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 leaders want answers from CFPB, Dept. of Education
A trio of House committee chairs have fired off letters to the Consumer Financial Protection Bureau (CFPB) and Department of Education to demand documents and information about the regulation (or lack of regulation) of student loan servicers.
Although the CFPB was once seen as a prime advocate for student loan borrowers, its reputation has taken some hits over the past couple years, especially after its student loan ombudsman slammed the agency as he resigned in protest last summer. In one case, it’s even been accused of offering potentially bad advice to borrowers.
The letter from the three House committee heads accused the CFPB of taking “actions that weaken its ability to fulfill its mission to protect student loan borrowers,” and said the body was “providing potentially harmful and conflicting advice to student loan borrowers.”
For its part, the CFPB has said the Department of Education was blocking oversight of student loan lenders by telling the lenders they don’t need to comply with the CFPB’s requests for information. The House leaders’ letter to the department referenced this, alleging that it is “shielding student loan servicing companies from state law enforcement and undermining the CFPB’s oversight of these companies.”
Meanwhile, Politico said Thursday it had obtained emails showing that Jack Remondi, the chief executive officer of major student loan servicer Navient, personally asked the department declare state governments couldn’t regulate servicers.
How it affects YOU: Any big changes at the CFPB or Department of Education may be slow in coming — the three House chairs are Democratic, while the two agencies are run by Republicans, almost guaranteeing a standoff. Since some of the criticism involves bad advice, you can protect yourself by doing some research of your own and knowing your rights as a borrower, especially when it comes to modifying your repayment plan or considering forbearance. Look into what your options are before you speak with your servicer so that you make the choice for yourself rather than outsourcing the decision to your lender.
Also in the news…
- In the latest from the frontlines of student loan philanthropy, musician Taylor Swift has paid off the roughly $4,800 in student debt owed by one of her superfans, ABC’s “Good Morning America” reported. The fan — 20-year-old Ayesha Khurram — and her family have struggled to meet the cost of attendance at the University of Waterloo in Canada, where Khurram studies. This also suggests that, despite Canada’s reputation of having an easier path for student loan borrowers, college debt can be a heavy burden everywhere.
- Although the now-defunct ITT Tech chain of technology schools has wiped away much of the loans held by its former students, it won’t have to pay a fine. The CFPB said Monday it had reached a $60 million settlement with ITT over alleged improper student lending practices, but added that it would not seek to collect the money from the bankrupt school operator. The agency’s decision was due to the fact that “there are limited funds available at the company after its 2016 bankruptcy,” according to an Inside Higher Ed report.
- Fresh data out from the New York Federal Reserve shows little sign of easing for student loan defaults, according to analysis in a Bloomberg News op-ed Wednesday. The article cites Fed researchers as saying student loan defaults “have grown stunningly since 2012,” even as the wave foreclosures from the housing collapse a decade ago has ebbed back.
- Remember that standoff between California and the Department of Education over online college rules? Education Secretary Betsy DeVos had demanded America’s biggest teacher’s union, the National Education Association, drop their suit to implement Obama-administration rules, alleging the union was putting online students’ financial aid in jeopardy. However, the Education Department decided this week to drop their own legal appeal instead, according to Politico.
- New accounting standards are requiring financial firms to include more projected losses when setting aside their loss provisions. As a result, student lender Sallie Mae said it may need to raise its loan-loss reserves by as much as 313% for 2020, lowering its earnings for the period, Bloomberg News reported Monday. The report described Sallie Mae’s revision as “eye-popping compared to the disclosures so far from other financial institutions” and is likely related to the relatively large proportion of defaults on student loans.
- New York moved a little closer to requiring student loan lenders to obtain a state license, trotting out proposed regulations for public comment, the National Law Review said Monday. The state revived its plans for a licensing requirement and passed them into law in April.
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|Lender||Variable APR||Eligible Degrees|
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|2.25% – 6.28%3||Undergrad & Graduate|
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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 Sep 1, 2020 and may increase after consummation.