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Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.
Democratic presidential contender details higher education policies
Michael Bloomberg, the former New York City mayor and current presidential hopeful, joined some of the other Democratic rivals in calling for community colleges to be tuition-free. Bloomberg’s seven-page, $700 billion higher education plan, released Tuesday, included some other high-impact proposals for current and former students.
For current students:
For indebted students:
- Cap monthly payments under income-driven repayment (IDR) at 5% of discretionary income (it currently starts at 10%)
- Forgive up to $57,000 of remaining balances, tax-free, for borrowers who repaid their debt under IDR for 20 years
- Do away with collections fees for low- and middle-income borrowers
- Ban wage, Social Security and tax refund garnishment for borrowers in default
- Improve Public Service Loan Forgiveness (PSLF) administration
Bloomberg said he would fund these initiatives with a wealth tax, according to Politico.
How it affects YOU: Whether you’re a current or former student, you might see Bloomberg’s policy proposals as less aggressive than those of some of his rivals for the Democratic nomination. For example, there’s no plan to make four-year schools free for a majority of Americans or to forgive student loan debt en masse.
Still, Bloomberg’s proposals, if they came to fruition, would have a significant impact on higher education. The New York Times praised his approach as the most progressive in the field of Democratic contenders. To compare Bloomberg to his competitors, see our guide to the presidential candidates’ platforms.
Also in the news…
- The private University of Southern California announced Thursday it would offer tuition-free attendance to dependent students from families with $80,000 or less in household income. USC also said it would no longer count a family’s home ownership when calculating the student’s financial need. In its attempt to make college more affordable for lower-income students, USC follows in the footsteps of other prestigious schools, such as Harvard University.
- With presidential campaigns promising to support Historically Black Colleges and Universities (HBCUs), the Washington Post reported on the challenges these “under-resourced” institutions face in keeping their students debt-free.
- The Education Department and the American Bar Association (ABA) settled a lawsuit on Tuesday that allows full-time ABA employees to qualify for PSLF.
- Education Secretary Betsy DeVos announced on Wednesday that 190 schools would join her department’s trial expansion of the federal work-study program. Students at these schools could have the option to earn money for college by working for private, off-campus employers.
- Also Wednesday, DeVos was sued by the New York Legal Assistance Group for her prescribed changes to borrower defense rules, which allow borrowers defrauded by their schools to receive relief.
- Congresswoman Vicky Hartzler (R-Mo.) introduced a bill late last week to allow married couples to double-dip on the student loan interest tax deduction. Deductions are just one tricky aspect of taxes when mixing student debt and marriage.
- The New York Times on Monday highlighted the Federal Student Aid ombudsman process that allows borrowers to air complaints and potentially receive relief. The Times reported that the Education Department doesn’t overtly advertise this process because the ombudsman’s investigations are “time-consuming.”
- A report by research group Public Policy Associates cites student debt as one cause of Michigan’s teacher shortage. The state’s only loan repayment assistance program serves solely medical professionals.
- Purdue University announced Saturday it was freezing tuition for a ninth straight year.
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