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.”
News can be useful, but if you want some deeper advice, take a moment to sign up for the Student Loan Hero weekly digest email and get valuable financial knowledge sent straight to your inbox … for free!
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for SoFi.
2 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 2.54% APR (with Auto Pay) to 7.27% 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 March 18, 2019, 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 0318/2019. 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 firstname.lastname@example.org, 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.
3 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.
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 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.54% – 7.12%3||Undergrad & Graduate|
|2.54% – 7.27%1||Undergrad & Graduate|
|2.67% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|