Higher Ed Policy Roundup: Vol. 7 - Issue 26

Over the weekend, the Office of Federal Student Aid launched a beta application allowing student loan borrowers to enroll in its new Saving on A Valuable Education (SAVE) income-driven repayment plan. Recall that the Education Department (ED) implemented the following changes under the SAVE plan on July 30, 2023:

• Increased the discretionary income threshold from 150 percent to 225 percent of the federal poverty rate;
• Adjusted the treatment of spousal income for married borrowers who file separately; and
• Eliminated the accumulation of unpaid interest.

The application also allows borrowers to give permission to ED to automatically access their income information from the IRS, eliminating the need for manual entry and recertification.

Late last week, Virginia Foxx (R-NC-5), Chairwoman of the Education and the Workforce Committee, threatened to subpoena ED to provide the committee with information regarding their plan for student loan payment resumption. Recall that Foxx sent a letter to Education Secretary Miguel Cardona requesting internal documents related to their strategy, as well as a hearing, which ED has not yet complied with.

The Education Finance Council published a research brief on the federal student loan knowledge gap, exploring what borrowers think they know about their education debt before repayment resumption.

Experts predict that a quarter of student loan borrowers will need to use money from their savings to make payments.

Changes to student loan servicing may complicate repayment resumption for borrowers.

A recent analysis from The HEA Group and Student Defense indicates that one in three U.S. graduate schools leave students unable to keep up with debt.

The following bill(s) have been recently introduced for consideration by the 118th Congress (2023-2024):

S. 2629 – Higher Education Reform and Opportunity (HERO) Act [Sen. Mike Lee (R-UT)] would reward colleges and universities for each Pell Grant graduate, require institutions to repay a percentage of the total loans issued, and mandate institutions participating in federal student loan programs to publish relevant outcome information in an easily accessible format. A companion bill, H.R. 5042, was introduced in the House by Rep. Chip Roy (R-TX-21).

S. 2557 – Student Loan Interest Elimination Act [Sen. Peter Welch (D-VT)] would eliminate interest on federal student loans. A companion bill, H.R. 4986, was introduced in the House by Rep. Joe Courtney (D-CT-2).