Student loan borrower says "we're kind of drowning" as collections begin
The Department of Education says federal student loan borrowers who do not pay on time could damage their credit scores and even have their wages garnished beginning today, May 5 — causing challenges for some of the more than 5 million borrowers who are in default and struggling to get answers about their loans.
"I don't think anyone takes out a loan with the intention of not paying it back. It's how easily you can pay it back, that's the problem," said Jana Heartwood, who owes more than $40,000 in student loans from her nursing degree.
"We're kind of drowning as it is," she said.
Two years ago, Heartwood's son was born with a medical condition, and to treat it, Heartwood exhausted her savings and took out money from her 401K.
During the pandemic, student loan payments were put into forbearance, but when repayments resumed last year, Heartwood said she was never notified.
After hearing of the agency's collection decision from a news report, Heartwood checked her account and said she was shocked.
"I had no idea that my loans were delinquent at that point … I checked every email. I got statements that had a zero on it," she said.
Persis Yu, an expert in student loan law, said steep job cuts at the Education Department, and steps to dismantle it, have left the loan system in disarray.
"Borrowers cannot get answers from their servicers," said Yu. "Many of the services have hours-long call wait times in order to get just a simple answer about, 'How much do I owe? How do I pay my loan?'"
After hours on the phone, Heartwood still had no clear answer on her loans, saying she can't afford to pay anything back right now.
"It's not easy. Every week is hard," she said. "Every paycheck is immediately gone. It's gone before we even, you know, have it."
The Department of Education's Office of Federal Student Aid (FSA) is restarting collections on defaulted federal student loan on Monday, as a new analysis shows that delinquency rates are higher than ever.
Yu said there are no provisions that take into consideration when families have extraordinary circumstances, like having to pay for the medical care of a loved one.
"It's an impossible standard for so many to meet and that's why so many borrowers do fall into default," she said.
The Department of Education under President Trump blames the Biden administration. It told CBS News that because of "attempts to transfer student debt to every taxpayer, the student loan portfolio is in a dire financial state."
Student loan pause and future payments
Student loans payments and interest accruals were paused in March 2020 by President Trump during the COVID-19 pandemic. Former President Joe Biden extended the halt of payments multiple times before they resumed in October 2023.
The Biden administration sought to eliminate some student debt but faced multiple legal challenges from the courts, including a 2023 ruling from the Supreme Court. During the Biden administration, more than 5 million borrowers had their debt erased through various initiatives.
GOP lawmakers recently introduced legislation to overhaul the student loan repayment program, which includes eliminating the SAVE plan, created by the Biden administration in 2023.
"Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation's economic outlook," Education Secretary Linda McMahon said in a statement last month, adding, "There will not be any mass loan forgiveness."
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Chicago Tribune
29 minutes ago
- Chicago Tribune
Illinois rental assistance program sees funding cut for 2026 budget in another blow to state, city housing programs
William Dalton had never faced eviction until a series of bad events struck last year: His mom died, his relationship with the mother of his now 5-year-old daughter ended and his car was totaled. He fell behind on the rent for his two-bedroom apartment in the New City neighborhood. It caused him 'anxiety every day,' he said, after receiving the eviction notice a couple of months later. He didn't know where he would go if he lost his apartment, the home where his daughter was born. 'It was a lot on me,' Dalton said, who works in education. 'It is very hard to concentrate on things you need to get done, especially when you have a little one depending on you.' In a move that has brought him 'great relief,' Dalton was able to keep the roof over his head, where he has lived for five years, thanks to $10,000 from Illinois' rental assistance program. 'Once everything was settled, it was like I could actually start living life again,' he said. 'And it is very important for my daughter to see. I tried my best to mask it, but I'm pretty sure she picked up on it.' After its inaugural year as a state-funded effort, Illinois' court-based rental assistance program for tenants like Dalton struggling to pay rent and their landlords will stop accepting applications Friday and will see a third of its funds wiped away in the 2026 fiscal year that begins July 1. The reduction comes after the state grappled with serious fiscal challenges when balancing its budget this year, issues exacerbated by a federal government focused on axing spending. State lawmakers cut spending in various areas beyond housing as well. Dalton is one of 7,129 renters who has received assistance this fiscal year from the state program. The state housing authority's goal was to assist 8,900 households through the new program but will likely see closer to 8,000 households supported, said Illinois Housing Development Authority Executive Director Kristin Faust in an interview with the Tribune. The state agency administers the rental assistance program. Faust said the 8,900 number was based on an authority projection. 'We had hoped it would take us to the very end of the fiscal year because we always want to be able to meet all the need,' Faust said. 'The need was even greater than we expected.' So far, Faust said about $58 million in aid has been distributed to tenants and landlords, with thousands more applications yet to be processed and a small portion of the funds kept for administrative fees. The state program was previously funded by federal aid distributed during the COVID-19 pandemic and focused on helping tenants experiencing COVID-19-related hardships and at risk of eviction. At its height, the program provided up to $25,000 in rental assistance to cover up to 15 months of past-due rent and up to three months of future rent. Rental assistance programs became widespread during the pandemic to aid the millions of renters who were struggling to pay their rent on time across the country after many lost their jobs and got sick. Illinois allocated $75 million in state funding to continue to provide rental assistance to tenants and their landlords for fiscal year 2025. Unlike many other states and municipalities, Illinois made a significant allocation of dollars to continue the program. For fiscal year 2026, the state has appropriated $50 million. The next iteration of the program is expected to begin accepting applications in August, Faust said. 'We think it is overall a positive sign that the state in a difficult budget climate is continuing to invest in the program,' said Bob Glaves, executive director of the Chicago Bar Foundation, which manages the state eviction diversion program. Faust agreed, calling the program 'a very positive lesson learned out of COVID.' The court-based rental assistance program is just one aspect of the state's eviction diversion program, known formally as the Early Resolution Program. Tenants and small landlords can also receive legal aid to help settle eviction cases before they go to trial. Under the state-funded rental assistance program for the 2025 fiscal year, households facing eviction can receive up to $15,000 in rental assistance, which can pay past-due rent, up to $500 in court costs and up to two months of future rent, according to the state housing authority. Next fiscal year's program will see the maximum amount of aid reduced to $10,000, with a raise to $700 for eligible court costs coverage. Faust said this decision was made based on data from this year's program and conversations with legal aid, tenants and landlords. The authority estimates about 6,500 households will be able to receive assistance. 'We are feeling that we will be able to meet the majority of needs with this new dollar amount,' Faust said, 'and then also try to keep the program going for as long as possible for the next fiscal year.' Some of the data considered was the average amount of assistance doled out so far this fiscal year, which has been around $8,260, or eight months of rent. And 39% of aided households are extremely low income, earning less than $36,000 a year for a household of four, the state said. Eligible tenants have to make 80% or less of the area median income and do not have to be facing a COVID-19-related hardship. For a household of four, the area median income for much of the last fiscal year in Chicago was $89,700, according to the Chicago Department of Housing. For the next round of assistance, the state said tenants will be ineligible if they have received aid in the last 18 months. Renters do not have to prove their citizenship status and must have an active eviction case due to nonpayment of rent to qualify. Housing providers are not allowed to evict tenants during the grant's coverage period for nonpayment of rent. And for tenants whose landlords are unwilling to participate in the program, the state offers up to two months of future rent payments to help them find a new place to live. Renters in Chicago and Cook County maintain the right to stay in their homes if they pay their debts in full to their landlord at any time before an official eviction order is filed. There will be less money available for those in need of rental assistance, but Chicago's rent prices are showing no signs of easing. In May, rents in Chicago increased 2% compared to .4% nationally, which was the second fastest month-over-month rent growth of the nation's largest 100 cities, according to Apartment List. The city's year-over-year rent growth stands at 5%, landing it in fourth place for fastest growth among the nation's largest 100 cities. The rental assistance program dollars are a piece of the state's roughly $263.7 million Home Illinois budget — an initiative aimed at preventing and ending homelessness — for the coming fiscal year. The Home Illinois budget saw an overall decrease in its pot of funds of approximately $26.6 million, according to state budget documents. The same documents show that the Home Illinois funds were significantly underused in the 2024 fiscal year, but the Illinois Department of Human Services said this is because it was a 'start-up' year for multiple programs. There are also separate rental assistance dollars allocated to other state programs, the state said, with $89.5 million total (including the $50 million court-based program) earmarked to support those efforts this coming fiscal year. For the 2025 fiscal year, the number spent is estimated at $130 million. The reduction in funds this coming fiscal year hit as area housing groups who rely on city, state and federal dollars are already struggling to provide subsidized housing to some of the lowest income residents in the state as they are facing multimillion dollar budget shortfalls. Gov. JB Pritzker highlighted housing affordability as a key issue in his State of the State speech in February. Still, some of the most ambitious proposals that legislators introduced on the topic didn't pass out of the General Assembly. Bob Palmer, policy director for Housing Action Illinois, a group advocating for an increase in affordable housing in the state, said that while he is thankful to see the state committing serious dollars to Home Illinois even in challenging budget times, the government has to find a way to increase funding for the initiative every year if it wants to accomplish the initiative's goal. 'Ending homelessness and making sure everyone has a safe and decent place to live should be one of the highest priorities, and the budget that passed doesn't reflect that,' Palmer said. Through April of this year, about 8,280 residential evictions were filed, according to the most recently available data from the Circuit Court of Cook County. Eviction filings in Cook County have been at pre-pandemic levels since 2022. Enforced evictions — those carried out by the sheriff's office under a court order — at residential rental properties caught up to 2019 levels for the first year in 2023. Most evictions in the city typically take place on the South and West sides in majority Black and Latino communities, trends that line up with national data showing racial minorities are more likely to face eviction. The pandemic disproportionately affected racial minorities, who were more likely to experience hardships such as job loss and illness. Landlords and their attorneys have said that sometimes rental assistance ends up being a Band-Aid fix, with housing providers having to evict their residents even after they have received aid. As an owner of five buildings with a total of 17 apartments, primarily in Washington Park, Gene Lee has received rental assistance for two tenants when the program was federally funded. In those cases, Lee said the renters had worked for Chicago Public Schools and their work hours were cut during the pandemic. For tenants who are communicative and experiencing short-term financial hardships such as those two CPS workers, the rental assistance program is effective, Lee said. Now, as the program faces a funding cut and rising rent costs are eating into households' budgets, Lee said housing providers like himself will be put in a tough position if there is not enough assistance available for some tenants in need. 'If those (rental assistance) resources become a little bit limited, it puts pressure on us,' said Lee, who runs TLG Development and works at LinkedIn. 'Do we make an economic decision to try to evict this tenant and find someone else, or do you try to have a heart for someone who just needs a place and falls on hard times?' To apply for the Illinois Court-Based Rental Assistance Program, go to Tribune reporter Olivia Olander contributed. ekane@
Newsweek
31 minutes ago
- Newsweek
Sunrun CEO Warns Against Congressional 'Rug Pull' on Clean Energy
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. The U.S. solar industry took a hit late last month when Republicans in the House of Representatives passed the "big beautiful" budget reconciliation bill that would largely eliminate tax credits for clean energy. Those Biden-era incentives for renewable energy, battery manufacturing, EVs and other clean tech have driven hundreds of billions of dollars of investments in renewable energy. Without the tax policy, analysts warn, more than $500 billion worth of announced but pending investments in the clean tech sector are at risk. Shares for rooftop solar companies tumbled on news of the bill's passage. California-based Sunrun, a leader in combining rooftop solar with home battery energy storage, saw shares plunge nearly 40 percent on news of the bill's passage. "We immediately went to work on how we can ensure our message about the importance of what we do for Americans on energy independence and advancing the agenda around energy dominance is heard," Sunrun CEO Mary Powell told Newsweek as she and colleagues in the clean energy sector attempt to change the bill. "Without changes it would be ripping the rug out from under 5 million plus customers." The company's stock price has since regained much of its value as attention turns to the Senate where the renewable energy industry is hoping that cooler heads will prevail and restore some elements of support. Sunrun CEO Mary Powell said the budget bill produced by the House would pull the rug from under the solar and battery storage industries, harming the U.S. ability to meet energy demands. Sunrun CEO Mary Powell said the budget bill produced by the House would pull the rug from under the solar and battery storage industries, harming the U.S. ability to meet energy demands. Photo-illustration by Newsweek/Getty/Canva/Sunrun Industry executives argue that as the U.S. enters a period of surging demand for electricity, solar, wind and battery storage are often the fastest and cheapest ways to add power. Last year, some combination of renewable energy and storage accounted for roughly 90 percent of new additions to the nation's electric grid. The House bill's draconian cuts to renewable energy pose particular threats to rooftop and community solar. In addition to repealing tax credits far sooner than initially intended, the bill would eliminate the ability to transfer the credits and restrict the use of tax credits in lease arrangements for solar installations, which is a common business model for solar companies. Clean tech companies are also counting on the local economic impact of investments that flowed to red states and Republican Congressional Districts as the renewable energy industry brings more manufacturing on shore to reduce dependence on imported products. About two dozen Republican members of Congress have signed letters supporting the clean energy tax credits, including four influential members of the Senate. Newsweek spoke with Powell, a power industry veteran, about how the industry and her company hope to persuade members of the Senate to make changes. Powell has been Sunrun's CEO since 2021and before that she led Green Mountain Power Corporation, Vermont's main electricity provider, for more than a decade. This conversation has been lightly edited for length. Newsweek: What are your chances of getting this bill to change? And, I guess it would have to change somewhat dramatically from the version that passed the House. Mary Powell: We had multiple conversations with Members to make sure the depth of what we bring to the United States from an energy independence perspective was understood. All of that work will be imported as the Senate now tackles the latest language that ultimately came out of the House. I've been in energy for about 24 years, and I like to say there's always a gravitational pull towards things landing in a commonsense way, something that is supportive of what needs to happen in terms of the American economy and energy capacity. So, I continue to believe that this will land in a reasonable place because that's what would make the most sense for Americans. It also makes the most sense in the context of the President's agenda, which is really about growth, about energy capacity, about making sure that we have enough resources to grow and ensure that we're meeting all the demands of the future. Given how much of the development and economic benefits from the clean energy sector have happened in Republican districts, I think it was a disappointment to a lot of folks in the sector to not see any of those Republicans who had signed letters of support for the credits actually stand up. What do you make of that? It seems like that indicates soft support for the tax credits given the other hard choices they have to make. The reality is America has built a thriving storage and solar industry, which is powering over 300,000 jobs. We now have 330 U.S.-based manufacturing facilities and $285 billion of investments. So yes, to your point, there are a lot of reasons for folks to support this. There was strong support in the House, there have been strong supporters and statements in the Senate. This was middle-of-the-night legislation and resolving of party differences. And I feel very clear that a lot of those leaders in the House are still going to be working very hard ultimately to land us in a place that makes sense. The process is rarely, in my experience, clean, straightforward and simple. On the Senate side, we have four fairly prominent Republican senators who have signed a letter in support of keeping the clean energy tax credits. What makes you think that those senators would be more inclined to follow through on that versus what we saw happen in the House? The language as written now would have dramatic impacts in a lot of states that are really important to Republican Senate leadership. And I think the Senate is known for historically really working hard to strike that balance of what ultimately makes sense for Americans. I think they're very sensitive to not doing dramatic rug pulls out from under industry. So, as things work through the process and people start to stare at the stark realities of moving in such a knee-jerk fashion, I think you'll see more and more really start to focus on, 'How do we land this in a way that is not so disruptive to the American economy and so disruptive to the American energy independence agenda?' Many are very concerned about this issue of capacity. At Sunrun, we're really America's storage company. We're bringing on the equivalent of a nuclear power plant a year in terms of dispatchable energy capacity because we are leaning in so hard to storage. My experience would suggest—and my conversations would suggest—that their job is to land in a place that is not so highly disruptive to the economies of the very states that they all go home to. And what do you say to the critics of the tax credits who argue that your business, your industry, should be able to compete without the subsidies? What's really important is we're deploying way newer technology. So, we're using the tax structure to accelerate the adoption of storage, which from a mass market perspective has really only been around for a couple of years. It's really important to remember that the tax structure for us, for the work we're doing is not, it's not about supporting a technology that has been around for 15 or 20 years, it's actually supporting innovation around technology As a former utility executive, I care deeply about America having enough energy capacity. I'm all in on nuclear, on all these resources that we need. But the reality is, they're really hard to build and they take a lot of time. So, we can scale fast with these [storage battery] technologies. I think as people understand that it opens up a different perspective. On top of that, I would also say that what we've been advocating for is just a reasonable glide path. The languages as it sits now is sort of the opposite of fostering capitalism and a productive economy in the United States. You just don't do rug pulls, you come up with a structured way to allow capitalism and innovation to respond. On that topic, what might a glide path for phasing out the credits look like? I'll point back to what the House Ways and Means Committee did. I think things needed work from that bill, but you know, in, in the context of how I might structure a glide path, it would be maybe more extended than what they did. But it was very thoughtful. And what do you say to folks on the Hill in regard to the U.S. positioning itself to compete with China and other countries for this industry of the future? That's one of the many reasons why it's so important that we come up with a really smart, thoughtful glide path. Because we don't have a chance of winning the race with China if we don't scale at a faster clip in terms of our own energy capacity. Just look at what's happening with AI. We need to scale quickly, and this is a really strong way to contribute to that effort. This industry has contributed to America's energy dominance across the world and independence at home. A lot of onshoring has been done. Are there challenges going deep into the supply chain? Yes, as is true for a lot of products in the United States. With the appropriate glide path, you're incentivizing all of that innovation and capitalism to do that sort of last step in the onshoring. That really puts America in an incredibly strong place from an energy independence and manufacturing perspective.
Yahoo
35 minutes ago
- Yahoo
Impressive Air Travel Demand at Copa Holdings: Sign of More Upside?
Copa Holdings CPA, based in Panama City, Panama, is gaining from upbeat passenger volumes. Driven by the buoyant air-travel demand scenario, revenue passenger miles (RPMs: a measure of traffic) increased 10.1% year over year in the first quarter of 2025. Load factor (percentage of seats filled by passengers) increased 0.4 percentage points to 86.4% in the March quarter, with traffic growth outpacing the 9.5% capacity expansion in the three-month period. RPMs increased 23.6%, 2.3% and 5.2% year over year in January, February and March, respectively, the three months of the first quarter of 2025. Despite economic uncertainties, RPMs increased an impressive 5.5% in April, on a year-over-year basis. The impressive air-travel demand scenario is primarily responsible for Copa Holdings' shares gaining a handsome 19% over the past six months, outperforming the Zacks Transportation - Airline industry and its U.S. counterparts, United Airlines UAL and American Airlines AAL. The double-digit increase in the share price of CPA against the double-digit declines of United Airlines and American Airlines seems to suggest that it has navigated the recent tariff-induced volatility well. Image Source: Zacks Investment Research Despite uncertainties, traffic growth has remained intact at Copa Holdings. With passenger volumes likely to remain strong, we anticipate passenger revenues to increase 4% in 2025 on a year-over-year basis. Copa Holdings seems to have performed better with respect to air travel demand than its U.S. counterparts due to factors like regional economic expansion, better adaptation to market trends and focus on innovative strategies. The impressive air travel demand scenario is also behind Copa Holdings' estimates for 2025 and 2026, moving north. Image Source: Zacks Investment Research Image Source: Zacks Investment Research As regional economies recover from the COVID-induced slump and middle-class populations expand in Latin America, demand for air travel is likely to remain healthy, which bodes well for CPA. Copa's strong brand presence and efficient operations position it well to capitalize on this potential growth. From a valuation perspective, Copa Holdings is still trading cheaper than the industry. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 6.21X, much lower than the industry average of 11.14X. The company has a Value Score of A, like its U.S. counterparts, American Airlines and United Airlines. Image Source: Zacks Investment Research Copa Holdings currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report United Airlines Holdings Inc (UAL) : Free Stock Analysis Report Copa Holdings, S.A. (CPA) : Free Stock Analysis Report American Airlines Group Inc. (AAL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
