June 25, 2021

Higher Ed Policy Roundup: Vol. 5 - Issue 22

Policy and Advocacy


This Week in Washington

Late last week, the Federal Housing Administration (FHA) announced updates to its rules regarding how student loan monthly payments are used to determine eligibility for an FHA-insured mortgage. The changes were made to “remove barriers and provide more access to affordable single-family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has a disproportionate impact on people of color.” Previously, FHA required that lenders calculate monthly payments using one percent of the outstanding student loan balance for student loans that were not fully amortizing. The new policy will allow lenders to calculate loan balances using the actual monthly student loan payment, which is often lower for those in income-based repayment plans. The changes are set to take place on or after August 16, 2021, but lenders are encouraged to implement the changes immediately.

On Wednesday, a group of Democratic leaders sent a letter to President Joe Biden urging him to extend the payment and interest pause on federal student loans (which is set to expire at the end of September) until March 31, 2022, or until the employment rate hits pre-pandemic levels. The letter argues that restarting the payments would create significant challenges for borrowers, the Department of Education and its servicers. The letter also encourages the administration to focus on completing its plan to improve the Public Service Loan Forgiveness program, income-driven repayment program, borrower defense, and Total and Permanent Disability discharge through upcoming negotiated rulemaking.

News You Can Use

The U.S. Supreme Court  declined to hear a case on student loan discharge in bankruptcy.

A new report by the American Association of University Women examines how student debt is harming the prosperity of women in the U.S., and finds that Black women hold 20 percent more student debt than White women.

Recent Legislation

The following bills have been recently introduced for consideration by the 117th Congress (2021-2022):

H.R. 4002Expanding Access to Graduate Education Act [Rep. Ann Kuster (D-NH-2)] would allow students who received a Pell Grant as an undergraduate to apply any remaining aid towards their first graduate degree.

H.R. 4053Defense Community Teacher Support Act [Rep. Ronny Jackson (R-TX-13)] would allow teachers in military communities to be eligible for federal student loan forgiveness after five years of service and ensure that military spouses of active duty servicemembers retain eligibility to work toward loan forgiveness as they transition through a permanent change of station move.