Latest news with #FederalStudentAid
Yahoo
5 days ago
- Business
- Yahoo
After FAFSA hiccups, more WV students completing the financial aid application
West Virginia's Free Application for Federal Student Aid completion rate stands at 49.8%. (Getty Images) More West Virginia students are completing the college financial aid application, known as the FAFSA, following pandemic interruptions and nationwide issues with the form over the last year. According to data tracked by the National College Attainment Network, the state's Free Application for Federal Student Aid completion rate stands at 49.8%. The state now ranks 15th in the nation for students completing the FAFSA, which is up from 19th last year, according to a news release from the West Virginia Higher Education Policy Commission. Brian Weingart, senior director of financial aid at the commission, said the HEPC has worked side-by-side with schools, counselors and communities to make sure students had 'a clever path to financial aid.' HEPC credits the success to statewide partnerships. 'Whether it's through hands-on FAFSA events, real-time data tools, or text message nudges, we're meeting students where they are and helping them take that critical next step toward college. Behind every completed FAFSA is a student who's one step closer to their future,' he said. The federal government's 2024 botched rollout of the new FAFSA form prompted former Gov. Jim Justice to declare a state of emergency and suspended a requirement that college-bound high school seniors fill out the FAFSA in order to receive state financial aid, including the state's Promise Scholarship. Unlike some other states, West Virginia didn't have a statewide FAFSA mandate. Instead, the HEPC said it focused on strategic outreach and community engagement. A WV FAFSA day in February brought together more than 50 high schools and colleges. The organization also used 'TXT 4 Success,' a text message program that provides personalized guidance and nudges to help students stay on track with financial aid deadlines. 'West Virginia's success, and approach, offer a lot for other communities and states to learn from,' said Bill DeBaun, senior director at the National College Attainment Network in Washington. 'Thoughtful, coordinated efforts like these that support practitioners in districts and schools make a big difference.' West Virginia's Chancellor of Higher Education Dr. Sarah Armstrong Tucker added, 'We built momentum through strong partnerships with our schools and counselors, innovative tools and a shared commitment to our students' futures. I am deeply proud of our team and the many school counselors, educators, and families who have rallied around this cause. Together, we're showing what's possible when we put students first.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
19-05-2025
- Business
- Yahoo
As loan payments restart, BBB alerts students to potential scams
JOPLIN, Mo. — The Better Business Bureau is warning students to watch out for scams, as the federal government begins collecting on student loans for the first time since 2020. More than 5 million borrowers are currently in default, and four million more are at risk, according to the BBB. It also says the best place to find information about repayment plans, relief programs, and loan forgiveness is the Department of Education's website. There, you can set up an Federal Student Aid ID to manage your loans. You can refinance your loans with a private institution, but it's important to take a step back and consider all your options first. 'Before you choose a private lender though, make sure you know your rights. If you decide you want to consolidate your federal student loans with a private lender, you might lose some options for repayment plans or forbearance. So really understand your terms before you make that decision,' said Pamela Hernandez, BBB Springfield Regional Director. They also say to never give out sensitive information, including your FSA ID, to a third party. If someone makes big promises of reducing your debt for a fee, chances are it's a scam. You can verify businesses offering loan consolidation with the Better Business Bureau. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Business Insider
17-05-2025
- Business
- Business Insider
3 options for student-loan borrowers in default to protect their wages and Social Security
This summer, millions of student-loan borrowers could lose some of their wages and federal benefits if they don't start making payments. They have options to avoid those consequences — but it won't be easy. After President Donald Trump's administration restarted collections on defaulted student loans on May 5, his Education Department said it sent notices to 195,000 defaulted borrowers that some of their federal benefits, like Social Security, may start being withheld in early June. "Later this summer, all 5.3 million defaulted borrowers will receive a notice from Treasury that their earnings will be subject to administrative wage garnishment," the department said. Most federal borrowers enter default when they have not made a payment in over 270 days. Business Insider has spoken to student-loan borrowers behind on payments and worried about how they'll budget th restart and navigate wage garnishment. Millions have been free of benefits garnishment and negative credit reporting for the past five years under a pandemic pause that began under Trump and continued under former President Joe Biden. Now that collections have restarted, borrowers in default can tap into three different options to evade long-term consequences: loan rehabilitation, loan consolidation, or bankruptcy. Rae Kaplan, a student-loan attorney based in Chicago, told Business Insider that while default consequences were standard before the pandemic, the five-year pause brings extra stress to the collections restart because "a lot of people took this out of their budget," adding that "five years is a long time" to get used to not paying. "So I think this period where they start ramping up collection activities is going to cause a lot of panic out there for borrowers," Kaplan said. Some borrowers in default previously told BI that they're not confident they'll be able to avoid garnishment. Here are some options that defaulted student-loan borrowers have to avoid having some of their wages and federal benefits seized. Loan rehabilitation Loan rehabilitation can take months, but it has several benefits, including eventual removal of the borrower's default status from their credit reports. To rehabilitate a defaulted loan, the borrower needs to contact their student loan holder and sign an agreement to make nine payments within 20 days of the due date during a period of 10 consecutive months. The payment amount is intended to be affordable; according to Federal Student Aid, the payment will be equal to up to 15% of the borrower's discretionary income divided by 12. Kaplan said that it's helpful to hire an attorney or an advocate to negotiate low payments, and it's possible that borrowers can end up with payments as low as $5 a month through this route. Notably, wage and benefits garnishment will continue during part of the loan rehabilitation process, and the benefits that are seized would be in addition to the agreed-upon rehabilitation payments. Garnishment will continue until the borrower has made at least five rehabilitation payments or the loan is no longer in default. Additionally, borrowers can only rehabilitate a defaulted student loan once; if the loan defaults again, rehabilitation will not be an option. "Once we get you rehabilitated, then your credit score will go up," Kaplan said. "So it's a nice feature that you can both get back to current and in good standing, get your loans back into good status, and get that negative credit removed from your credit report." Loan consolidation Consolidating a defaulted student loan is quicker than rehabilitation, but the record of the default will remain on the borrower's credit history. Borrowers can apply with Federal Student Aid to consolidate their defaulted student loans into a federal direct consolidation loan. To be approved for consolidation, the borrower must agree to pay off the consolidated loan under an income-driven repayment plan or make three consecutive, on-time, full monthly payments before consolidating. After the loan is consolidated, the borrower can make use of all federal student-loan benefits, including deferments, forbearances, and loan forgiveness. Bankruptcy If a defaulted borrower does not think that consolidation or rehabilitation is feasible, they can file for bankruptcy. Dustin Baker, an Iowa bankruptcy attorney, told BI that filing for bankruptcy is "a very efficient way" to stop wage and benefits garnishment because once a bankruptcy petition is filed, creditors are no longer allowed to contact and collect from the borrower. "If nothing else, it's kind of a four or five-month break to figure out what to do," Baker said, adding that he's already received an increase in requests from borrowers worried about collections on defaulted student loans. Prior to 2022, student-loan borrowers had to clear a high and burdensome threshold to discharge their loans in bankruptcy. However, Biden issued new guidance in November 2022 to streamline the process, and Baker said he's had much greater success discharging borrowers' student loans in recent years. "It seems like it's moving more quickly now," Baker said. "They've allocated the appropriate resources, and it's not a partisan thing. Biden started this process, Trump reaffirmed it, and it sounds like the administration at least is providing the appropriate resources to make it happen."
CNBC
09-05-2025
- Business
- CNBC
Watch out for student loan scams as collections resume: 'Scammers see opportunities,' expert says
Amid policy updates, legislation proposals and the upcoming resumption of involuntary collections, student loan borrowers have quite a lot on their plate. But while they navigate those circumstances, they should also be aware of potential scams. "Whenever there's uncertainty, which is what we have right now because of the changing policy situation, scammers see opportunities to pounce," Ian Bednowitz, general manager of identity and privacy at LifeLock says. "There's confusion and there's stress, and that means that there's opportunity, unfortunately, for the scammers." Malicious actors routinely prey on vulnerable people, and that includes individuals who are struggling to make their loan payments or may be facing collections and wage garnishment. A scammer may pose as a debt relief agency or as a loan servicer to lure a student loan borrower into thinking they can get some help, only to find more financial turmoil through a scam. "It's easy to fall victim to when you are desperate to find forgiveness, find some option [to improve your situation]," Bednowitz says. Here's what to look out for. Generally speaking, scammers may call, text or email you with some claim to try to get you to engage with them, Bednowitz says. The messaging may say you qualify for loan forgiveness or offer you some kind of repayment assistance, but in reality, responding to the message or clicking a link included could harm you financially. "[Scammers] might ask for sensitive information, such as your Federal Student Aid ID, your Social Security Number or account log in," he says. "They can use that information to steal your identity, to hack your accounts." Federal Student Aid and its partners — including your loan servicer — will never ask for your FSA password or call you directly to request information. Official emails will come from noreply@ noreply@ or CNBC Select reports. Your federal student loans are managed by one or more of the seven contracted servicers, which include Nelnet and Mohela. You can log in to to find yours. Make sure you know which servicer you have and how they may contact you to avoid falling for a potential scam. And if an unknown number or email address reaches out to you, do a quick search to see if it matches your servicer or whatever entity it claims to be. AI is making it even easier for scammers to try to trick you, Bednowitz says. Malicious actors can use AI tools to gather any publicly available information about you and then use it to make you think they are a credible organization or even someone you know. "You really have to be wary," Bednowitz says. "Unfortunately, you can't trust. You have to verify anyone reaching out to you no matter what organization they claim to be from." Alternatively, a scammer may just try to get money out of you up front by offering services like loan consolidation, management or forgiveness and claiming you need to pay a fee, Bednowitz says. But there is no fee to consolidate federal student loans or have your loans discharged through existing programs like Public Service Loan Forgiveness or disability discharge. If you're stressed out about paying your student loans or facing challenging decisions like whether to pay your loans or pay your rent, unfortunately that makes you even more susceptible to scams. "Scammers like to prey on the anxiety that people have," Bednowitz says. They often use urgent language like "act now" or insist an offer is only available for a limited time. Any kind of pressure like that should be a red flag, he says. "If you do find yourself in a conversation or a text thread with one of these [fraudulent] companies and you have some questions about it, stop. Take your time. Breathe. Don't give in to the pressure," Bednowitz says. If you're struggling to manage your student loans, there are free and legitimate services available to help as well as products that may be worth a small investment to help protect your identity. Start by talking to your loan servicer to see what options may be available if you're behind on payments. Additionally, organizations like The National Foundation for Credit Counseling offer free financial counseling to help you get back on track.
Epoch Times
07-05-2025
- Business
- Epoch Times
Crackdown on Student Loan Defaulters to Begin With Benefit Seizure, Then Wage Garnishment
The U.S. government will begin seizing federal benefits from 195,000 student loan defaulters in June, with wage garnishment notices set to reach 5.3 million borrowers later this summer, the Education Department The renewed enforcement effort begins with the Treasury Offset Program, which allows the federal government to intercept tax refunds, Social Security checks, and other federal payments to recover unpaid student debt. Borrowers affected by the program began receiving notices this week, the department said. 'Starting today, approximately 195,000 defaulted student loan borrowers will begin receiving an official 30-day notice from the U.S. Department of Treasury notifying them that their federal benefits will be subjected to the Treasury Offset Program,' the Education Department said in Monday's announcement. Following the notice period, administrative wage garnishment will begin later this summer for all 5.3 million borrowers who remain in default. Guaranty agencies have also been authorized to resume involuntary collections on defaulted loans under the Federal Family Education Loan (FFEL) Program, the department added. The move officially ends a pandemic-era freeze first imposed in March 2020 under President Donald Trump and extended multiple times under the Biden administration. Although payments officially resumed in fall 2023, most collection efforts remained paused—until now. In an April 21 percent of the 42.7 million federal student loan borrowers were current on their loans, while nearly 10 million were delinquent or in default. The remainder were in forbearance, deferment, or grace periods. Related Stories 5/6/2025 5/5/2025 'Student and parent borrowers–not taxpayers–must repay their student loans,' the Education Department said at the time. 'There will not be any mass loan forgiveness.' As of early 2025, To help borrowers avoid wage garnishment or benefit offset, Federal Student Aid (FSA) has launched direct outreach and expanded support services, encouraging borrowers to enroll in income-driven repayment (IDR) plans, make voluntary payments, or begin loan rehabilitation. Alongside the repayment restart, the Education Department also issued a Dear Colleague The letter reminded institutions that the cohort default rate—the share of former students who default soon after leaving school—must stay below 40 percent in a single year or 30 percent for three years in a row, or the school risks losing access to Pell Grants and federal student loans. To mitigate that risk, the department urged schools to immediately contact former students with reminders of their loan obligations and information on repayment plans. 'As we begin to help defaulted borrowers back into repayment, we must also fix a broken higher education finance system that has put upward pressure on tuition rates without ensuring that colleges and universities are delivering a high-value degree to students,' Secretary of Education Linda McMahon said in a statement. 'For too long, insufficient transparency and accountability structures have allowed U.S. universities to saddle students with enormous debt loads without paying enough attention to whether their own graduates are truly prepared to succeed in the labor market.' The department also said it plans to publish institution-level nonpayment rates later this month to increase transparency and accountability across the higher education sector. The enforcement restart follows the collapse of former President Joe Biden's sweeping student loan forgiveness plan, which aimed to cancel hundreds of billions in debt through executive action. The Supreme Court struck down the plan in 2023, ruling that the administration lacked the authority to cancel loans without congressional approval. In April, McMahon made clear that the department would no longer pursue blanket debt forgiveness. 'American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,' McMahon said in April. 'The executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear.' While supporters of Biden's proposal argued that widespread forgiveness would reduce inequality and stimulate economic growth, critics said it was fiscally reckless and unfair to borrowers who had already repaid their loans—or never borrowed at all.
