Current student loan news for the week of October 4, 2021
Biden administration launches hearings to potentially reform federal student loan cancellation and repayment programs, while expert close to administration says major PSLF reviews are underway and could be announced as early as this week . Additionally, Federal Duty Officer Navient has announced his intention to end his contact with the US Department of Education.
Here’s what you need to know about this week’s top trends and their potential impact on your student loans.
3 current trends in student loans for the week of October 4, 2021
1. Navient to leave the Federal Student Loans Service
At the end of last week, Navient announced his intention to end his contract with the Ministry of Education. If the departure is approved, 6 million student loan borrowers will have their loans transferred to Maximus, one of five student loan managers the department will contract with in its new Next Gen platform.
Navient has been the subject of several lawsuits in recent years and his contract was not up for renewal when the Department of Education reduced the number of federal student loan officers. Borrowers have complained about poorly managed accounts and poorly processed payments.
Navient first needs approval from the Federal Student Aid Office (FSA) to officially shut down the federal service, but this assessment is currently underway.
How it affects student loans
Navient is one of the largest federal student loan managers in the country and is the third manager in 2021 to announce plans to stop managing federal student loan products. The Pennsylvania Higher Education Assistance Agency (PHEAA) and Granite State Management and Resources are also terminating their contracts earlier.
If you have a student loan managed by Navient, you will be informed of the steps to take to prepare. Your loans themselves will not change, but they will be managed by a new company after the transition is complete. So the process for paying or getting help might be a little different. To make the transition easier, check your account details now to make sure all of your contact information is up to date.
Key to take away
Borrowers with student loans managed by Navient may soon have their loans transferred to a new manager.
2. Department of Education Begins Hearings on Federal Pardon and Reimbursement Programs
Last week, the US Department of Education announced an agenda for the first of several hearings on the subject of federal student loan repayment plans. The hearings begin this week and could result in significant changes to forgiveness programs, such as the release of total and permanent disability (TPD), the forgiveness of public service loans (PSLF), the release of closed schools, defending the borrower against repayment and income-oriented repayment plans.
The ministry’s proposals for each of the programs include significant changes to the application process and qualification requirements, making it easier in all cases to continue with the programs.
These changes are part of the negotiated rule-making process, which is led by a committee of stakeholders such as college administrators, lenders and borrowers. Following a series of hearings, the committee will assess any potential new regulations to be implemented.
How it affects student loans
Potential student loan reforms will be discussed, debated and reformed over several months. After this week, hearings will be held November 1-5 and December 6-10. If the changes are approved, it may take some time before they are implemented.
However, if these changes were to occur, federal student loan borrowers would have a clearer path to loan forgiveness. The revisions would introduce automation into many existing programs, reducing application and paperwork requirements. Borrowers might also see more flexibility in the qualification requirements for programs such as the PSLF and TPD discharge.
Key to take away
The Department of Education is considering revisions to several student loan forgiveness and repayment programs.
3. Changes to the PSLF could happen this week, experts say
NPR reported that an expert familiar with the administration’s plans expects the education ministry to make major revisions to the PSLF as early as this week. The potential reform could take place in two stages: short-term action using the executive branch to retroactively grant credit to borrowers who qualify for the program, and long-term reviews to make the program easier to qualify.
Long-term changes will be discussed during the rule-making process – and the PSLF is already on the agenda for hearings starting today. However, if NPR’s source is correct, short-term changes could also be announced as early as this week.
How it affects student loans
The PSLF has come under intense scrutiny in recent years due to its stringent eligibility and application requirements, with just 2% of applicants successfully completing the program and being approved. The Department of Education began the process of re-evaluating the program earlier this year, but the use of executive authority could speed up some temporary changes.
According to NPR, the changes could include:
- Retroactive credit for payments made under the wrong repayment plan or on the wrong type of loan.
- Relaxation of payment requirements, allowing late payments and certain suspended payments to count towards program requirements.
- Broader definition of public service work.
Key to take away
Major reforms to the PSLF program could be rolled out by the Biden administration this week.
Here’s how to prepare
Whether you’re new to the area of ​​student loans or already in advanced repayment, it’s wise to stay on top of how your student loan rates might change. As 2021 continues, more opportunities for cheaper loans or loan cancellation may open up; Keep an eye on the Bankrate student loan news center for the latest trends.