Student loan quagmire frustrates borrowers - and alarms some Trump voters

Reuters

2 days ago

June 10 (Reuters) - Kelly Belt, 33, a high school life-sciences teacher in Provo, Utah, is ready and willing to repay her student loans. But like 8 million other U.S. borrowers on an affordable repayment plan created by former President Joe Biden, she has not been able to for nearly a year.
Federal courts halted parts of the Biden plan last spring and summer after Republican-led lawsuits and in February an appeals court blocked it altogether. But when Belt tried to switch to another plan in March - so she could resume payments - the Education Department had removed its online application portal.
Even after the website was restored, it had technical problems that prevented Belt from switching to her preferred plan. Instead it offered Belt a third plan that would require her to make monthly payments of $608, more than triple her old rate of $198. The cost was more than she could afford on her public-school salary.
President Donald Trump, who called Biden's efforts to alleviate crushing student loan debt "vile" on the campaign trail, is upending the system relied on by many of the 42.7 million Americans who borrowed money for their education and collectively owe more than $1.6 trillion in debt.
Workforce cuts at the U.S. Department of Education, the ending of pandemic-era amnesty for defaulted borrowers, and the elimination of the most affordable repayment plans are impacting those with perfect repayment records like Belt as well as those delinquent in their payments who got amnesty during the pandemic but were required to start repaying their loans in May.
Since Trump took office, thousands of complaints have poured in, according to internal data obtained by Reuters. The backlog of unprocessed applications for low-cost repayment plans has risen from 1,494,792 on February 4 to 1,985,726 on April 30, according to Education Department data.
The Trump administration cut the Department of Education staff by 50% in March, vastly reducing its capacity to assist borrowers like Belt, according to six current or former department officials and student borrower advocates interviewed by Reuters.
They say the changes are making it difficult for student loan borrowers to access affordable repayment plans just as the Trump administration is starting to crack down on borrowers who can't afford theirs.
A Department of Education spokesperson blamed the Biden administration for the application backlog but acknowledged that the Trump administration had not started processing applications until three months after inauguration. The spokesperson did not comment on the number of complaints or the technical errors that prevented Belt from switching plans.
In May, the Trump administration ended a pandemic-era program that allowed 5 million other borrowers who had defaulted on their loans to pause payments for five years. Those bills started coming due again in May; those who default face having their wages garnished.
Trump is pushing to eliminate the most affordable loan repayment plans as part of the massive "One Big Beautiful Bill Act" now before the U.S. Senate.
The Department of Education spokesperson said the bill would "simplify" the repayment process and hold "institutions financially accountable for defaulted student loans."
In the meantime, Belt says she's struggled to sign up for a new plan via the department website or by calling the federal student aid help center where she has "been unable to get a hold of a person to help me navigate my options."
The department has disbanded a support team that formerly reviewed and helped solve borrower complaints and removed a complaint button that used to appear prominently on every page of the department's student loan website, according to a current department official.
Even so, through a harder-to-find "feedback" button, the agency has received 8,400 complaints about income-driven repayment plans since February 1, of which nearly half mention the plan Belt is now on, the official said.
After she was unable to apply online, Belt mailed in a paper application for her preferred plan, but it might take months to process. Meanwhile, by the time her application is processed, her preferred plan could be outlawed by the tax-and-spending bill now before the Senate.
Belt's predicament alarms her mother-in-law, Lesa Sandberg, one of 20 Trump voters Reuters is periodically interviewing about his administration's policies. Sandberg, who has been "on the Trump train" for a decade, said the administration is betraying its deal with borrowers like Belt by leaving them either unable to pay down their debt or stuck in unaffordable plans.
Belt said she could have sought a more lucrative job, but she chose to teach at a public school in part because she was counting on affordable income-driven repayment options.
"They make choices in their careers, based on having that loan program available, and now they don't. It's just wrong," Sandberg said.
Sandberg says she still supports shuttering the Education Department because she favors state control over education. But she is disappointed that the administration has pursued that goal without allowing borrowers like her daughter-in-law to keep paying off their loans.
"It doesn't look to me like there was a plan," Sandberg said. "I don't understand why people aren't inundating their representatives or even the White House with, 'what the heck are you going to do?'"
'I WISH I COULD REWIND THAT VOTE'
Sandberg isn't the only Trump voter disappointed by how his administration is making student loan repayment more complicated.
Tammy Sabens, 64, a grandmother in Kentucky, borrowed $25,000 in the 2000s to go back to school for a nursing degree. Today, accrued interest has left her with a nearly $52,000 balance, leaving her unable to retire despite a doctor's recommendation that she do so for her health.
Sabens voted for Trump in November because she "didn't want our economy to turn into a socialist economy, which seemed to be the way it was heading under Biden," she said.
But she, like Belt, was dismayed when the federal portal for changing repayment plans went down for a month, preventing her from adjusting her monthly payment to reflect her current income. Instead, she had to enter the same limbo as Belt, unable to make progress toward repaying her loan.
"Boy, I wish I could rewind that vote," Sabens said of the ballot she cast for Trump. "I can't sleep at night worrying about all this stuff."