The Obama administration made it clear since Day One that higher education — and its associated debt — was one of its priorities. We’ve seen a lot of positive changes, including expansion of income-driven repayment plans. Here are a few more ways the federal government is trying to ease the burden of student debt.
1. Applying for financial aid is easier. One of the most stressful times in the college planning process can be applying for financial aid. If you haven’t done your taxes yet, the Free Application for Federal Student Aid process can be difficult, and often, the acceptance deadline for colleges is close to when financial aid award letters start coming in. This can make the college choice and financing process challenging.
Last fall, the government announced a new initiative intended to allow families to apply for federal financial aid earlier, and receive information about awards in enough time to help decide which school might be the best financial fit.
Under the current process, the new FAFSA becomes available on Jan. 1 of the award year. Families use the prior year’s tax information to file the FAFSA. If you’ve already filed your taxes when you fill out this application, use the data retrieval tool to have your tax information automatically downloaded. Not only is this much faster than filling it in by hand, but the chances of error have essentially been eliminated.
[Discover five myths about parent information on the FAFSA.]
The problem is that many families choose to defer filing their taxes. Deferred filing also results in families being forced to estimate their income for FAFSA purposes — something that can result in changes to the amount of aid the student ultimately received.
Under the new process, known as “prior prior year,” the FAFSA will become available in October, prior to the award year. Families will be asked to use their tax information from the year prior to that one — hence the name. For example, if you are applying for aid for the 2017-2018 academic year, you’ll be able to access the FAFSA in October 2016, and use your 2015 tax information to complete it.
Not only does this mean families will receive their student aid reports that much earlier, but most if not all will also have their tax info filed with the IRS by then, meaning more can use the data retrieval tool. More good news: The common application used by many colleges for other financial aid, the CSS/Financial Aid Profile, will also be switching to this timeline.
[Explore more college financial aid resources.]
2. There are new protections from fraudulent schools. Despite the longstanding existence of audits, program reviews and oversight of colleges and universities by accreditors, the Department of Education and states that has existed for decades, some schools have still been caught misrepresenting their statistics and value or otherwise defrauding vulnerable students. The misdeeds of Corinthian Colleges affected thousands of students, for example.
This past February, the Department of Education announced the creation of the Student Aid Enforcement Unit to investigate and act on allegations of fraud quickly, and to ensure that affected students are given appropriate relief as quickly as possible. The move allows the Department of Education to recognize more quickly if the warning signs of a troubled school are there.
In addition to the creation of this new enforcement unit, the department also implemented a negotiated rulemaking session this winter to create a process for defrauded borrowers to apply for discharge of their federal student loans. The session also suggested new rules to help create an early warning system to try and prevent scenarios like Corinthian. The Student Loan Ranger will be sharing those new rules once they are completed this fall.
[Learn three tips for securing student loan forgiveness.]
3. The customer experience will improve. One of the most frequent questions received by the Student Loan Ranger is, “How do I know who holds all my loans?” Having multiple loan holders is a very real issue for many students with debt, and it can be confusing at best; at worst, it can destroy your credit if you do not realize that you have another loan at a different servicer.
The Department of Education has tried over the years to improve this by combining loans under a single loan holder as much as possible, but the struggle remains. Last week, it announced that it would work toward a single portal for all direct loan borrowers to use regardless of loan holder.
Not knowing where one’s federal student loans are — which you can find at www.nslds.ed.gov — is just one of many complaints from student loan borrowers.
In addition to the single portal, the department will also standardize communications so all borrowers, regardless of loan holder, receive the same messages. It will improve oversight of servicers, reduce the frequency of loan transfers and implement better customer service practices to ensure consistent treatment and standards regardless of the loan holder.
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3 Changes That Will Help Student Loan Borrowers originally appeared on usnews.com
