Every July 1st, new regulations come into effect, influencing the landscape of higher education. The latest changes, effective from July 1, 2024, could significantly impact your college experience. From enhanced financial aid transparency to updated transcript policies, you might observe several differences this upcoming year. Let's delve into what you can expect.
Increasing Oversight of Career Education Programs
The initiative to measure gainful employment has been in place for over a decade—and several initiatives have been tried. As of July 1, new regulations have taken effect. In summary, schools will now report information to the U.S. Department of Education about students enrolled in nondegree programs to assess whether graduates can afford their student loan payments. For-profit institutions must provide data on their gainful employment (GE) programs, while nonprofit schools offering nondegree programs must report for Financial Value Transparency (FVT).
It will take some time before the results for each program are made public. Schools required to report on GE programs may face consequences if their graduates fail to earn sufficient income to manage their student loan payments.
Transcript Withholding Policies
New regulations now restrict when schools can withhold a student's transcript. Institutions are no longer permitted to withhold transcripts for periods during which the student received federal student aid and has fully paid their bill. However, schools may still withhold transcripts for periods where outstanding charges remain unpaid, but they can only withhold those periods that have an unpaid balance. This policy change aims to ensure students have access to their academic records, even if they have outstanding debts to the institution. According to a study by Ithaka S+R, more than six million students have abandoned college credits.
Increased Interest Rates for Federal Student Loans
Interest rates for federal student loans have increased for loans first disbursed on or after July 1, 2024:
- Undergraduate borrowers will see an interest rate of 6.53%
- Graduate students will face a rate of 8.08% on Direct Unsubsidized Loans
- Direct PLUS Loan borrowers can expect an interest rate of 9.08%
This means, students receiving loans for the 2024-2025 academic year, will have some of the highest federal student loan interest rates we have ever seen.
Enhanced Consumer Information for Students
Over the years, schools have been required to provide specific information to help students make informed decisions about their education financing. Despite efforts, there's always room for improvement in this area. This year, several updates have been made to the consumer information that schools must provide to their students.
Schools are now obligated to clearly indicate which components of the cost of attendance must be paid directly to the institution and disclose the net price to attend. Additionally, they must offer transparent information on how financial aid is determined and disbursed and clarify which types of aid are earned or need to be repaid.
These updates offer students more detailed insights, but it's crucial for you, as the student, to ensure they thoroughly understand all school policies.
Implementation of Phase Two of the SAVE Plan
Despite facing ongoing legal challenges, portions of phase two of the Saving on a Valuable Education (SAVE) Plan have been implemented. Many borrowers were eagerly anticipating phase two, which would reduce their monthly payments for undergraduate debt from 10% to 5% of their discretionary income.
As you may have heard, the SAVE Plan has been contested in two courts. A case in Kansas temporarily halted certain aspects of phase two--including the payment reduction for undergraduate debt. However, a federal appeals court swiftly granted a stay, allowing the monthly payments to be dropped as planned.
Meanwhile, a court in Missouri blocked additional forgiveness for borrowers enrolled in the SAVE Plan, a restriction that remains in place.
Currently the U.S. Department of Education has published information on their StudentAid.gov website to help borrowers manage their repayment under the SAVE Plan.
Regulatory Changes Don’t Always Make the Headlines
While high-profile issues often dominate the headlines, it's essential to stay informed about the broader range of regulatory changes in higher education. These recent updates aim to increase transparency, protect students, and ensure financial viability. By understanding these changes, you can make more informed decisions about your education and financial future.
Stay informed and take advantage of the resources available to you. If you have questions or need more personalized advice, consider booking a call with one of our experts who can help you navigate these changes and make the best choices for your educational journey.