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.
New student policy group seeks wide reforms
Student government leaders from colleges across the country have formed a new organization — the Student Policy Alliance — aimed at addressing higher education issues, including school costs and student loans.
Its policy goals for helping student borrowers include “protecting subsidized student loans and Public Service Loan Forgiveness [amid calls for ending those programs], simplifying repayment plans and maintaining low interest rates” on federal student loans. The group also wants strong oversight of student loan servicers and a change in bankruptcy rules to allow easier discharge of student loans.
It also wants to see the Free Application for Federal Student Aid (FAFSA) simplified and the formula for the Expected Family Contribution (how much students are responsible for paying out of pocket) updated. Other policy goals deal with on-campus issues, including fighting racial discrimination, sexual assault, food insecurity and other pressing problems.
Student body presidents announced the formation of the Student Policy Alliance as they met in Washington, D.C., this week for their annual summit, Politico reported, although work on the organization began last summer. According to its website, the campus leaders involved represent a combined 6.1 million students.
How it affects YOU: The alliance is currently “organization based,” meaning its members are student governments and other coalitions, rather than individuals. However, it is asking individual students to come forward with their ideas and personal stories that connect to the policy issues it focuses on. If you agree or disagree with any of the Student Policy Alliance goals, you can use their online forum to sound off, or to share your own experiences “so policymakers understand the real impact of policy on real students.”
State-level student loan measures roll on
It’s time to check back in on how state governments around the country are working to protect student loan borrowers. As part of an ongoing trend, the following state governments have taken recent legislative action on the college loan front:
- Student loan borrowers in the state of Maine look set to get a raft of new protections, thanks to the creation of a “Student Loan Bill of Rights.” The legislation passed the State Senate unanimously on Monday and was sent to Gov. Janet Mills, who is expected to sign it, according to the Maine Beacon news website. Provisions under the bill include creating an ombudsman to help resolve complaints about servicers and requiring those servicers to be licensed by the state (although servicers on contract with the federal government will be exempt from this, the Associated Press reported.)
- California has moved a step closer to passing its own student borrower bill of rights. Comprehensive legislation to oversee student loan servicers was passed by the State Assembly and moved to the Senate, where it was taken up by the relevant committees last week. Language in the bill would, among other things, allow borrowers to sue servicers and create an annual state “report card” for the industry, the Daily Democrat of Woodland, Calif., reported.
- Texas Gov. Greg Abbott signed a new law to end the practice of revoking professional licenses for those who default on student loans. Forbes reported that the move was widely supported.
How it affects YOU: With partisan gridlock dragging on progress at the federal level, state governments have emerged as a frontline when it comes to student loan reform. State lawmakers also tend to have fewer constituents than their federal counterparts, so they might be more responsive if you reach out with your concerns — look for your state government’s website here to get the contact info you need.
Also, don’t forget to check out our database of states’ many student loan repayment assistance programs. (Though since these programs can come and go over the years, make sure to hit the internet search engine of your choice and do some investigating of your own too.)
Also in the news…
- A coalition of civil rights groups and student borrower advocates issued a public letter to the Consumer Financial Protection Bureau last week, urging action against discrimination in the student loan system. As an example, they cited unequal access to income-driven repayment. As the National Law Review noted, the letter was linked to previous comments from the CFPB director saying that oversight of student loan servicers was difficult due to Department of Education policy.
- The head of the Office of Federal Student Aid has resigned from the board of a foundation holding about $30 million in federal student loans, Politico said. An earlier Politico report had flagged the potential conflict of interest after Gen. Mark Brown (ret.) was appointed in March.
- In a report last Friday, financial publisher and advisor Kiplinger urged caution when taking out Parent PLUS loans. It said the federal loans had less competitive interest rates than some other sources of funding, possibly including home equity lines of credit.
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.