The new year brings some major moves in the student loan industry. From a new round of forgiveness to more transparency around financial aid, students are getting help from universities and the government alike.
For students who took out $12,000 or less in loans, the Biden-Harris Administration plans to forgive those amounts next month, according to a Department of Education press release. Borrowers must have made payments for the last 10 years and enroll in the Saving on a Valuable Education (SAVE) plan to qualify for forgiveness.
Once enrolled in the SAVE program, borrowers will have their loans automatically forgiven starting in February, with no action necessary on their part.
This round of forgiveness is particularly geared towards community college students who typically take out less in student loans. Through the help of the SAVE plan, 85% of future community college students that take out loans will be debt-free in 10 years or less, according to the Department.
“Beyond being the most affordable student loan repayment plan ever available, the Biden-Harris Administration designed the SAVE Plan to put community college students and other low-balance borrowers on a faster track to debt forgiveness than ever before,” U.S. Secretary of Education Miguel Cardona said in the press release. “Our ability to deliver this relief to borrowers months ahead of schedule is a testament to the Biden Administration’s commitment to delivering relief to as many borrowers as possible, as quickly as possible.”
The forgiveness also applies, in select ways, to borrowers with loans up to $21,000. For every $1,000 borrowed above $12,000, borrowers on the SAVE plan can earn forgiveness after an additional year of payments. This lessens the traditional 20-year timeline for undergraduate borrowers on SAVE.
If you have private student loans, federal relief doesn’t apply to you, unfortunately. If you’re looking to lower monthly payments and ease the burden of student loan debt, then consider refinancing your student loans. Lock in some of the lowest interest rates ever via the online marketplace Credible.
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Colleges commit to financial aid transparency to help students understand debt
In an effort to address the high cost of student loans and make borrowing an easier journey, over 360 higher education institutions are committing to a set of standards that promotes transparency around student financial aid offers, according to a release by the National Association of Student Financial Aid Administrators (NASFAA).
“Students and families need transparency, consistency, and clarity when colleges and universities communicate their student financial aid offers so that they are able to make informed decisions about enrolling in and affording higher education,” Cardona said. “Unfortunately, financial aid offers are often confusing and, in some cases, misleading.”
The standards set out by the College Cost Transparency Initiative include making the language in financial aid offers more approachable for students and their families. It also requires colleges to give a clear look at the total cost of attendance.
Some of the well-known universities that have committed to providing more transparency include Duke, California State University, Michigan State University and Purdue, among many others.
To see what you’d pay on a private student loan — either with or without a cosigner, you can visit Credible today to view a rates table that allows you to compare fixed and variable rates from multiple lenders at once without affecting your credit score.
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This commitment comes as the FAFSA soft launch gets a shaky start
While universities are committing to more transparency, students are struggling to submit financial aid paperwork to their universities of choice.
The Department of Education intended to soft launch their revamped Free Application for Federal Student Aid (FAFSA) on December 31st, after delaying the usual October 1st date. The relaunch didn’t go off without a hitch.
Borrowers cited extremely short windows where they could fill out the FAFSA. Those who did get through were met with constant glitches that left incomplete applications for many borrowers.
“Even by soft-launch standards, this weekend’s rollout was challenging and students, families, and financial aid administrators who have been waiting for this release for months are understandably frustrated,” NASFAA President Justin Draeger said.
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