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.
House slams servicers as Senate looks for deal
The past week and a half has seen Congress suddenly take a larger focus on the student debt crisis, including hopes for a bipartisan agreement on improving the college aid system.
On the House side, the subcommittee in charge of education held its first hearing on student loans since Democrats took control of the chamber. Topping the agenda was the Department of Education inspector general’s report from February, which called out the Federal Student Aid office for a lack of oversight of student loan servicers.
While the lawmakers took no immediate action, they did express serious concern over the report, with the committee’s chairwoman, U.S. Rep. Rosa DeLauro, D-Conn., saying the country was in the throes of a student loan “servicing crisis.”
On the Senate side, meanwhile, hopes grew for a bipartisan deal to improve and reauthorize the Higher Education Act. After U.S. Sen. Lamar Alexander, R-Tenn., who chairs the Senate committee in charge of education, offered his vision for college aid reform in early February, ranking Democrat Patty Murray, D-Wash., gave her own take late last week.
Among her top priorities was affordability. “Everyone who wants to go to college — whether it’s a two- or four-year degree — should have the choice to do so, and shouldn’t be saddled with debt as a result,” Murray said in a speech to the Center for American Progress.
She also called for more funding to help pay for school, especially for students at historically black colleges and universities.
While there wasn’t a huge amount of overlap between the two senators’ views, an Inside Higher Ed report noted that both Murray and Alexander had indicated the need for more accountability in the system. It also quoted Alexander as saying that he and Murray “have a good history of working together to find areas of agreement, and I expect that we will be able to do the same this year.”
“My hope is that working together, our committee can produce a recommendation to the full Senate before summer,” he said.
How it affects YOU: Changes to the Higher Education Act could have a big impact on your student loan repayment. As we’ve noted in this space before, you should reach out to the lawmakers involved if you have views you want heard. It’s worth starting with your own representative’s office. In terms of the Higher Education Act, you could also write emails to the members of the Senate education committee and urge them to keep borrowers in mind as they rewrite the law.
Fear of refinancing grips student loan borrowers
An interesting survey by Student Loan Planner shows that a full 85% of student loan borrowers “stated they had some sort of fear related to refinancing.”
The type of fear, however, varied. For example, 32% said they were worried the government would come out with a new forgiveness program that they wouldn’t be able to access if they refinanced their federal student loans as a private loan. Meanwhile, 24% said they were more concerned that life changes would make the payments on their refinanced loan unaffordable.
How it affects YOU: Whether to refinance your student loans is a big decision, but it doesn’t need to be a scary one. Start by considering some key questions to see if refi is the right move for you. And if it does seem worth investigating, make sure you shop around and compare offers so you get the best deal possible.
Also in the news …
- The part of the Consumer Financial Protection Bureau that oversees student loans got a big demotion, according to a Bloomberg report last Friday. Not only has the office dealing with student debt suffered staff cuts, but its next head will be a “manager,” rather than a higher-level “executive” as had been the case previously.
- A recent paper from the Urban Institute highlights racial and ethnic gaps in college funding, with black students having to borrow more than their white classmates. The policy institute suggests expanding funding for the Pell grant and “direct funding to institutions to reduce the prices paid by students of color.”
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