Category Archives: Student Debt

What students owe and why it matters.

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Student Debt in Mind, Education Dept. Renegotiates Loan Servicers’ Contracts

The U.S. Department of Education on Friday announced it had renegotiated its contracts with federal student-loan servicers, giving them more incentives to keep borrowers from defaulting on their loans.

President Obama announced plans to renegotiate the contracts in June, but Friday’s announcement provides more detail. For example, customer-satisfaction surveys will now play a larger role in how the servicers are evaluated, according to a statement from the department.

Student-loan servicers have…

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Adjuncts Would Qualify for Loan Forgiveness Under Proposed Bill

Adjunct professors would become eligible for a federal student-loan-forgiveness plan available to public servants under the terms of a bill introduced on Thursday by Sen. Richard A. Durbin, an Illinois Democrat.

The Public Service Loan Forgiveness Program allows employees of nonprofit organizations—including full-time professors at public universities—to have their federal student loans forgiven after making 120 payments while working in that capacity. Eligibility for the program would be ex…

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New Analysis Says College Is (Surprise!) Still Worth the Cost

An analysis released on Wednesday by the Federal Reserve Bank of Cleveland comes to a familiar conclusion about the value of a college education: While earning a degree saddles many people with student-loan debt, it still pays off in the long run. Among the evidence cited by the researchers, Daniel Carroll and Amy Higgins, is the advantage in earnings enjoyed by those with college degrees. The report also notes that students who attend college but do not earn degrees get little to no earnings a…

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Illinois Sues 2 Settlement Companies Over Student-Debt Claims

Illinois’s attorney general on Monday filed lawsuits against two companies that claim to help borrowers free themselves from student-loan debt. The lawsuits accuse the companies of having engaged in deceptive practices such as charging upfront fees for services that the government provides free or that are nonexistent.

The lawsuits, which are the first to be filed by a state attorney general against settlement companies over deceptive practices in student-loan debt, were aimed at First American …

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Despite Criticism, Education Dept. Extends Loan Contract With Navient

The U.S. Education Department has extended its contract with Navient, a student-loan servicer and collection agency that was formerly a division of Sallie Mae, despite allegations it has overcharged borrowers, The Wall Street Journal reports.

Navient’s work for the federal government was worth $106-million last year, and its contract would have expired this month. Sallie Mae, which in April was divided into two companies, Navient and Sallie Mae Bank, agreed last month to pay $97-million to settl…

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Interest Rates on New Federal Student Loans Will Rise for 2014-15

Interest rates on new federal student loans will rise for the 2014-15 academic year, with the rate on undergraduate Stafford loans increasing to 4.66 percent, Bloomberg reported.

Congress voted last year to tie interest rates to the high yield on the 10-year Treasury note. This year’s auction took place on Wednesday, with the yield on the note set at 2.61 percent.

The interest rate on Stafford loans for undergraduates will rise to 4.66 percent, up from 3.86 percent. For graduate students, the ra…

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U. of Baltimore Offers a Free Semester to Students Who Can Finish in 4 Years

The University of Baltimore announced on Tuesday that new freshmen entering this fall will be offered free tuition in their final semester if they can finish their degrees in four years, The Baltimore Sun reported.

The university’s president, Robert L. Bogomolny, said the break was not a direct response to the university’s low four-year graduation rate for first-time, full-time freshmen, which now stands at 8 percent, second-lowest in the University System of Maryland. But he said he hoped the d…

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Study Examines Characteristics of Student-Loan Borrowers Who Default

A study released on Monday by the National Bureau of Economic Research examines the loan-repayment and default outcomes, 10 years after graduation, of students who earned baccalaureate degrees in 1993.

The study looks at differences across individual and family-background characteristics, as well as by factors such as college major, type of institution, debt levels, and post-graduation earnings.

“Among the individual and family-background characteristics, only race is consistently important for …

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N.Y. Governor’s Watchdog Investigates 13 Student-Debt-Relief Companies

A new watchdog group that was established by Gov. Andrew M. Cuomo of New York has subpoenaed 13 student-debt-relief companies as part of an investigation into what his office said were “potentially misleading advertising, improper fees, and other consumer-protection problems in that industry.”

Mr. Cuomo created the watchdog group, which is known as the Student Protection Unit, in his 2014-15 budget proposal. It will operate as part of the state’s Department of Financial Services.

In a news relea…

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Tracking the White House Summit on College Access

Today the White House is convening dozens of higher-education leaders to discuss expanding college access for needy students. The participants were asked to make one new commitment in keeping with that goal, and this morning White House officials released an exhaustive list of those pledges.

The commitments describe colleges’ efforts in several areas. They include expanding college advising, improving remedial education, increasing the pool of low-income applicants, and matching more needy stude…