Category Archives: Student Debt

What students owe and why it matters.

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Student-Debt-Relief Firm Will Shut Its Doors After New York Investigation

[Updated (7/1/2015, 9:09 p.m.) with news of a lawsuit against another company supposedly helping borrowers with debts.]

A business offering student-loan “debt relief” will close its doors as part of an agreement with New York’s governor, Andrew M. Cuomo. The Times Union, a newspaper in Albany, reports that an investigation by Mr. Cuomo’s office found that Interactiv Education LLC advertised it could lower student-loan payments when, in fact, it just filled out a loan-consolidation form that is a…

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Federal Government’s Student-Loan Watchdog Will Step Down

Rohit Chopra, the Consumer Financial Protection Bureau’s first student-loan ombudsman, will step down next week, he wrote in a letter on Wednesday.

“I am proud of the progress that we have made together to assist borrowers, promote transparency, and hold accountable those who break the law,” Mr. Chopra wrote to Jacob J. Lew, the U.S. treasury secretary. “While more work is needed to correct the serious deficiencies in the student-loan market, I have great confidence in the bureau’s ability to co…

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Education Dept. Says It Will Forgive Debt of Many Corinthian Students

As it announced a plan on Monday to forgive the debt incurred by many former students of Corinthian Colleges, the U.S. Department of Education promised reforms that could make it easier for other students who feel they have been defrauded by colleges to seek loan forgiveness.

Corinthian, the for-profit higher-education provider, imploded last year — finally closing the last of its campuses this spring — after being hit with a $30-million fine by the department and accusations by a federal consum…

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U.S. Senator’s Bill Would Make Public 4-Year Colleges Free for All

Bernard Sanders, the independent senator from Vermont and long-shot candidate for the Democratic Party’s 2016 presidential nomination, introduced a bill on Tuesday that would make attending all four-year public colleges free. The College for All Act, the cost of which would be split between the federal government and the states, has virtually no chance of passing the Republican-controlled Congress.

The bill proposes a tax on transactions in the financial sector to offset its estimated $470-billi…

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Interest Rates on New Federal Student Loans Will Drop for 2015-16

Interest rates on new federal student loans will drop for the 2015-16 academic year, The Wall Street Journal reports.

The rate on undergraduate Stafford loans will drop to 4.29 percent, down from 4.66 percent this year. Graduate Stafford loans’ interest rate will be 5.84 percent, down from 6.21 percent. The rate on PLUS loans for parents and graduate students will be 6.84 percent, down from 7.21 percent.

Interest rates on student loans are tied to the high yield of the 10-year Treasury note. Th…

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Lawmakers Investigate Education Dept.’s Role in Forgiving Student-Loan Debt

A group of Democratic lawmakers is pushing the U.S. Department of Education to more frequently forgive the loan debt of students who attended colleges that engaged in “fraudulent activities.”

Five U.S. senators and a member of the House of Representatives wrote a letter to Education Secretary Arne Duncan on Monday, stating that the department should “take immediate action” to inform students eligible for debt relief — including those who attended the now-defunct Corinthian Colleges — of thei…

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Democratic Lawmakers Push Idea of ‘Debt-Free College’

Democratic lawmakers in the U.S. Senate and House of Representatives on Tuesday introduced resolutions to “ensure that students have access to debt-free higher education.” The Washington Post reports the push comes amid a broader effort by the Democratic Party to promote college affordability as a central issue in the 2016 presidential campaign — and to push the front-runner, Hillary Clinton, to propose a national plan for debt-free college.

The coalition advancing the resolutions includes six s…

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Audit Finds Education Dept. Lacks Plan to Fight Student-Loan Defaults

The Education Department “does not have a comprehensive plan or strategy to prevent student-loan defaults,” an audit conducted by the department’s Office of Inspector General has concluded.

A report on the audit’s findings, released on Friday, argues that the department’s lack of a coherent strategy renders it ill equipped to find effective measures against default, identify risks that cause loan delinquency, and work effectively with companies that service student loans on the department’s beha…

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Lawmakers Urge Education Dept. to Forgive Debt of Corinthian Students

A group of Democratic U.S. senators wants the Education Department to discharge the federal loans of students who have legal claims against Corinthian Colleges, a defunct for-profit education provider. The students include those covered under lawsuits brought by the attorneys general of Massachusetts and California.

In a letter sent on Tuesday, the 13 senators argue that “students should not literally be stuck paying the price” when colleges “fail to hold up their end of the bargain.”

They also …

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Senior Democrats Criticize Changes in Education Dept.’s Default Rate

Two senior Democratic lawmakers sent a letter on Tuesday to the education secretary, Arne Duncan, criticizing changes the Education Department has made in how it calculates cohort default rates on student loans. Sen. Tom Harkin of Iowa and Rep. George Miller of California took the department to task for exempting from penalties some colleges with default rates of 30 percent or more.

“With few exceptions, any institution or program where students consistently default over the 30% threshold should…