The rules and regulations concerning student loan borrowing and repayment are at the mercy of the federal government. This can make them confusing at best, and at worst, virtually impossible to comprehend.

That’s why we’ve gathered the latest news on student loan reforms here, in plain English.

How to use this info

This news is good to keep track of, but you can’t count on the government to handle your student loans. Keep up with your payments as best as you can. Communicate with your loan servicer if you’re having trouble. Your payments (or lack thereof) can affect your credit, so your financial future depends on how you handle your loans.

These updates will tell you how laws and regulations changed, but only your servicer can tell you with certainty how these updates affect your loans. If you think something here applies to you, ask.

Looking ahead

The 2020 election will be key for the future of student loan debt. Republicans and Democrats have very different ideas about post-secondary education, so if student debt is an important issue to you, make sure to vote.

Here’s an overview of what the main 2020 candidates think:

student loan reform 2020 candidates

2020

CARES Act (Coronavirus)

The latest changes to student loans have to do with coronavirus. Congress passed the CARES Act, which was meant to stimulate the economy and make it easier for consumers to deal with the economic impact of COVID-19.

Here are the changes to student loan repayment as outlined in the CARES Act:

Interest charges have been put on pause.

From March 13 until the end of September, interest won’t accrue on your student loans. After this period, your interest rate will go back to normal.

Payments are also paused, but you can still pay if you want.

Federal loan payments were automatically paused, but if you still want to work toward paying down your student debt, you can call your loan servicer and reinstate your monthly payments.

Missed payments won’t count against your eligibility for Public Service Loan Forgiveness.

Usually, qualifying for PSLF means making 120 continuous, on-time payments. If you skip payments between now and the end of September, it will still count as monthly payments.

To learn more about how the CARES Act affects student loans, read this.

Changes to income-driven repayment plans

Applying for income-driven repayment plans in 2020 is going to be easier than before. The application process used to be spread out across different sites. Now, everything will be in the same place on studentaid.gov.

2019

FUTURES Act

The FUTURES Act made it possible for the IRS and the Department of Education to share data. This makes the yearly re-application process of those enrolled in income-based repayment plans will be automatic.

Will Public Service Loan Forgiveness survive?

Both sides of the aisle are proposing big changes for Public Service Loan Forgiveness (PSLF). Democrats want to make it easier to qualify, while Republicans want to scrap the program and replace it with something that may be more effective.

The Democrats proposed the following changes:

  • Change the 10-year forgiveness plan to a 5-year plan.
  • Provide forgiveness for other types of loans besides Federal Direct.
  • Provide forgiveness for repayment plans that aren’t just income-based.

Depending on who wins the 2020 election, PSLF will take one of two extremes.

A possible limit to how much you can borrow

Americans owe $1.5 trillion in student loans. It’s difficult to even wrap your head around how big that number is. With this in mind, the Trump administration has proposed putting a limit on how much a student can borrow for their education.

They think that limiting loans would force universities to lower the cost of tuition. On the other hand, universities say that tuition has only risen because they lack state funding and that a limit on borrowing wouldn’t aid their students.

2018

Closing Schools and Student Loans

A handful of community colleges and four-year colleges closed in 2018, leaving their former students to bear the weight of their loans without a degree. If your school closed, you may be eligible for student loan forgiveness. This does not apply to private student loans.

PROSPER Act

PROSPER stands for Promoting Real Opportunity, Success and Prosperity through Education Reform. A vote was scheduled in the House of Representatives in 2018, but the bill hasn’t gone anywhere. It was meant to eliminate some student loan programs and streamline the process.

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Article last modified on May 21, 2020. Published by Debt.com, LLC

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