As we delve into the year 2023, a wave of significant changes sweeps through the student loan landscape. The most notable headline is the resumption of payment programs after a three-year hiatus due to the coronavirus pandemic. In this article, we’ll explore the key ‘2023 Student Loan Updates,’ shedding light on the complexities and transformations that borrowers and lenders face. Other major student loan news announcements center around the context of helping borrowers to be successful in making those payments in repaying their loans – that has been a priority of the Biden administration, but it hasn’t been easy to implement.
Student Loan News: Understanding Negotiated Rulemaking
One of the most underreported aspects of the student loan changes we saw this last fall and winter has to do with a particular process that the education department uses to make decisions.
It’s called negotiated rulemaking, and it’s part of the Higher Education Act, a law that provides guidance for the agency to work with other parties. Here’s how a department spokesperson describes the process in a press release talking about current events, from November 28, just over a month ago, noting that negotiated rulemaking is “required under the Higher Education Act for any regulations related to the Federal student financial aid programs:”
“This process started with public hearings and a request for public comments conducted by the Department in April 2023. Next, negotiators selected by the Department will meet virtually on January 8-11, February 5-8, and March 4-7 to discuss ideas for regulatory reform. A subcommittee will meet virtually on January 12 and February 9. Sessions will be open to the public and include opportunities for public comment.”
So part of this involves having sort of town-hall style meetings to give people a chance to weigh in.
When you understand how the Department of Education approaches these conversations, it helps you better understand what’s happening with student loan lenders and student loan servicers. It helps show how everyone has reacted to the process of resuming payments after so long. Some of the headlines around the department’s negotiated rulemaking are very relevant to borrowers and anyone else with interest in what’s happening with student loans in general (like student loan cosigners, or guardians looking for news on college loans for parents.)
The SAVE Program…Saves!
We’ve also been hearing a lot about the SAVE program promoted by the Biden administration as the courts prevented them from doing more comprehensive student loan forgiveness.
Some experts estimate that the SAVE program has helped 5.5 million borrowers to reduce or even eliminate student loan payments.
One of the big headlines in student loan news in 2023 was a policy that allowed those making under $15 an hour – (the government’s livable wage calculation, at least so far as policy is concerned) – to get their loan payment amounts zeroed out. In other words, one policy addition is that if you make below that $15 an hour benchmark, you don’t have student loan costs to deal with in your household budget. That’s going to help a lot of lower-income families, and likely take hundreds of thousands of children and adults out of poverty.
2023 Student Loan Update for High-Balance and Long-Term Borrowers –
Now, let’s talk a little bit about some of the categories of borrowers who have been relieved by SAVE and other programs:
High-balance accounts – if your student loan account has gone up over time rather than down, you’re stuck paying on massive accumulated interest, and you may never be able to really pay off your student loans successfully. This category of borrowers is often served by new student loan programs aimed at lowering their payments, like SAVE.
Long-term borrowers – some borrowers have spent years or even decades making minimum payments or just addressing interest. The government is looking to help them to finally shrink down their student loan to manageable proportions.
Bad schools – some of the other biggest headlines this year were around the government reducing or eliminating student loans for people who went to a school where they were promised something they eventually did not get.
Corinthian is one example, but the news media has blossomed with many different accounts of schools or even lenders engaging in fraudulent behavior. The Consumer Finance Protection Bureau (CFPB) has also covered some of these scandals. SAVE and other programs can help many of these borrowers who unknowingly walk into a bad situation.
Those eligible for programs – one more category of borrowers helped by the student loan process is those who were eligible for programs, but didn’t get into them, because they didn’t know how to. This sort of “red tape relief” is also part of what modern student loan reform looks like.
2023 Innovations in Student Aid: Employer Matching and Student Loans
This one happened rather late in the year: in fact, people were still reporting it a week or so ago. It’s the idea that a part of the recent Secure 2.0 Act is allowing employers to match student loan payment amounts in an employee’s 401(k).
That’s big news for working people with existing student loans. It’s another way to give borrowers the tools they need to succeed! It’s also another mark on the changing landscape showing how a new generation of people with degrees will survive financially.
Be sure to keep reading! We are compiling a lot of the best student loan news and student loan updates for student loan borrowers, resources, and warnings about how not to get taken advantage of in what can be a predatory loan environment. And we’ll continue to do that in 2024!
