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.
Trump proposes 12% cut to education funding
As he did in his previous two budget requests, President Trump asked for a cut to funding for the U.S. Education Department. The proposed budget would slash $7.1 billion from programs while canceling surplus funds in the Pell Grant program, eliminating subsidized student loans, and putting an end to the Public Service Loan Forgiveness (PSLF) program, according to reports by CNBC, Inside Higher Ed and others.
The proposal also involves a “skin in the game” provision for colleges that accept federal funds. This addition might require colleges to pay if their students default on federal student loans, though the details of how exactly it would work remain unclear, the Washington Post said.
The budget proposal also seeks to reduce the number of income-driven repayment programs to just one. This single income-driven plan would cut borrowers payments to 12.5% of their discretionary income and offer loan forgiveness after 15 years for undergraduates (five years sooner than some current plans allow) and after 30 years for graduates (five to 10 years later than current plans offer).
Assistant Secretary of Education Jim Blew told reporters: “We’re coming back again asking for a reduction because the administration believes that we need to reduce the amount of discretionary funding for the Education Department.”
But few expect these budget cuts to pass, as they’ve been rejected by a Republican-led Congress in the previous two years and are even less likely to get through with today’s Democrat-led House.
How it affects YOU: In all likelihood, this budget proposal won’t make it through Congress, so you don’t have to worry about subsidized student loans or PSLF disappearing overnight. That said, keep an eye out for changes to federal programs and repayment plans, just in case funding priorities get shifted around in the future.
What’s more, the current system of income-driven repayment plans still stands, so explore your options — which include Income-Based Repayment, Pay As You Earn, Revised Pay As You Earn, and Income-Contingent Repayment — if you’re looking for a way to adjust your monthly student loan payments and ultimately get loan forgiveness.
Senate agrees to simplify the FAFSA for students
As we detailed last month, there’s been recent talk about how to simplify the FAFSA to make it more accessible to families seeking financial aid. As of a hearing on Tuesday, the Senate is ready to move forward with bipartisan legislation that would reduce the number of questions on the FAFSA from 108 to 15-25, Politico reported.
Among other reforms, this legislation would allow students to fill out the FAFSA on their own and to find out as early as eighth grade how much Pell Grant funding they might expect to receive. What’s more, families would be able to apply for financial aid sooner because they’d be able to use information from the previous year’s tax returns.
Discussions about simplifying the FAFSA have been in the works for the past five years, but this hearing could represent a big step forward, with the reform measure looking more likely to be enacted.
How it affects YOU: If you’re a soon-to-be college student (or parent of one), expect the FAFSA to become a lot simpler in the future. Although there’s no stated start date for these changes, students and their families should have an easier time applying for federal financial aid in the years to come.
FBI charges 50 in college admissions bribery scandal
You might not have been shocked by the news that wealthy families are buying their kids’ admission to top universities — but none of us expected Aunt Becky of “Full House” to be among those accused.
On Tuesday, the FBI charged 33 parents (among them actresses Lori Loughlin and Felicity Huffman), an owner of a college counseling firm, an exam proctor, a college administrator and college athletic coaches in the “largest college admissions scam ever prosecuted by the Department of Justice,” according to CNN and other reports.
Federal authorities allege that the parents involved paid over $25 million to ensure their children’s admissions to elite schools such as Yale, Stanford, and UCLA. In exchange for bribes, some coaches allegedly accepted students as athletic recruits despite their never having played the given sport competitively. And an SAT proctor is reportedly charged with correcting students’ answers on the SAT to get them a higher score.
The charges in this case include mail fraud, racketeering, money laundering, obstruction of justice and conspiracy to defraud the government.
How it affects YOU: Unfortunately, it’s no secret that the college admissions system tends to favor students and families in positions of privilege. From private college counseling to personal statement editing, wealthier students tend to get extra assistance navigating the college admissions process.
What’s more, entrance exams such as the SAT and ACT have been shown to be biased toward students from high-income families. While these rampant problems probably won’t be going away anytime soon, this case is at least shedding a light on inequities within the college admission process.
Also in the news…
- While the Senate was tackling FAFSA simplification, the House was talking about what to do about for-profit colleges, Politico reported. Various critics testified, including a veteran who says he was scammed by DeVry University.
- According to Roll Call, 68 members of Congress have their own student debt or have family members with debt. Collectively, Democrats and Republicans owe $2.5 million for higher education — so this issue is close to home.
- Student loan lawyer Adam Minsky penned a piece for Forbes about student loan reforms to watch out for in 2019. Among them, Minsky cites free tuition colleges, bankruptcy reform, and the introduction of a federal refinancing program.
- Although we’ll have to wait to see if the government will offer student loan refinancing, Democrats in the state of Wisconsin are pushing for a state-run refinancing program to ease the burden on borrowers, the Capital Times reports.
- In lighter news, there’s a new trivia app that’s awarding winners with money to pay off student loans. To date, the Givling app has paid out more than $2.5 million to its trivia-savvy winners, according to Fox News affiliate WBRC. Looks like that college degree is finally paying off.
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 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.99% – 6.59%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.48% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance 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 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.49% APR to 6.94% APR (with autopay). Variable rates from 1.99% APR to 6.59% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 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.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.