Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.
You must choose between vacation and student loan repayment
A Bloomberg report out Wednesday has created some buzz, detailing an insurance company that will help repay its employees’ student loans if they agree to give up five paid vacation days. The exact amount the company, Unum, offers depends on the staff member’s salary, with the assistance averaging an estimated $1,200 a year, the report said.
While a growing number of companies large and small have started providing some form of student loan repayment help, Unum’s requirement that borrowers trade in part of their vacation time for the benefit is unusual. But as the report notes, Unum also has a relatively generous vacation allotment — at least 28 paid days versus a national average of 15 days — so employees taking part in the program will still have a reasonable amount of time off.
But Vice news editor Matt Taylor suggests that Unum’s offer is a sign of “how badly the system is broken.”
“It’s fair to wonder if businesses that decide to offer student loan relief in exchange for other benefits in the future may do so at growing cost to their employees’ well-being,” he writes.
How it affects YOU: At least so far, most firms offering help with student loan payments don’t require giving up any vacation time. If you’re intrigued by this benefit, check out these 17 companies that have joined a growing list providing help to workers with college debt. You can also make the case to your human resources department on why student loan aid can help employer and employee alike. And if you’re lucky enough to already have access to this valuable job perk, make sure you don’t overlook the tax implications of repayment assistance.
Senate panel chairman lays out vision for new student loan rules
The Higher Education Act (HEA), governing a host of major federal programs, is due for a reauthorization by Congress, and U.S. Sen. Lamar Alexander, R-Tenn., has some big changes in mind.
Alexander chairs the Senate committee in charge of education. Speaking at the American Enterprise Institute, the senator called for, among other things …
- Trimming the number of federal repayment plans to two: Alexander suggested having just two options for repayment of your student loans — the standard 10-year plan and something that sounds like the current Pay As You Earn (PAYE) program, with payment set at 10% of disposable income and forgiveness after 20 years.
- Pulling repayment directly from your paycheck: He also said the new repayment options “would automatically deduct payments from your paycheck” in a manner “just like federal taxes.” While he didn’t go into details, the notion raised alarms from some observers. Currently, forced automatic deductions are considered wage garnishment and are only resorted to for borrowers in default.
- Simplifying FAFSA: Alexander criticized the Free Application for Federal Student Aid as overly complicated and suggested cutting the number of questions from a current 108 down to 15 to 20.
- Beefing up the gainful employment rule: The gainful employment rule monitors whether graduates of a given school can handle their student debt, and it holds schools accountable if they can’t. While Education Secretary Betsy DeVos has sought to get rid of the 2015 regulation, Alexander wants to expand it to cover some currently exempt public schools and to adjust some of the data-reporting requirements.
How it affects YOU: The HEA was set to expire in 2013 but has been extended until a reauthorization can be passed through Congress. While Alexander’s Republicans control the Senate, the Democrats have taken over the House, so any major reforms will likely need to be bipartisan. Ideas from the Democratic Party on higher education have focused on increasing borrower protections and helping fund college, rather than some of the issues raised by Alexander. If you want to weigh in, reach out to the senators on the panel via their constituent services offices — if enough people phone in, they’ll probably get the message.
Also in the news …
- A new student loan game show is out, this time from the folks at CollegeHumor. The show, called “Total Forgiveness,” requires student loan borrowers to do various “Fear Factor”-style stunts in exchange for repayment of their school debt. According to one report, the challenges include “getting in bed with a giant anaconda, reading your middle-school diaries out loud at a bookstore and selling all your belongs.” To which Student Loan Hero asks: Will the humiliations never cease?
- Politico reports that international student enrollment at U.S. colleges and universities has fallen for the second year in a row, with enrollment applications slumping 4%, and incoming students down 1%. The report said the data has added to concern that the “administration’s immigration policies are tarnishing America’s reputation as the top destination for higher education.”
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