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.
‘Mayor Pete’ details free college proposal
Democratic presidential candidate Pete Buttigieg announced late last week details of his plan to tackle student debt and other higher education issues.
If elected president, Buttigieg — currently serving as mayor of South Bend, Ind. — would seek $500 billion in funds to provide tuition-free public college for middle- and low-income students.
Under the plan, “80% of families of public college students that earn up to $100,000 will not pay any public college tuition,” according to Buttigieg’s campaign website.
Buttigieg has personal experience struggling with student loans, with he and his spouse having previously racked up six figures of college debt.
Other candidates have advocated similar proposals of various sized. Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have called for eliminating tuition at public colleges, while former vice president Joe Biden previously pitched tuition-free community college.
Other highlights of the plan include increasing Pell Grant funding for low-income students and investing $50 billion to support Historically Black Colleges and Universities and Minority Serving Institutions.
However, Buttigieg’s initial announcement on his student loan policy spanned just 100 words and was short on details, with no position on federal student loan forgiveness programs, for instance.
How it affects YOU: If you plan to vote with your pocketbook (or student loan balance) in mind, you might take the time to consider Buttigieg’s platform. You can compare his agenda to the proposals of other presidential candidates. Also consider how likely these candidates would be to enact their plans, especially if the levers of power remain divided between the two parties.
Dept. of Education wipes away $11 million worth of student loans
Education Secretary Betsy DeVos announced last Friday that about 1,500 students from a pair of for-profit colleges would receive a closed school loan discharge. Students who borrowed nearly $11 million to attend the Art Institute of Colorado or the Illinois Institute of Art in 2018 will also regain their eligibility for Pell Grants.
“In this instance, students were failed and deserve to be made whole,” Devos said in a statement.
The two schools in question received federal student aid funding despite being unaccredited, according to the Washington Post and other outlets. However, some members of Congress who called on DeVos to act in a March letter were left unsatisfied by the statement.
“For the vast majority of defrauded students, this announcement cancels only a small portion of the loans they took out to attend a failing school,” Rep. Bobby Scott (D-Va.), the chairman of the House education committee, told PBS.
The Education secretary was held in contempt of court last month over a separate student loan discharge dispute involving the now-defunct Corinthian Colleges.
How it affects YOU: In her announcement, DeVos also said that students of 24 schools owned by the same education company, Dream Center Education Holdings, would now have more time to apply for a debt discharge of their own. If you were or are a student of one of these schools, consult the Education Department’s dedicated information page.
While this is a positive development for some student loan borrowers, it might not mean relief for many others. Thousands upon thousands are waiting for a response to their borrower defense to repayment applications. We’ll update you here if the Education Department expands forgiveness options for other disgruntled borrowers.
Also in the news…
- The U.S. Supreme Court appears to be leaning toward allowing the Trump Administration to end the Deferred Action for Childhood Arrivals, also known as DACA, the New York Times reported Tuesday. The program has allowed many undocumented immigrants who came to the U.S. as young children to stay in the country, though they aren’t able to access some government services, such as federal student aid.
- English or a foreign language, biological and physical sciences, education, social sciences and law, or communications — those are the most-regretted majors of college students, according to a ZipRecruiter study reported by CNBC. Many of the fields named also ranked poorly in Student Loan Hero’s recent research on the return on investment for different college majors.
- Borrowers who live in predominantly black neighborhoods are nearly twice as likely to default on their student loans as peers in mostly white neighborhoods, according to Federal Reserve Bank of New York research. A separate study from Student Loan Hero found that student debt tends weighs heaviest on students of color.
- A California man was sentenced to six months in prison and fined $150,000 on Wednesday for paying $450,000 to gain his son and daughter’s admission to the University of Southern California. It was the stiffest punishment doled out since the multi-million dollar college admissions bribery scandal broke in March, according to USA Today.
- A New York woman employed identify theft to borrow $28,000 worth of Sallie Mae student loans, the Finger Lakes Daily News reported Sunday.
- A West Virginia man who won a $50,000 deer-hunting competition said he would put most of his winnings toward ending his wife’s student loan debt, the Charleston Gazette-Mail reported on Saturday.
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