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 affect your own student loan situation.
Another year, another record for student loan debt
A Bloomberg study out this week shows Americans owed a record $1.465 trillion in student loans in November. This means the country’s education debt is double what it was in June 2009, according to the study, which expanded off of Federal Reserve numbers by looking at Bloomberg’s own securitization data.
Meanwhile, one of the worst years to have taken out a student loan turns out to be 2012 — defaults on loans taken out that year were the second-highest on record, as the U.S. labor market struggled to recover from the financial crisis.
And it’s not just millennials either — the study showed a full 1.8 million people aged 62 or older were also repaying student loans.
Borrower defense, government offense
Late last week, the Department of Education conceded that it will start canceling student loans that fall under “borrower defense” after suffering a legal defeat over its efforts to halt the Obama-era rule.
But as Politico’s Morning Education tipsheet reported on Thursday, the fate of other parts of the rule remain uncertain, including provisions allowing students to join class-action lawsuits against their schools and prohibiting colleges from forcing students to accept arbitration for settling legal disputes. Stay tuned!
Student loan borrower group investigates PSLF
It’s not exactly news that few people have benefited from the decade-old Public Service Loan Forgiveness (PSLF) program. But the question remains: Why?
The recently founded advocacy group Student Borrower Protection Center and the American Federation of Teachers union have done some sleuthing, including combing through consumer complaints, court records, Freedom of Information Act requests and other sources. In their report out this week, they concluded that PSLF’s “flawed implementation and the U.S. Department of Education’s inadequate oversight of the student loan servicing industry have created mistakes and missteps that have denied borrowers the loan forgiveness they earned.”
Specifically, the report accused student loan servicers of having “created roadblocks for borrowers at each step in the process of qualifying for PSLF.” It also said the government failed to release documents that would show why more than 99% of PSLF applicants were rejected for forgiveness.
In response, an Education Department spokesperson told the Washington Post that the government “recognizes that the requirements — set forth by Congress — to achieve public service loan forgiveness are complex,” but that the department is nonetheless committed to helping borrowers find out how to get PSLF.
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