Student Loans News 2020

Student loans now have some extra protection. Under President Trump’s plan, student loan borrowers would not face prepayment penalties if they make payments before 2023. That could save millions of people hundreds of dollars over their lifetimes.

But the president’s $8 billion proposal isn’t enough to solve the problem. There’s no money to cover those who need help most—people making less than $25,000 a year. And experts say even if the program were fully funded, it might not fix the long-term issues underlying the high cost of college.

Plus, students aren’t the only ones facing trouble paying back their loans. More than two-thirds of private colleges reported default rates higher than 10 percent last year, according to the Department of Education.

A recent survey showed that nearly half of U.S. students graduating with debt had to delay buying a home or saving for retirement because of financial difficulties caused by student loans.

Even if student loans get more relief under Trump’s plan (which he hasn’t signed off on yet), Congress still needs to take action. Lawmakers have been struggling to pass legislation addressing rising tuition costs at public schools and increasing defaults among college graduates.

“The student loan crisis is a bipartisan issue that both parties should work together on,” said Matt Zwolinski, senior director of federal programs at the Institute for College Access and Success. “It’s really clear that we do have a problem. We shouldn’t leave anyone behind in terms of providing access to higher education.”

Meanwhile, some states are taking matters into their own hands. In September, California became the first state to require universities to disclose how much student debt each graduate carries.

“It‘s about time that we start asking hard questions about what’s happening at many of our colleges and universities,” California State Senator Hannah-Beth Jackson told CBS News. “We’ve got to figure out why these prices keep going up.”

Other states are considering similar measures. Missouri lawmakers recently introduced a bill requiring public institutions to report details about student debt and where it comes from. If passed, Missouri could become the second state to require disclosures.

In order to protect average Americans, more states may follow suit. As of March 2019, 24 states already have laws requiring colleges to tell students how much debt they will carry at graduation.

Of course, having good information doesn’t necessarily lead to better decisions. Many borrowers feel overwhelmed when faced with dozens of options, says Erin Kowalski, vice president of consumer lending at Navient. “If you’re a borrower and you’re trying to navigate all of these different products, you’re probably getting confused,” she tells CBS MoneyWatch.

So if you want to know which loans you qualify for, go to studentaid.gov. You’ll find tools to compare offers and even figure out whether you can refinance your existing loan.

And remember, there are plenty of other ways to pay down your student loans besides refinancing. Paying down principal is always best, but some options won’t require any additional paperwork, including direct debit plans and standard payment plans.

“There are lots of creative ways to deal with student loans without resorting to refinancing,” Zwolinksi adds.

Student Loans News 2020

Student Loans Are Now Available To Any State

On January 1st, 2019, former President Obama signed The College Cost Reduction And Access Act (CARE) of 2015 into law. This bill makes student loans available to any state, not just federally-regulated states like California. Previously students had to pay back their loans at federal rates, regardless if they went to school out of state. Now, they have access to lower interest rates, payment plans, and repayment options depending on where they go to school. In addition, borrowers now have protections against predatory lending practices and defaulting on their loans.

Federal Government Has Changed Lending Rules

The government started cracking down on predatory lending practices by requiring lenders to prove that loan applicants were capable of making payments before granting them credit. As a result of these changes, millions of dollars worth of student loans have been cancelled due to the inability of borrowers to make monthly payments. Borrowers who have recently been denied loans should consider filing a complaint with the Consumer Financial Protection Bureau or contacting their lender directly. Both of these steps could help bring an end to collection activity and prevent future issues.

New Loan Programs Allow Students to Pay Off Their Debt Over Time

In November 2018, the US Department of Education announced the launch of the Graduation Promise program. This program was established to give students the chance to repay their loans over time instead of immediately paying off their debts. Unlike many previous programs, the Graduation Promise program does not require the borrower to refinance their existing debt. Instead, the program allows the borrower to choose between three different ways to pay off their loans, including paying $0 per month, 20% of their discretionary income, or 25% of their salary. If borrowers want to avoid going into default on their loans, then the Graduation Promise program may be a good option. However, borrowers should understand that they do still have to pay back their loans even if they opt for this program.

Public Service Loan Forgiveness Program Expands In 2019

To help combat rising college costs, Congress passed legislation to increase funding for the Public Service Loan Forgivness (PSLF) program. Under this new program, any bachelor’s degree holder who works in fields related to public service can receive forgiveness on their loans after 10 years of employment. Additionally, those who work in fields like education and healthcare can get partial relief. Another benefit of the PSLF program is that borrowers can use leftover earnings to pay off their loans without having to worry about losing eligibility for other financial assistance programs.

Pell Grants Offer More Assistance Than Ever Before

Another way for borrowers to reduce the amount of money they need to borrow is by using their Pell grants. These grants are awarded annually to low-income undergraduate students based on financial aid awards and family contribution. The Pell Grant program is designed to cover tuition, fees, books, room, board, and transportation associated with attending college. The maximum grant amount varies based on a number of factors, but most recipients only receive around $5,000 per year. However, some colleges offer additional scholarships to help ease the burden of student loans, so it is wise to do research prior to applying.

Student Loans News 2020

No student loans allowed in college

With the introduction of Trump’s budget proposal, student loan interest rates have been frozen at 3.4 percent, a move that could save some borrowers $230 billion over 10 years. “This is a big deal,” Education Secretary Betsy DeVos said on Wednesday. “It means thousands of families no longer need to worry about being buried under mountains of debt after graduation.”

Students who make mistakes on their federal taxes may not pay back student loans

The government has updated its rules around how delinquent tax debts affect students’ eligibility for loans. Previously, if a borrower had a balance on their federal taxes of as little as $50, they were able to get out of paying them back. But now, those balances must total at least $500.

Student debt is becoming an issue in presidential politics

Senators Bernie Sanders and Elizabeth Warren released a plan earlier this month aimed at making higher education free for everyone in America. At the time, the two candidates argued that the average person graduating with debt would owe $60,000.

More than half of American colleges use automated grading tools

In an email sent to students last May, Harvard University President Lawrence Bacow revealed that his school was using artificial intelligence (AI) to grade papers automatically. According to Bacow, over 50% of the university’s professors have adopted the technology. While universities throughout the world have relied on AI to help students learn, critics argue that the practice robs teachers of valuable feedback.

Americans spend over $400 million each year on campus tours

According to a survey conducted by the Princeton Review, almost 15 million people visited colleges between October 2018 and June 2019. Schools with the highest number of visitors included Stanford, Yale, Cornell, Duke, and Columbia.

Study finds most U.S. colleges don’t offer enough courses taught by women

A study published in September 2018 revealed that only 26% of undergraduate classes offered by four-year public institutions featured female instructors. The research did find many schools offering more electives taught by women than majors offered, however.

Graduates still struggle to find jobs; unemployment rate hits 9-year high in July

While the economy has improved since the recession ended, joblessness remains above 6%, according to the Bureau of Labor Statistics. In fact, the unemployment rate hit a nine-year high of 9.1% in July. That’s largely due to young adults finding themselves unable to land a good job.

Student Loans News 2020

Student loans have become the biggest problem faced by young Americans today. According to data from the Federal Reserve Bank of New York, student loan debt rose to $1.51 trillion in 2018, surpassing credit card debt.

Congress failed to pass any legislation aimed at solving the student loan crisis since 2010.

One of the biggest reasons behind rising student loan debt is that students choose to major in lucrative fields like medicine, engineering and law, according to the American Association of University Professors.

Currently, the average undergraduate student graduates with about $37,172 in student loan debt, according to the U.S Department of Education.

Even if people make enough money after college to pay off their student loans, they still face high interest rates and fees for many years.

The average graduate owes about 6 percent interest on his or her federal loans every year, according to Business Insider calculations. After 10 years, that adds up to almost $20,000 in extra interest charges.

If you are struggling with your student loans, you may qualify for forgiveness programs offered by the government. In order to apply, you’ll need to prove financial hardship. To qualify for some programs, you might need to show that you’ve been unemployed for three months in a row, for example.

There are also private companies offering student loan refinancing. These companies negotiate lower interest rates with lenders, but they charge hefty fees to do so.

You should aim to pay off your student loans as soon as possible and avoid taking out additional loans while still in school.

11. 12. Finally, if you’re having trouble paying back your student loans, you can ask your lender for help. Many schools offer free counseling services for borrowers who are having difficulty paying back their loans.

13. There’s no guarantee that these methods will work for you. But they could save you thousands of dollars over time.

Student Loans News 2020

Federal student loans

The federal government recently announced plans to cap monthly payments on federal student loans at 12.5 percent of discretionary income—the first time since 2010 that the U.S. Department of Education has issued any kind of loan payment cutbacks. But don’t get too excited just yet; the move only applies to new borrowers who start taking out their loans on or after July 1, 2019, and doesn’t affect existing borrowers. And even then, students may have to wait until Oct. 1, 2021, before they actually see their monthly bills reduced.

Private student loans

Private student loan debt was $945 billion last year, according to Sallie Mae, making its way onto the top-ten list of household debts in America. Meanwhile, average monthly private student loan payments hit $429, according to data from NerdWallet. And while many people borrow money for college hoping to build a career later on, the reality is that borrowing money to pay for school is not always necessary. In fact, a college education is a luxury item compared to the basic necessities (housing, food, healthcare) that almost everyone needs in order to survive. To find out what people without student loans spend their money on, check out our article.

Average tuition costs

Most students take out private loans for undergraduate degrees. That means that the total cost of attending school — including tuition, fees, and room and board — comes to roughly $30,000 annually. However, if you attend a public university, you should expect to shell out about $10,500 per year in tuition alone. That number increases significantly for graduate schools, where tuition prices can reach upwards of $50,000 per year.

Most popular majors

The table below lists the 10 most popular undergraduate majors, based on 2018 data from NACE, a trade association representing higher education institutions.

Most Popular Undergraduate Majors According to NACE | Source: National Center for Educational Statistics

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