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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Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|