Lending giant PPL and its student loan refinancing subsidiary, Pinnacle Loan, have agreed to provide $1 billion in federal loan relief to borrowers who applied for forgiveness of their student loans from the SBB’s Higher Education Opportunity Program (HEAP) in the last 12 months.
Pinnacle and its loan servicing subsidiary, First Choice Loan, were one of the largest borrowers of the SBA’s HEAP program.
PPL is one of five loan servicing firms participating in the program, which allows students to refinance up to $35,000 in student loans.
The SBB, which was established in 2008 to provide higher education for low-income borrowers, has long sought to improve affordability and improve access to financial aid for millions of students.
Under the program’s terms, eligible borrowers can refinance their federal loans for up to 6.5 percent interest rates, with repayment terms of 30 to 60 years.
Under its terms, borrowers can also refinance a $10,000 Stafford loan for up a full year, with up to 5.8 percent interest rate and a $5,000 Federal Direct Loan for up two years.
The deal comes as the S BB faces a steep cost-cutting effort and a steep funding gap.
The SBB has cut its budget by more than a third since last year and is struggling to meet its goals to have the deficit within a 1.5-percentage point of the current economy.
President Donald Trump, who is expected to nominate Republican Betsy DeVos as secretary of education in coming weeks, has repeatedly called for cuts to federal education funding.
The Department of Education’s budget for the coming fiscal year is currently set at $17.3 billion.