President Obama used executive order today to push forward student loan reform that would reduce monthly payments for 1.6 million borrowers next year, accelerating the previous 2014 startup timetable.
The overall student loan default rate increased to 7 percent in fiscal 2008, compared to 6.7 percent in fiscal 2007, according to the latest figures released today by the U.S. Department of Education.
The independent Congressional watchdog agency said it investigated 15 for-profit U.S. colleges that draw high rates of federal financial aid and found that all “made deceptive or otherwise questionable statements” to its undercover applicants – while 4 of the colleges encouraged fraudulent practices.
Discover Student Loans, a division of the financial services more widely known for its credit card, said today it is reducing its lowest eligible interest rate to 3.75 percent.
Wells Fargo has announced a reduction in variable rates for its student loan programs, with rates as low as 3.5 percent tied to the prime rate for those who qualify. The reduced rates apply to its programs: Wells Fargo Collegiate Loan and Wells Fargo Student Loan for Parents.
The past week has brought renewed focus on the fast-growing, for-profit college industry and the heavy debt loads for many of its students, who typically default at a higher rate than counterparts who attended traditional colleges and universities. The PBS Frontline documentary, College, Inc., that aired Tuesday focused on for-profit colleges and universities that cater to “non-traditional students, often confer degrees over the Internet, and, along the way, successfully capture billions of federal financial aid dollars,” according to the program’s description.
Private student loan delinquencies – those 90 days or more past due – decreased about 4.9 percent in the fourth quarter of 2009, down from a high of 6.34 percent in the third quarter, according to just-released figures from TransUnion. This is the first bit of good news in months for the private student loan industry, decimated by the financial crisis and credit crunch, and now facing an uncertain future with sweeping reform signed by President Obama last month.
President Obama today signed into law a landmark overhaul of the federal student loan system that promises to bolster Pell Grant funding, make it easier for graduates to repay college aid and save $68 billion by eliminating “middlemen” lenders. “We are finally undertaking meaningful reform in our higher education system,” Obama said.
ECMC, one of the top 10 student loan guaranty agencies and the U.S. Department of Education’s designated provider for “student loan bankruptcy services,” has reported the theft of personal information of 3.3 million individuals. The theft involved “portable media” data of ECMC guaranteed borrowers and occurred sometime during the weekend of March 20-21 at the company’s headquarters in St. Paul, Minn. The data included names, addresses, dates of birth and social security numbers.
Capping off an historic week that launched the overhaul of the nation’s decades-old student loan program, President Obama said today that no longer will taxpayer dollars be “handed out as subsidies” to bankers and middlemen, saving $68 billion to help needy students. On Thursday, Congress approved an end to the 45-year-old Federal Family Education Loan Program, which propped up private student lending with federal subsidies.