Higher Ed Policy Roundup: Vol. 7 - Issue 15
This Week in Washington
This Week in Washington
On Wednesday, the U.S. Treasury’s 10-year Treasury note auction resulted in an increase in interest rates (the highest in a decade) for federal student loans disbursed on or after July 1, 2023 and before July 1, 2024. The rates are expected to increase from 6.54 percent to 7.05 percent for graduate Direct Unsubsidized Loans and from 7.54 percent to 8.05 percent for Grad PLUS loans. Interest rates on federal student loans are set annually according to the 10-year Treasury note rate, plus a fixed percentage that differs by loan type (e.g., subsidized Stafford, unsubsidized Stafford, PLUS). The interest rates will be fixed for the life of the loan.
Also on Wednesday, Republicans on the House Education and the Workforce Committee voted to advance a Congressional Review Act (CRA) resolution to overturn the Biden-Harris Administration’s student loan forgiveness plan. Recall that back in March, Senate Republicans introduced a similar measure which has not yet advanced. The House CRA now heads to the floor for a vote.
On Monday, the Office of Federal Student Aid announced new updates to its StudentAid.gov website as part of an effort to enhance the customer service experience by improving the information and self-service tools. The enhancements include:
- An update to the Public Service Loan Forgiveness (PSLF) Help Tool which will now allow applicants and their employers to provide digital signatures and to track the status of their PSLF form;
- An update to the Direct PLUS Loan Application which includes reduced page length, reorganized material for better flow, and clarifying language to better understand “next steps;” and
- An update to the Loan Simulator Tool with graphic representations of repayment options and monthly payment amounts across plans.
The Education Department (ED) also announced that since October 2021, it has approved $42 billion in PSLF to over 615,000 borrowers. ED attributes the large amount of forgiveness to temporary PSLF changes made by the Biden-Harris Administration in an effort to mitigate programmatic issues that prevented borrowers from receiving forgiveness. Prior to those changes, and at the end of the previous administration, only 7,000 borrowers had been approved for PSLF.
News You Can Use
An analysis from Brookings Institution revealed that the two most significant barriers limiting college students' financial success are the complexity of the qualifications for who can receive federal student aid and the Free Application for Federal Student Aid (FAFSA).
With the end of the student loan pause approaching, the Biden-Harris Administration is considering extended flexibilities for borrowers, such as pausing interest rates until September and restarting payment in October.
The National Association of Student Financial Aid Administrators (NASFAA) published a report on institutional considerations for the end of the student loan pause and created a toolkit to help prepare borrowers for repayment resumption.
There were no relevant student-aid related bills recently introduced for consideration by the 118th Congress (2023-2024).