Last week, the US Department of Education wrote off student loan debt for about 1,800 students who attended three tertiary institutions that misled borrowers. Over the past several months, the department has written off more than $ 1.5 billion for borrowers in similar circumstances. In addition, the Pennsylvania Higher Education Support Agency announced that it will no longer service federal student loans. Here’s what you need to know about student loan news this week.
2 current student loan trends for the week of July 12, 2021
1. The Department of Education is writing off student loan arrears to students from three schools.
The Department of Education recently approved borrower protections against loan claims for more than 1,800 students who attended Westwood College, Marinello Beauty Schools and the Legal Accountability Institute. The Department of Education found that all three (currently closed) schools were misleading students about credit transfers, promises of future job prospects, program durations, and more.
As part of Borrower Protection, students who attended these colleges will be forgiven student loan debt pending payment on the grounds that these schools have misled or deceived them. The move will collectively cancel out $ 55.6 million in outstanding student loans.
How does it affect student loans
The Biden administration has been working over the past several months to approve requirements to protect borrowers from repayment, eliminating the backlog of applications. The administration has now satisfied the borrower’s claims for more than $ 1.5 billion for 92,000 borrowers. Students who visited ITT TechCorinthian Colleges and the American Career Institute have also recently received approved applications.
The Department of Education is still dealing with backlog of claims, so other agencies may follow. The current process may also protect more borrowers in the future, with Education Minister Miguel Cardona hoping the permits “serve as a warning to any institution engaging in such behavior that such misrepresentation is unacceptable.”
2. The Pennsylvania Higher Education Support Agency will no longer serve federal student loans.
The Pennsylvania Higher Education Support Agency (PHEAA), the agency that administers federal student loans and grants, will not renew its contract with the US Department of Education at the end of the year. The contract expires on December 14, 2021.
PHEAA, also known as FedLoan Service, currently manages 8.5 million federal student loans and is the only service provider currently servicing loans for Public Service Loan Forgiveness (PSLF)… Borrowers who currently hold company-serviced loans will see their loans transfer to other service personnel after the PHEAA contract expires. Meanwhile, PHEAA says it will maintain commitments to its borrowers during the transition period.
How does it affect student loans
PHEAA has undergone rigorous scrutiny of how it handled the PSLF approval process, a program that gives government officials the opportunity to obtain forgiveness for their student loans after 10 years of eligible payments. In the very last annual budget of the White HouseBiden has proposed revising the PSLF approval process to make it more affordable, but PHEAA’s departure could also change the way these loans are managed.
PHEAA isn’t the only service company to suffer at the end of the year; with the Department of Education overhaul of student loan service, several other service centers have not received renewal contracts. Borrowers whose loans are currently administered by PHEAA or other service centers with expiring contracts should closely monitor any communications from the Department of Education or their current service personnel. These loans will be passed on to new service personnel, although the details of the loans themselves will not change.
Whether you are new to obtaining student loans or in the process of paying off, it is wise to know how student loan rates can change. As 2021 progresses, more opportunities may open up for cheaper loans or loan forgiveness; follow up Student Bank Loan News Center for the latest trends.