student loans for the week of Sept. 13, 2021
1. Amazon plans to add free college tuition as a benefit to employees
Amazon recently announced plans to offer tuition-free college to more than 750,000 employees through its Career Choice Program. These benefits cover the cost of classes, books and fees, as well as high school diplomas, GED programs and English as a second language certifications to its front-line U.S. employees.
Hourly employees will qualify for the benefit starting in January as long as they have been working for the company for at least 90 days and they pursue a degree at one of Amazon’s “education partners.” The tuition benefits will be disbursed in advance, so employees do not need to wait for a reimbursement of funds. Additionally, Amazon is investing in training programs for employees who want to learn more about skills related to roles within the company.
How this affects student loans
Several large corporations have introduced tuition benefits for employees. Walmart, Target and McDonald’s all have programs that help pay for employee education, and the trend could continue as companies try to attract and retain talent during the pandemic.
Even if you don’t work for one of these corporate giants, many employers offer some form of education assistance. If you’re interested in pursuing a degree, ask your employer about tuition reimbursement, educational assistance programs or other educational benefits. Both you and your employer could receive tax benefits through one of these programs.
2. New report shows that Public Service Loan Forgiveness will remain out of reach for many borrowers
A report from the Student Borrower Protection Center (SBPC) projects that only one in five applicants will receive full forgiveness through the Public Service Loan Forgiveness (PSLF) program through January 2026.
PSLF, a federal repayment program designed to forgive a portion of student loan debt for qualifying public service workers after 10 years of payments, has a notoriously low approval rate. U.S. Department of Education data shows that as of April 2021, PSLF has a 98 percent rejection rate. The majority of rejected borrowers haven’t made enough payments on a qualifying loan, even if they’ve been in repayment for more than 10 years.
The Pennsylvania Higher Education Assistance Agency (PHEAA), which manages PSLF, expects a total of 276,370 borrowers to receive forgiveness through January 2026 — despite the Department of Education data currently listing 1,250,373 borrowers who currently have eligible employment.
How this affects student loans
Many people have criticized the implementation of PSLF in recent years because of its stringent eligibility requirements. PHEAA has come under fire for its mismanagement of the program, with many accusing it of failing to properly count PSLF payments and making errors in eligibility determinations.
To complicate matters, PHEAA has ended its contract with the Department of Education, so it will be phasing out its loan servicing platform at the end of the year. Management of PSLF will fall to a different company following the transition, which could cause delays in application processing.
In early May, dozens of Democrats sent a letter to Education Secretary Miguel Cardona asking for reforms to PSLF in order to streamline the eligibility and application process. President Biden also specifically mentioned working with Congress to improve the program in the White House annual budget back in May. In July, the Department of Education held online hearings allowing stakeholders to comment on PSLF and changes that could be made. So far, more than 33,000 comments have been made.
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. 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.