The U.S. Department of Education is working to eliminate significant sums of student loan debt through regulatory action, Higher Ed Dive reports. This comes after a significant legal setback for the Biden administration this summer when the Supreme Court denied its initial loan forgiveness plan. The administration is now pursuing loan forgiveness through negotiated rulemaking, a considerably more drawn-out procedure. The negotiators, who include higher education officials, college presidents, loan experts, and student loan borrowers, will first meet in mid-October to discuss loan forgiveness policies under the Higher Education Act. If an agreement is not reached, the Education Department will release its own draft rule.
Higher Ed Dive reports that interest rates on graduate and undergraduate loans have reached their highest levels in over a decade due to elevated inflation, which may contribute to public perception that higher education is unaffordable. However, there is little evidence that higher interest rates will affect where borrowers choose to attend college and how much they take out in loans. The new income-driven SAVE plan from the Biden administration reduces monthly payments for borrowers from 10% of their discretionary income to 5% while eliminating unpaid interest. The Education Department opened the plan to borrowers in late August and partnered with grassroots organizations to spread awareness.
The U.S. Department of Education released new gainful employment guidelines for college career programs. The guidelines, which will take effect on July 1, 2024, require programs to provide evidence that graduates earn more than the debt they have accrued in student loans. Federal aid will no longer be available to colleges that twice fail to meet the criteria for debt-to-earnings ratio in a three-year period. The Education Department says that about 700,000 students who would have otherwise enrolled in nearly 1,700 subpar programs will be safeguarded by the new rule.
Wesleyan University will eliminate loans in its financial aid packages starting next fall, Inside Higher Ed reports. The private university will join a small group of around two dozen colleges and universities that have made a commitment to fulfilling the demonstrated financial need of every student. According to Wesleyan President Michael S. Roth, raising the private university’s “no-loan” threshold from its current level will make it more accessible to middle-class families.