Current student loan news for the week of May 3, 2021

In the ever-changing world of student loans, staying on top of student loan news and rates is essential. Below are this week’s student loan trends that could affect your loans and your portfolio.

3 current trends in student loans for the week of May 3, 2021

1. A new bill would make loan forgiveness easier for the military

Following a recent Government Accountability Office (GAO) report on military involvement in Public Service Loan Forgiveness (PSLF), Senses. Maggie Hassan and Marco Rubio have proposed a bipartisan bill facilitating the path to forgiveness.

The PSLF is a federal program that cancels student loan debt for those in qualifying public service jobs after 120 qualifying monthly payments. However, according to the GAO report, only 124 of some 177,000 eligible military personnel have had their loans repaid through the program. The report alleges that this is largely due to a lack of eligible payments. In particular, deferred student loan payments during deployment are not considered eligible payments.

Hassan and Rubio’s bill, the Recognize military service in the PSLF law, seeks to modify this requirement by allowing deferred payments during military service to count towards the requirements of the PSLF.

How it affects student loans

If passed, this bill would provide an easier route to the release of student loans through the PSLF for active-duty military personnel. Experts have criticized the PSLF for its stringent qualification requirements for years: the number of borrowers who have actually received forgiveness through these programs has been incredibly low compared to the number of applicants. Revisions to the program, like this bill, could pave the way for millions of people to receive the forgiveness promised by this program.

2. Student borrowers could benefit from savings assistance for their retirement

A new bill led by Senator Ron Wyden aims to help student borrowers save for retirement through 401 (k) matches. The Student Loan Retirement Parity Act, sponsored by Senators Maria Cantwell, Sheldon Whitehouse, Sherrod Brown and Ben Cardin, would allow employers to match student loan payments through contributions to a pension plan . In other words, the student loan payments that the borrower makes would be treated as optional deferrals for the purposes of the 401 (k) match, which would allow the retirement account to grow even if the student does not. contributions directly.

How it affects student loans

A Bankrate survey found that about 29% of borrowers with student loans carry over their savings for retirement due to their outstanding balances. The Student Loan Retirement Parity Act could help, essentially allowing borrowers to make payments and save for retirement at the same time.

3. American Families Plan calls for a tuition-free community college, increased Pell Grant and more

During the joint congressional address on Wednesday night, President Biden unveiled the United States Plan for Families: a collection of large-scale social proposals aimed at helping American families financially.

Much of the plan is to make higher education more accessible to low- and middle-income people and to close the equity gap that exists in America. Among the proposals are:

  • Two years of community college tuition-free.
  • Tuition Fee Grants for Students at Minority Serving Institutions (MSI), Historically Black Colleges and Universities (HBCU), and Tribal Colleges and Universities (TCU).
  • Increased values ​​of Pell Grants.

How it affects student loans

Although the American Families Plan does not deal directly with student debt – student loan cancellation is one of the few higher education proposals from Biden that has not made it into the plan – it can help students avoid most of this debt in the future. A cheaper college, along with the promise of more federal funding, could significantly reduce college costs for students in the future.

Next steps

Whether you are new to student loans or are in a position to repay, it is wise to stay on top of changes in your student loan rates. As 2021 continues, more opportunities for cheaper loans or loan forgiveness may open up; Keep an eye on the Bankrate student loans news hub for the latest trends.

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