The Student Borrower Protection Center (SBPC) has found that approximately $40 million in wages were taken from student loan borrowers in May and June of 2021 in violation of coronavirus regulations. Additionally, President Biden unveiled an executive order aimed at making historically Black colleges and universities (HBCUs) more affordable. Here’s what you need to know.
2 current trends within student loans for the week of Sept. 6, 2021
1. Data shows that about $40 million in wages were garnished during the pandemic, despite student loan payment pause
Recent data obtained by the Student Borrower Protection Center (SBPC) revealed that roughly $40 million in wages were garnished unlawfully from student loan borrowers between May and June 2021 by guaranty agencies.
Guaranty agencies are nonprofit or state agencies that are responsible for collecting debt owed on Federal Family Education Loan Program (FFELP) Loans. However, due to the CARES Act and subsequent extensions, wage garnishment due to defaulted federal student loans has been prohibited since March 2020 and will continue through Jan. 31, 2022. This includes defaulted FFELP Loans.
The federal data shows that the agencies illicitly seized $27.2 million in May and $12.9 million in June in direct violation of the U.S. Department of Education’s coronavirus regulations. These guaranty agencies have also failed to refund previous wage garnishments made during the coronavirus protection period.
How this affects student loans
The SBPC recently sent a letter to the Consumer Financial Protection Bureau (CFPB) calling on it to further investigate the situation. At this point, it’s unclear how many FFELP borrowers have had their wages garnished and how many have received refunds. If you believe that your paycheck has been cut due to defaulted FFELP Loans, you can contact the SBPC or submit a complaint to the CFPB.
2. Executive order seeks to improve funding for historically Black colleges and universities
Late last week, President Biden issued an executive order promising to improve economic and education opportunities at historically Black colleges and universities (HBCUs) by increasing access to federal funding. The order also seeks to address college affordability for students attending HBCUs.
“It is the policy of my Administration to advance educational equity, excellence and economic opportunity in partnership with HBCUs, and to ensure that these vital institutions of higher learning have the resources and support to continue to thrive for generations to come,” the order stated.
How this affects student loans
Biden has long spoken about the need for more equitable funding for HBCUs. During his campaign and throughout his presidency, he has also proposed subsidized tuition for students attending these schools.
While the order doesn’t directly mention tuition adjustments — or student loan forgiveness — it could be one step toward Biden’s goal of making college more affordable. HBCUs will now have increased access to federal funding like grants and procurement opportunities, and Biden also plans on creating a board of HBCU leaders to advocate for the best interests of the colleges and students around the country.
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.