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 proposes ‘modest’ but expansive College Affordability Act
The Higher Education Act of 1965 is overdue to be reauthorized. Leading senators and the current administration have weighed in on changes they’d like to see, and this week the House Democrats added their latest ideas on remaking financial aid.
The College Affordability Act would, in part, help states offer tuition-free community college and expand federal grant and loan programs — but it would stop short of matching the wider-sweeping promises of some presidential candidates.
Rep. Bobby Scott (D-Va.), the chairman of the House’s education and labor committee, presented the bill on Tuesday as a “more modest proposal [that] can actually pass in this Congress,” according to Politico.
You can check out the full text here, but some of the initiatives contained in the bill include:
- Increasing Pell Grant availability and reviving the defunct Perkins Loan program for lower-income students
- Holding schools that receive federal financial aid to a higher standard
- Streamlining repayment for federal loan borrowers and allowing some to lower their interest rates
- Improving the Public Service Loan Forgiveness program and strengthening borrower defense to repayment rules
Politico reported criticism from Republical House members, however, who said the bill would create red tape and drive up the cost of college.
How it affects YOU: In 2017, the House Republicans sought to revamp the system with the PROSPER Act, but it failed to become law despite full Republican control of government. With the Congress now split between the two main parties, passage of the College Affordability Act through the GOP-held Senate faces even longer odds.
Still, it’s worth keeping an eye on the debate in Washington. The Higher Education Act was last revamped in 2008, and its next iteration is likely to affect current and future students and borrowers for some time to come.
Also in the news …
- The Department of Education blocked the Consumer Financial Protection Bureau (CFPB) in its attempt to review the failures of Public Service Loan Forgiveness, according to an NPR report Tuesday. For its part, the Education Department told NPR it was in the process of hashing out a new information-sharing agreement with the CFPB.
- Also on Tuesday, the CFPB’s private education loan ombudsman, Robert Cameron, released the agency’s annual report on student loan complaints. The report catalogs about 6,700 private loan complaints and 13,900 federal loan complaints received between 2017 and 2019.
- The restaurant chain Chipotle announced Tuesday it will pay 100% of tuition for seasoned employees to pursue a business or technology-related degree at one of five universities. Employees with 120 or more days of experience at the company would be able to attend the University of Arizona, Bellevue University, Brandman University, Southern New Hampshire University or Wilmington University without incurring student loan debt.
- Budweiser beer brand Natural Light said Wednesday it will award a $10,000 grand prize and 10 additional $1,000 prizes to student loan borrowers and others who dress up as their “real-life nightmare” for Halloween. The offer follows similar Natural Light giveaways earlier this year.
- Education Secretary Betsy DeVos, who was criticized in court last week for her department’s collection of loan payments from defrauded Corinthian Colleges students, traded shots on Twitter with Sen. Elizabeth Warren (D-Mass.) over the issue. Warren called DeVos a failure, while DeVos accused Warren of lying about the situation.
- Taking a cue from international student loan practices, Rep. David Cicilline (D-R.I.) unveiled a proposal to make federal student loans interest-free and lengthen repayment terms to 30 years. Cicilline told an NBC News affiliate the plan was modeled on the current system in Australia.
- A student loan borrower zeroing her balance nearly woke the dead: 28-year-old Mandy Velez’s viral celebration included posing in a cemetery and pronouncing her $102,000 debt deceased, once and for all. Velez told USA Today last Friday that her key repayment strategies included budget-cutting and income-increasing.
- During her visit to Morehouse College earlier this month, entertainment mogul Oprah Winfrey made the surprise announcement that she would donate an additional $13 million to the school’s scholarship program bearing her name. Winfrey has now given a total of $25 million to Morehouse since 1989, while fellow philanthropist Robert F. Smith paid off the entire debt of the Morehouse Class of 2019.
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