Category Archives: Student Debt

What students owe and why it matters.

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After 3 Days of Talks, No Agreement on Rules to Protect Student Borrowers

Should students who say they’ve been defrauded by their colleges be guaranteed a chance to take their cases to court? When the U.S. Department of Education said recently that they should, advocates for student borrowers were encouraged. But now, after three days of negotiations over a rule intended to protect those borrowers, it’s still unclear whether such a guarantee will take shape.

At issue are the “mandatory arbitration” clauses that some colleges — chiefly for-profit institutions — ins…

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New Paper Proposes Starting All Over on Federal Student Aid

Nearly everyone agrees that the federal student-aid system is broken, perhaps irreparably so. The Pell Grant hasn’t kept pace with rising tuition, students are saddled with too much debt, and many states have shifted the burden for financing colleges onto the federal government and families. At the same time, the system’s reliance on vouchers has made it hard for lawmakers to hold colleges accountable without hurting students in the process.

So what if instead of reforming the system, we blew it…

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After Lawsuit, For-Profit College Will Forgive $15 Million in Ex-Students’ Loans

The for-profit Westwood College has agreed to forgive the student-loan debt of graduates of its criminal-justice program, amounting to roughly $15 million. The college reached an agreement last month with the office of Illinois’s attorney general, Lisa Madigan, to cancel former students’ debt from institutional loans, among other things, according to a copy of the deal provided to The Chronicle.

The attorney general sued the college in 2012, asserting it had deceived students and enrolled them i…

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Education Dept. Releases 2 Sets of Rules to Simplify Student Borrowing

The U.S. Department of Education has unveiled two sets of final regulations governing its expanded income-based repayment program and efforts to rein in banks’ deals with colleges.

The revised Pay as You Earn plan, dubbed REPAYE, which is one of the department’s income-based repayment programs, appears similar to the one negotiators settled on earlier this year. The expansion of the plan, which caps monthly payments at 10 percent of borrowers’ discretionary income, comes more than a year after P…

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Average Student Debt Climbed Higher in 2014, Study Finds

Average student-loan debt among graduates of four-year public and nonprofit private colleges who had incurred debt at the time of graduation climbed to $28,950 for the Class of 2014, up 2 percent from the Class of 2013. An annual report by the Institute for College Access and Success, released on Tuesday, found that at those colleges, 69 percent of graduating seniors had student loans, a rate that held steady from last year.

This is the institute’s 10th annual report on average student debt. The…

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Complaints From Private Student-Loan Borrowers Rise as Few Enroll in Income-Based Repayment

The number of complaints from private student-loan borrowers to the Consumer Financial Protection Bureau increased by roughly 20 percent in the past year, from 5,300 last year to 6,400 in the past year, according to the annual report of the bureau’s ombudsman.

Another key finding in this year’s report: A whopping 95 percent of borrowers with federal loans made by private lenders are not enrolled in income-driven repayment plans, an option heavily advertised by the Obama administration that allow…

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Clinton Rips Free-College Proposals as Benefiting ‘Donald Trump’s Kids’

Speaking at a town-hall event in New Hampshire on Monday, the Democratic presidential candidate Hillary Clinton said she was “not in favor of making college free for Donald Trump’s kids.”

The remarks, which appeared live on NBC’s Today show, served as a rebuke to both Mr. Trump, the billionaire and Republican presidential candidate, and Sen. Bernie Sanders, her chief rival in the early stages of the quest for the Democratic nomination for president in 2016.

Mr. Sanders, a U.S. senator from Vermo…

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Borrowers Continue to Face Problems With Loan Servicers, Watchdog Says

Borrowers continue to report widespread problems with student-loan servicing, according to a report released on Tuesday by the Consumer Financial Protection Bureau.

The report, which is based on more than 30,000 comments that the federal watchdog received as part of its recent inquiry into the servicing industry, describes a range of practices that the bureau says harm borrowers, including poor customer service, mishandled paperwork, and “surprise fees.”

Tuesday’s report comes just two months …

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Community-College Borrowers Who Default Are Those With the Least Debt

The community-college borrowers most likely to default on their student loans are those with the least amount of debt, according to a new report from the Association of Community College Trustees.

The report, which examines data from all 16 of Iowa’s community colleges, reaches several other conclusions, many of which repeat or support the findings of previous research. Among them:

  • Many borrowers who default — just shy of half examined in the report — don’t take any action on their debt.
  • Almost…
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Borrowers Using Income-Based Repayment Plans Are Mostly Low-Income, Report Says

Borrowers using the federal government’s income-driven repayment plans are overwhelmingly low-income and much less likely to default, according to a new report from the Government Accountability Office. The report, which was requested by Sen. Patty Murray of Washington, the top Democrat on the Senate’s education committee, also encourages the Education Department to better spread the word about the programs.

The Obama administration began such an effort last year, and reported last month that th…