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.
Defrauded students waiting for relief
The Education Department is waiting on a legal ruling before tackling the backlog of students who were defrauded by schools and are now seeking student loan relief, Principal Deputy Under Secretary Diane Jones said Tuesday.
According to Politico, there are more than 158,000 claims waiting for a decision. But Jones said “the department, unfortunately, is waiting for a court ruling,” and that while determinations on some cases are clear-cut and could be processed now, “where there are students that are likely eligible for partial relief, we’re stuck.”
Education Secretary Betsy DeVos has sought to overhaul the borrower defense rule, rolled out during the Obama administration to protect students scammed by unscrupulous schools, and for a while, the department had stopped processing claims against for-profit schools accused of defrauding students.
Last October, however, a court ruling said the department would need to comply with borrower defense.
With the administration now stuck with the rule, Jones said the department was working to make major changes to it. As Politico reported, it “now plans to publish a final borrower defense rule based on the Trump administration’s proposal from last fall” as announced by DeVos.
How it affects YOU: Many of the outcomes from the government these days seem to hinge on whether a decision is good politics. If polling — or a (loud) outpouring of support or opposition — shows something is a good or bad idea, politicians will often act accordingly. So if borrower defense affects you or is something you care about, you can call your senators and your representative to sound off, and even get your like-minded friends to do the same.
Military service members to get more protections
Advocates for student loan borrowers in the military scored a big win this week, as the Pentagon announced a plan alert those serving in combat on the option of ceasing interest from accruing on their college debt.
A new data-sharing agreement with the Department of Education will automatically flag all service members who qualify for cancelling their interest costs, Politico reported.
The benefit for those serving in war zones was enacted in 2008, but the report notes that few military members took advantage of it. In fact, as a separate MarketWatch item noted, student loan servicer Navient paid out $60 million to almost 78,000 service members in a 2015 legal settlement with the government over the interest rule.
The announcement comes as the government is considering amending the so-called “90/10” rule that may have led some less-than-honest schools to target veterans for their GI bill funds.
How it affects YOU: If you have views on the proposed data-sharing plan, you have until May 16 to submit your comments to the government. You can do so online or by mail.
Also in the news …
- Presidential candidate Sen. Elizabeth Warren unveiled a detailed slate of student debt relief programs Monday, including a plan to cancel up to $50,000 in student loans per person for 42 million borrowers. You can read the details here.
- Meanwhile, rival presidential hopeful Sen. Amy Klobuchar said this week that politicians promising student loan debt relief aren’t being honest about what’s possible, The Week reported.
- Opponents of student loan forgiveness are pushing back against recent proposals. They include Liz Peek, Rush Limbaugh, and Derek Hunter, who said that “every student with a complaint about student debt” should be asked whether they “understand the concept of a loan.”
- Student loan servicer Navient has been the focus of various complaints and lawsuits, but it still managed to pleasantly surprise its investors Wednesday by posting better-than-expected earnings for the first quarter, sending its share price higher.
- An op-ed published Tuesday in Forbes says student loan forgiveness could help shrink the pay gap between women and men.
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!
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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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 2020, 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 7/31/2020. 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 protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 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
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 September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 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 September 10, 2020.
5 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 0.16% effective August 10, 2020.