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Forbes
18-04-2025
- Business
- Forbes
5 Ways To Help Your Kids Avoid Student Loan Debt
WASHINGTON, DC - MARCH 12: The headquarters of the Department of Education are shown March 12, 2025 ... More in Washington, DC. The Department of Education announced yesterday that it will reduce its staff by nearly 50 percent, leaving the department with 2,183 workers, a reduction from 4,133 when U.S. President Donald Trump took office for his second term. (Photo by) Despite the headlines surrounding the Department of Education, upwards of $90 billion in new student loans will be issued this fall to families attending college. At the same time, there's a lot of uncertainty around what repayment plans and loan forgiveness options will be around when these kids graduate. The SAVE income-driven repayment plan that gave so many borrowers so much hope is essentially dead as well, after the 8th Circuit Court of Appeals upheld an injunction blocking its implementation. All the while, costs for higher education and our collective national student loan debt (currently somewhere between $1.6 and $1.7 trillion or more) continue to spiral out of control. These are just some of the reasons to wonder if there's any way you can help your dependents avoid student loans altogether, but there's plenty more. This includes the fact that a decent percentage of college degrees have essentially no return on investment (ROI), or even a negative ROI. How can you help your kids avoid student loans, soul-crushing debt, and the decades of turmoil that are bound to come with it at this point? These tips from experts can help. Claudia Wenzel, who serves as Assistant Vice President of Enrollment & Financial Services at John Carroll University, says the best way to prepare for a child's college education is to start planning and saving early. "Consider creating a 529 savings plan, which allows you to invest tax-free for education expenses," she says. "Even a small amount each month will add up and help you feel prepared for when your child's college search process begins.' That said, you'll want to make sure the money you move to a 529 savings plan is actually invested for long-term growth. Also check whether any tax advantages apply in your state since they might give you even more reason to put some money away. In the state of Indiana, for example, taxpayers get a 20% state tax credit on up to $7,500 contributed to a 529 plan (or plans) each year. That's an instant 20% return on your money, and $1,500 back from the state when you file taxes annually if you max it out. While students should consider a range of college majors that suit their personality and future career goals, finding the right school is just as important. And since cost is a consideration, the right school doesn't have to be (and shouldn't be) the most expensive one. This is especially true if a student wants to pursue a non-specialized degree that's offered at a range of high-quality, affordable schools. Wealth advisor Jack Wang of Innovative Wealth Management says that, first and foremost, parents should help students do a deep dive into investigating colleges instead of just focusing on the "name" or ranking. "There are great colleges that are not brand names but cost a ton less," he says. College consultant Danilo Umali of Game Theory College Planners also says families should do their best to map out the child's potential career path before picking a school, even though this may not make sense until late in their sophomore year of high school or their junior year. "Part of minimizing your cost and need for loans is making sure your student doesn't jump from college to college chasing their major every time they change their mind," says Umali. "Find schools with a wide array of majors that match your student's interests." Dr. Peter C. Earle of the American Institute for Economic Research says that "fostering financial literacy from a young age" can be immensely helpful when it comes to avoiding crushing student debt. This is because finance is generally not taught in schools and can help kids make informed decisions about college costs, budgets, and tradeoffs they may need to make. Helping kids understand the financial impacts of their decisions can also help them choose wisely when it comes to money-saving measures they can participate in, such as pursuing advanced placement (AP) courses, dual enrollment, or community college credits. Earle says all of these can decrease the total cost of credits one may have to take at their university of choice. How can you teach your kids about money? Start with financial literacy books that can help you learn with your kids, talking about how debt works, and staying on top of the news regarding average student loan debt. You can even just explain to your kids that the average student loan debt is currently around $28,950 per borrower, and that a large percentage owe even more than that. From there, you can talk about how that leads to monthly payments that can last for years or even decades, and how those payments might prevent them from achieving other financial goals. William Gogolak, Assistant Teaching Professor at Carnegie Mellon University's Heinz College, says that students who work during school can graduate with better financial outcomes over all. As a result, parents should encourage their students to look for internships or take on jobs around the university. "Universities often need students to fill roles in various campus buildings, and these jobs can help cover basic expenses while in school," he says. 'Plus, they offer a great opportunity to meet new people and build a network.' If not on-campus, finding a job off-campus can also help cover regular living expenses, books, and supplies for school. Basically any money the student can earn can help reduce the amount of money they borrow, so nothing should be off the table when it comes to working at least part-time during college. James Lewis of the National Society of High School Scholars (NSHSS) says that something non-negotiable is completing the Free Application for Federal Student Aid (FAFSA) for each year of college. While filling out the FAFSA is the only way to qualify for federal student loans, it can also unlock various types of financial aid that doesn't need to be paid back. In addition to financial aid that can be accessed through the FAFSA, Lewis says there are 1.7 million private scholarships and fellowships available to students nationally with a total value of more than $7.4 billion. "Don't assume you are not eligible," he says. 'Countless awards are available for athletics, STEM & STEAM, community service, music, and those from government and large corporations.' Lewis also points to some off-the-beaten track scholarships that can help with college and may be easier to qualify for. For example, Tall Clubs International offers scholarships to male and female students who are considerably taller than their peers. Lewis says to research all the available scholarships you can, and to apply early and often since doing so increases your chances of bridging the gap between what you owe and what you can afford.
Forbes
04-04-2025
- Business
- Forbes
Trump And GOP Target Student Loan Forgiveness, Plunging Programs Into Uncertainty
US President Donald Trump speaks to reporters while in flight on board Air Force One. (Photo by ... More MANDEL NGAN / AFP) (Photo by MANDEL NGAN/AFP via Getty Images) President Donald Trump and Republican officials have made clear in recent months that they want roll back student loan forgiveness, including longstanding programs that historically have had bipartisan support. Programs are being targeted on multiple fronts through executive actions, legal challenges, and legislation. The net result is a heightened degree of uncertainty for millions of student loan borrowers. Many loan forgiveness programs require years of payments before someone can qualify for student debt relief, and borrowers often make key personal and financial decisions premised on the promise of eventual loan forgiveness. But the landscape for borrowers is more volatile than ever, making it exceedingly challenging to plan for the future. Here's where things currently stand on efforts to gut federal student loan forgiveness programs, and what borrowers should know. Student loan forgiveness remains blocked under the SAVE plan, an income-driven repayment program launched by the Biden administration in 2023. SAVE, like all other IDR plans, provides for loan forgiveness after 20 or 25 years in repayment. But the plan can allow for faster loan forgiveness for certain borrowers who initially took out relatively small student loan amounts. Months after the SAVE plan went live, a group of Republican-led states filed a legal challenge last spring to halt the program. In August of last year, the 8th Circuit Court of Appeals issued a preliminary injunction that prevents the Department of Education from implementing the SAVE plan while the lawsuit proceeds. As a result, more than eight millions borrowers were forced into a forbearance which halted payments, interest, and all progress toward student loan forgiveness. In February, the 8th Circuit issued a new ruling that reaffirmed and expanded the SAVE plan injunction, keeping the program stuck in limbo. The court all but said that the program is likely to ultimately get struck down, although that has not happened yet. Meanwhile, Republican lawmakers in Congress are working on legislation to expand and make permanent massive tax cuts. To offset the associated costs, GOP leaders want to scrap several student loan forgiveness programs, including the SAVE plan in its entirety. While the SAVE plan technically still exists, it appears nearly certain that one way or another, the program will end. The good news for borrowers is that SAVE is not the only income-driven repayment option. There's also Income-Contingent Repayment, Income-Based Repayment, and Pay As You Earn; these plans are often referred to by their acronyms (ICR, IBR, and PAYE, respectively). These plans can also provide affordable payments and eventual student loan forgiveness, although their terms are not as generous as the SAVE plan. But these other income-driven repayment options are also mired in turmoil. As a result of the 8th Circuit's recent rulings, which calls into question not only the SAVE plan but the underlying statute that authorized the creation of several distinct IDR plans, student loan forgiveness at the end of the 20- or 25-year repayment term is currently blocked for the ICR and PAYE plans. Borrowers can still repay their student loans under these plans, but if they reach the threshold for loan forgiveness, they cannot receive a discharge at this time. Instead, these borrowers are supposed to be put into a forbearance while the legal challenge continues, according to the Department of Education. Meanwhile, the Department of Education announced this week that it intends on rewriting the rules for the ICR and PAYE plans – possibly to eliminate any possibility of student loan forgiveness under these programs. Student loan forgiveness through the IBR plan remains available, as IBR was created separately by Congress and the underlying statute is not being challenged. However, all IDR plans – including IBR – are effectively still blocked by the Trump administration. In response to the 8th Circuit's February court order, the Department of Education took down the IDR application and prevented borrowers from applying to any of the four plans. After a national labor union and student loan borrower advocacy group filed a legal challenge against the Trump administration arguing that the shutdown was unlawful, the department reopened IDR applications for ICR, PAYE, and IBR. However, processing still remains paused. A key court hearing is scheduled for later this month to determine if the Trump administration should be ordered to resume processing, or if borrowers should be entitled to relief (such as student loan forgiveness credit associated with a forced forbearance). If there's any other student loan forgiveness program that is being targeted on the same scale as the SAVE plan, it's Public Service Loan Forgiveness. PSLF offers loan forgiveness to borrowers who commit to working in traditionally lower-paying roles in the nonprofit or government sectors for at least 10 years while meeting other key program requirements. Once a bipartisan program signed into law by President George W. Bush, PSLF has now become a major target of Republican lawmakers and the Trump administration. Even without being directly targeted, borrowers on track for PSLF have been impacted by the SAVE plan litigation and subsequent shutdown of the income-driven repayment system. Borrowers who were thrown into a forbearance because they were in the SAVE plan cannot make ongoing progress toward student loan forgiveness through PSLF, and have been unable to change to a different repayment plan. And those who want to enroll in PSLF may not be able to do so, as typically an income-driven repayment plan is a required component for PSLF borrowers pursuing student loan forgiveness. But PSLF is also being directly targeted. In March, President Trump issued an executive order to limit eligibility for student loan forgiveness based on an organization's activities. The Trump administration has argued that the changes are necessary so that organizations engaging in 'illegal' actions cannot benefit from PSLF. Critics, however, say that the definition of 'illegal' is so broad and vague that it could allow the Department of Education to to block loan forgiveness under PSLF for any organization that the administration disagrees with. The executive order has so far not gone into full effect, as it directs the department to draft regulations implementing it – a process that can take well over a year. But this week, the Department of Education initiated a rulemaking process to do just that. Many observers expect legal challenges, as only Congress can fundamentally change the PSLF program. GOP leaders in Congress are, however, also considering potential changes to PSLF. Some suggestions include limiting student loan forgiveness under the program based on a borrower's income, or capping loan forgiveness at a certain amount to prevent higher-income earners who take on large amounts of student debt – such as doctors and attorneys – from benefiting. Typically, when Congress restricts longstanding benefits through legislation, the changes would only apply to new loans going forward, effectively grandfathering in current borrowers. But it remains to be seen what Congress will do here, as no draft legislation has yet been released. Republican lawmakers in Congress are also considering including other changes to student loan forgiveness programs in its upcoming bill to extend tax cuts. These include repealing Biden-era regulations that have made it easier for borrowers to qualify for debt relief under Borrower Defense to Repayment and Closed School Discharges, two programs that can cancel the federal student debt for borrowers who were harmed by their school. Lawmakers may also try to repeal all existing income-driven repayment plans and replace those plans with a new program that does away with time-based student loan forgiveness, potentially trapping borrowers in debt for decades. GOP congressional leaders are also considering changes to the tax code that could indirectly impact student loan forgiveness programs, but could still have profound consequences for borrowers. Proposals include changing the tax-exempt status of nonprofit hospitals, which could eliminate PSLF eligibility for millions of healthcare workers, and not extending federal tax relief on certain federal student loan forgiveness programs.
Forbes
01-04-2025
- Business
- Forbes
8 Student Loan Dates And Deadlines Borrowers Should Know For 2025
The federal student loan system remains mired in turmoil due to multiple legal challenges and major changes proposed by President Donald Trump and congressional Republicans. But there are several important dates that student loan borrowers should be aware of as they try to access affordable repayment plans and federal student loan forgiveness programs amid all of the ongoing disruptions. While the landscape is more confusing than ever and can sometimes seem like it is changing by the day, understanding these important milestones for 2025 may help student loan borrowers navigate their options. Here's a breakdown. The Department of Education recently announced that it would be pushing out income recertification dates associated with income-driven repayment plans, which offer affordable payments to borrowers and the possibility of eventual student loan forgiveness. Under IDR plans, borrowers must recertify their income annually. The decision to push out the recertification dates came after the Trump administration took down the IDR application and halted all processing following a recent court ruling from the 8th Circuit Court of Appeals, which extended an injunction blocking the SAVE plan, one of several IDR options. Because borrowers on other IDR plans were unable to recertify their income given that the application to do so was removed, some borrowers started experiencing dramatic increases in their monthly payments when their IDR term lapsed. A national labor union filed a lawsuit against the administration in March, arguing that the shutdown of the IDR system is illegal. Following this new legal challenge, the Department of Education announced that it would be pushing out annual recertifiation dates to 2026, with several key cutoff dates in February and March of this year. 'If your recertification date was on or before March 17, 2025, you were due to recertify on or before Feb. 20, 2025,' says updated department guidance. 'If you submitted your recertification request on or before Feb. 20, 2025, and your servicer did not complete processing of your request, then your recertification date will be extended by one year. You do not need to submit a recertification request at this time.' Borrowers who experienced a jump in their monthly payments due to failure to recertify 'must submit a recertification request as soon as possible to potentially lower your payment,' says the guidance (however, such requests are still not being processed). 'If your recertification date was on or after March 18, 2025, you were due to recertify on or after Feb. 21, 2025,' continues the guidance. 'If you were due to submit a recertification request on or after Feb. 21, 2025, then your recertification date has been extended by one year. You do not need to submit a recertification request at this time.' The department's guidance indicates that borrowers who were due to recertify on or after February 21, 2025 and experienced an increase in their monthly payment amount should expect to have their monthly payments readjusted by their loan servicer in the coming weeks. Once all of the changes are implemented, the soonest any student loan borrower on any IDR plan should have to recertify their income would be February 1, 2026, according to the Department of Education. A key court hearing will be held this month in the legal challenge over the Trump administration's decision to suspend processing for income-driven repayment plans. The American Federation of Teachers, a national labor union, filed a lawsuit last month after the Department of Education removed IDR applications from its website and halted all processing following the 8th Circuit's order extending the SAVE plan injunction. While the department has now restored IDR applications to its website, processing remains paused, and it is unclear when that will resume. 'Although the IDR application is now available, loan servicers are still updating their systems in accordance with the court's actions,' says department guidance. 'Servicers will begin processing applications in the near future.' The AFT is going forward with a motion for a temporary restraining order and preliminary injunction, which – if granted – could force the Trump administration to resume IDR application processing. 'Millions of student loan borrowers are being denied Congressionally mandated student loan repayment and forgiveness programs, simply because the defendants have unlawfully ceased to accept and process enrollment applications,' reads the motion. A hearing is scheduled for April 17th. Republican lawmakers in Congress are proposing an array of reforms that could dramatically reshape federal student loan forgiveness and repayment programs. The proposed changes, they argue, would reduce government spending and help offset the projected costs of extending and expanding massive tax cuts that are due to expire at the end of the year. Proposed changes include repealing Biden-era regulations that have expanded access to several federal student loan forgiveness programs including Borrower Defense to Repayment and Closed School discharges. Lawmakers also want to eliminate time-based student loan forgiveness associated with income-driven repayment plans and replace these options with a new IDR program that would limit loan forgiveness to borrowers who make significant payments over time. Republicans also want to repeal the SAVE plan, sunset the Graduate PLUS and Parent PLUS loan programs, and make changes to eligibility rules for Public Service Loan Forgiveness, or PSLF. So far, these are proposals, and nothing has been finalized yet. But House Ways and Means Chair Jason Smith (R-MO) has said that he wants a bill passed by Memorial Day. So that will be a key date for student loan borrowers to watch. Millions of borrowers remain in limbo on their student loans due to the ongoing forbearance associated with the SAVE plan legal challenges. Because courts have blocked the SAVE plan, millions of borrowers have not had to make payments on their student loans, and interest isn't accruing. But the time spent in the forbearance won't count toward student loan forgiveness for income-driven repayment plans or for PSLF. After the 8th Circuit's new ruling earlier this year extending the ongoing injunction blocking the SAVE plan, it doesn't sound like the SAVE plan forbearance is ending anytime soon. But no one can know exactly when the forbearance will end, or when borrowers will be resuming their payments. That's because the end of the forbearance will depend in part on when the courts issue a final ruling on the fate of the SAVE plan. While most observers believe that SAVE will ultimately get struck down, no one can say when, exactly. As a result, there is a good amount of uncertainty about when SAVE plan borrowers should expect to resume repayment. According to current Department of Education guidance, 'Servicers expect to complete the necessary technical updates to be ready to begin moving borrowers back into repayment no earlier than September 2025. Because this transition will take time, servicers expect first payments to be due no earlier than December 2025.' But all of this could be subject to change. 'Borrowers will be informed of any further change to this timeline,' says the guidance. On December 31, 2025, tax relief associated with student loan forgiveness will come to an end. Several student loan forgiveness programs have been shielded from federal taxation under the 2017 Tax Cuts and Jobs Act and the 2021 American Rescue Plan Act. But unless Congress extends this relief, many (although not all) student loan discharges and loan forgiveness events will revert to being taxable again starting in 2026.
Yahoo
27-03-2025
- Business
- Yahoo
Trump administration reopens online applications for income-driven student loan repayment
March 27 (UPI) -- The Department of Education has reopened online applications for a student loan repayment program used by millions of people, it announced Thursday. Earlier this year, the Trump administration ended the online application process for the Income Driven Repayment plan, which allows borrowers to repay their student loans based on how much money they make, citing a court order. That prompted complaints from borrowers and their advocates. The plan joins Pay as you Earn and Income-Contingent Repayment as options for student loan repayment. The Saving on a Valuable Education, or SAVE plan, a component of the income-driven plan, was initiated by the Biden administration. The Trump administration ended the program based on a ruling by the 8th Circuit Court of Appeals. The American Federation of Teachers sued the administration, arguing it interpreted the ruling too broadly when it stopped accepting online applications for that portion of the SAVE plan. The SAVE plan itself remains blocked in court.
Yahoo
26-03-2025
- Politics
- Yahoo
Judge blocks Iowa law banning books with sex acts from schools
A federal judge on Tuesday put a hold on an Iowa law that says schools cannot carry books that depict sex acts. District Judge Stephen Locher placed a temporary block on the ban, saying there were 'several dozen unconstitutional applications' of the law regarding books with 'undeniable political, artistic, literary, and/or scientific value,' listing examples including '1984,' 'Brave New World' and 'The Fault in Our Stars.' This is the second time Locher has blocked the law, also doing so shortly after it was signed by Iowa Gov. Kim Reynolds (R) in 2023. The 8th Circuit Court of Appeals, however, overturned that ruling and made the law enforceable for the 2024-25 school year. 'The bottom line is that the unconstitutional applications of the book restrictions in Senate File 496 far exceed the constitutional applications of those restrictions under both legal standards the Court believes are applicable,' Locher said this week. A suit challenging the law was brought by the Iowa State Education Association and multiple best-selling authors, including Jodi Picoult. The decision will likely be appealed again. 'As a mom, I know how important it is to keep schools a safe place for kids to learn and grow. Parents shouldn't have to worry about what materials their kids have access to when they're not around. This common sense law makes certain that the books kids have access to in school classrooms and libraries are age-appropriate,' Iowa Attorney General Brenna Bird (R) said. 'I'm going to keep on fighting to uphold our law that protects schoolchildren and parental rights,' Bird added. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
