Latest Student Loan News for the week of July 18, 2022 – Bankrate.com | Vette Leader

Last week, the US Department of Education distributed the latest round of HEERF funding to qualifying US schools and universities. Also, a group of House Democrats proposed a bill that would speed up forgiveness under the Public Service Loan Forgiveness Program (PSLF). Here’s what you need to know about this week’s student loan trends and how they could be affecting your balance.

2 recent student loan trends for the week of July 18, 2022

1. Final HEERF funds distributed to select colleges

Last week, the Department of Education distributed the final $198 million in grants through the Higher Education Emergency Relief Fund (HEERF), established in 2020 to support students and universities during the pandemic. This final distribution goes to the 244 U.S. colleges and universities with the greatest unmet need by the financial impact of COVID-19.

Most of the 244 eligible schools must distribute about half of the aid directly to students. These funds can be used by students to cover their basic needs such as housing, food and tuition.

How does this affect student loans?

HEERF grants are distributed to students with the greatest financial need, allowing low-income students to potentially qualify for emergency funding. Students who are struggling to afford basic services should contact their Student Aid. Each school distributes HEERF grants differently; Some may automatically apply for grants, while others require a separate application. Financial aid offices may use information from your Free Federal Student Aid Application (FAFSA) to determine your financial need and eligibility for HEERF aid.

key to take away

Colleges have received the latest round of emergency grants through the Higher Education Emergency Relief Fund, which provides funds for low-income students.

2. Democrats push for more changes to PSLF program

Last week, several House Democrats proposed the PSLF Simplification and Strengthening Act of 2022, which would reduce the number of payments required for Public Service Loan Forgiveness (PSLF) and permanently relax some of the eligibility requirements.

PSLF currently awards student loan credits to civil servants who have made 120 qualifying payments while working for an eligible employer, but borrowers must also meet strict requirements for eligible loans and repayment schedules. Last October, the Biden administration implemented a temporary waiver that broadens the definition of a qualifying payment and allows thousands of borrowers to make progress toward the PSLF. However, this waiver ends on October 31 of this year.

The 2022 Simplification and Strengthening PSLF Act proposes making elements of the temporary waiver permanent and making the waiver available after five years of qualifying payments instead of ten.

How does this affect student loans?

The biggest benefit of the bill is that it would cut the repayment period in half and make the waiver more accessible to eligible borrowers — and it also means borrowers who have already made payments under the plan for at least five years are likely to would receive an immediate waiver. It would also make the following reforms permanent:

  • Make any repayment period eligible for PSLF, regardless of federal loan type, repayment schedule, and payment.
  • Clarifying eligibility for active-duty military and Peace Corps volunteers whose loans have defaulted while on duty.
  • Allow Parents PLUS loan holders and couples who previously had jointly consolidated FFEL federal loans to reconsolidate their loans into one direct loan.

That being said, the bill has yet to pass the House and Senate, so the likelihood of lasting reform is still up in the air. Borrowers interested in availing the temporary PSLF waiver should sign up soon before the program ends on October 31.

key to take away

House Democrats proposed a new bill that would forgive student debt under public sector loan forgiveness after just five years.

Here’s how you can prepare

Whether you’re new to student loans or already in the process of repaying, it’s wise to stay informed about how your student loan rates might change. More opportunities for cheaper credit or credit forgiveness could open up as 2022 progresses; Keep an eye on Bankrate’s student loan news hub for the latest trends.

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