Our Take on Interest Rate Deal; Private Loan News
Our Take on the Federal Student Loan Interest Rate Deal
Last week the Senate passed compromise interest rate legislation that's expected to pass the House this week and become law. While it lowers federal student loan rates for borrowers taking out loans this year, it's more of a missed opportunity than a cause for celebration, as we said in a widely covered statement. That's because it's projected to cost students and families more over time than if Congress had done nothing at all after interest rates doubled on subsidized Stafford loans.
We thank the thousands of you who asked Congress to make student loans more affordable- not less -- for today's students and tomorrow's. Without your voices, the outcome could have cost students far more. And as many in Congress have pointed out, the new policy is permanent until changed. The upcoming reauthorization of the Higher Education Act is a crucial opportunity to revisit student loan policy in the context of higher education reform as a whole.Read our blog post on the Senate compromise
Federal Regulators Encourage
Lenders to Help Private Loan Borrowers
In better news on private loans, last week federal bank regulators issued a joint statement encouraging private education lenders to help struggling borrowers. The Federal Deposit Insurance Corporation, the Federal Reserve Board, and the Office of the Comptroller of the Currency also assured lenders that they won't criticize them for modifying loans in ways that make the loans easier for financially stressed borrowers to repay.
If you or anyone you know is struggling to repay a private education loan, now's the time to ask for a loan modification or other help - even if the lender rejected similar requests before. And if the lender says it still can't do anything, contact the Consumer Financial Protection Bureau (CFPB).
Read the agencies' joint statement
File a complaint with the CFPB
Bill Would Repeal and Block Student and Taxpayer Protections
The House Committee on Education and the Workforce recently approved a bill (H.R. 2637) that would prevent the Department of Education from addressing waste, fraud, and abuse in career education programs, college recruiting, and other areas. A broad coalition of more than three-dozen organizations working on behalf of students, consumers, veterans, faculty and staff, civil rights, and college access and affordability - including TICAS - strongly opposes the bill. As noted in the coalition letter, the bill would "require Washington to turn a blind eye to how billions of dollars in taxpayer-funded student aid are being abused." Among other things, it would block any regulations on gainful employment and create loopholes in the ban on incentive compensation.
The full House may vote on the bill after the August recess. Meanwhile, the Department of Education's negotiated rulemaking process for new gainful employment rules is proceeding with the first meeting scheduled for September 9-11. TICAS will keep advocating for protections for students and taxpayers, and we'll keep you informed about ways to weigh in.
Read the coalition letter opposing H.R. 2637