Latest news with #Income-BasedRepayment
Yahoo
30-04-2025
- Business
- Yahoo
Student loan income driven repayment plans changes and impact on borrowers
NEW YORK (PIX11) – Following court actions that briefly paused applications for student loan income driven repayment plans, the Department of Education has updated its options for borrowers. Servicers have begun re-processing applications for IDR plans, meaning borrowers can now apply for plans such as Income-Based Repayment (IBR), Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR). More Local News Borrowers who were already under an IDR plan are also advised to recertify under the IBR, PAYE, and ICR plans. For borrowers enrolled in the SAVE Plans, their loans will remain in forbearance until servicers can calculate their monthly payment or until the court reaches a decision on the future of the plan. More: Latest News from Around the Tri-State During the general forbearance, interest will not accrue on loans and borrowers do not have to make monthly payments. Borrowers can stay updated with the latest on the student loan courses and their impact online. Dominique Jack is a digital content producer from Brooklyn with more than five years of experience covering news. She joined PIX11 in 2024. More of her work can be found here. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Newsweek
21-04-2025
- Business
- Newsweek
Student Loan Change on May 5 Could Hit Millions: Here's Who's Impacted
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Millions of federal student loan borrowers face a renewed threat to their wages and tax refunds starting May 5, when the Department of Education (DOE) resumes debt collection on defaulted loans. This marks the end of a yearslong pause that began at the onset of the COVID-19 pandemic. The Treasury Offset Program will be reinstated, allowing the federal government to withhold tax refunds, Social Security payments and other federal benefits to recover unpaid student loans. Administrative wage garnishment will follow later this summer, with notices going out to affected borrowers beforehand. Why It Matters Roughly 5.3 million federal student loan borrowers are currently in default, meaning they have gone more than nine months without making a payment, PBS reported. An additional 4 million borrowers are in late-stage delinquency, according to data from the DOE. These figures suggest that nearly 10 million people could be subjected to debt collection actions over the coming months. A person walks past the U.S. Department of Education on March 20, 2025 in Washington, DC. A person walks past the U.S. Department of Education on March 20, 2025 in Washington, To Know Under the reinstated collections process, the Treasury Offset Program will automatically divert federal payments to cover defaulted student loans. Additionally, the DOE will authorize administrative wage garnishment—the seizure of a portion of a borrower's paycheck—after giving a 30-day notice, reported the Associated Press. Borrowers are considered delinquent after missing a single payment. If no payments are made for 270 days, the loan is considered in default, and the government may begin collection efforts including garnishment and litigation, according to To avoid garnishment, borrowers can seek loan rehabilitation. This process allows them to get out of default by making nine consecutive, on-time monthly payments based on their income. The DOE has also not processed any new applications for repayment plans such as Income-Based Repayment (IBR) or Pay As You Earn (PAYE) since August 2024. Processing is expected to resume next month, according to DOE officials. The Biden administration had extended payment pauses several times after taking office, but the current leadership under Education Secretary Linda McMahon has ended that era. What People Are Saying McMahon said in a statement released Monday: "American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies." Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "For many student loan borrowers, the past few years provided a plethora of forgiveness and payment plans to ease the repayment process. However, with a new administration comes new policy, and if you've defaulted on your loan balance by not making a payment in more than 360 days or in delinquency by not making a payment for the last 91 days, the crackdown on repayments is about to begin." What Happens Next Borrowers in default will begin receiving notices by email within two weeks and must take action quickly to avoid collection efforts. Wage garnishment notices will follow this summer. "You need to start making plans immediately to begin making payments or you'll risk having your wages garnished later this year," Beene said. "It may not be the desired outcome for many, but it's the new reality for millions of borrowers." McMahon has reiterated that broad student loan forgiveness is not in the cards. "There will not be any mass loan forgiveness," said the department's announcement. Instead, the administration aims to restore "commonsense and fairness" by ensuring borrowers fulfill their repayment obligations.
Yahoo
26-03-2025
- Business
- Yahoo
Education Department restarts online borrowing applications
March 26 (UPI) -- The U.S. Department of Education reopened its online income-driven repayment plan and loan consolidation applications for borrowers Wednesday. In a press release, the agency said its Office of Federal Student Aid can once again receive applications from borrowers for the Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment plans using which has been reportedly updated. The application was paused by an injunction in February due to a lawsuit filed by the Trump administration. However, the American Federation of Teachers filed a suit on March 18 to restart the application, stating in a press release that the Trump administration was "denying borrowers' access to affordable loan payments and blocking progress towards Public Service Loan Forgiveness," in what it alleged is a "violation of federal law." It declared in its lawsuit that "Congress provided clear and specific directives to the Department so that millions of Americans could repay their loans without being hindered by the debt." Acting Education Department Under Secretary James Bergeron said in the release, "Our team was able to relaunch this application within weeks, ensuring borrowers have access and the ability to access all legal repayment plans."
Yahoo
25-03-2025
- Business
- Yahoo
Department of Education prepares to reopen income-driven repayment plans
The Department of Education plans to reopen applications for a popular set of student loan repayment programs as soon as Wednesday after blocking access to them for several weeks, according to two sources familiar with the administration's plans. The change will once again allow borrowers to sign up for income-driven repayment options that cap their monthly payments at a share of their earnings. The Trump administration abruptly took down the online forms for those plans last month in response to a federal appeals court decision, leaving many former students baffled about how to manage their loans. When the portal reopens, borrowers will be able to enroll in one of three plans according to the sources: Income-Based Repayment, Pay as You Earn, or Income-Contingent Repayment. The Biden administration's SAVE plan and REPAYE, both of which were involved in last month's court ruling, will not be available. Neither will offer a feature that automatically selects a plan based on the lowest monthly payment. Student loan servicers have been told to resume processing income-driven repayment applications in about two weeks, the sources said. They had been put on pause while applications were shuttered. The Department of Education closed off access to income-driven repayment options in February after the US Court of Appeals for the Eighth Circuit upheld an injunction stopping the government from implementing SAVE, which lowered monthly payments on undergraduate loans to 5% of discretionary income and shortened the path to forgiveness compared to previous repayment options. In doing so, the court also ruled that parts of REPAYE, which capped payments at no more than 10% of earnings, were likely illegal as well. Student loan advocates criticized the decision to cut off access to programs like Income-Based Repayment, which was not part of the litigation, as an overreaction. The move may have been necessary, however, because borrowers apply to all of the income-driven plans using the same online form. Many students already enrolled in income-driven plans were worried that they would not be able to submit their annual paperwork recertifying their incomes, which could cause their monthly payments to balloon. But last week, student loan servicers announced that the deadlines for those forms had been pushed back until February 2026. According to one of the sources who spoke with Yahoo Finance, the staffers responsible for turning the IDR application back on were originally laid off as part of the Department of Education's massive reduction in force this month, aimed at cutting the agency's headcount in half. But they were brought back a week later after officials realized that nobody else understood how the technology behind the applications worked. The Department of Education's press office did not return a request for comment. Jordan Weissmann is a senior reporter at Yahoo Finance. Sign in to access your portfolio
Yahoo
25-03-2025
- Business
- Yahoo
Student aid disruptions, education reshuffling confuse borrowers, advisers
March 25 (UPI) -- Financial aid advisers on college campuses across the United States are sharing in the confusion of student loan borrowers as the Trump administration tries to reshape education. Borrowers are blocked from accessing income-driven repayment options while awaiting the Court of Appeals' final ruling on the Saving on a Valuable Education Plan introduced by the Biden administration. President Donald Trump formally ordered the end of the Department of Education and for student loans to be moved to the Small Business Administration. Current and soon-to-be borrowers, financial aid advisers and advocacy organizations are unsure about what comes next. "A lot of what we're hearing is what everyone is hearing," Megan Walter, senior policy analyst with the National Association of Student Financial Aid Administrators, told UPI. "'What is actually happening? Can they actually do this? What does it mean for student loans and Pell grants?' These are questions we don't have answers for." Student loan borrowers hold nearly $1.8 trillion in federal and private student loan debt in the United States. Repayment plan applications down A federal court in Missouri has issued an injunction blocking the U.S. Department of Education from administering the SAVE Plan and parts of other Income Driven Repayment plans. The SAVE Plan is not the only plan that has been disrupted. Income-Based Repayment, Income Contingent Repayment, Pay As You Earn and Revised Pay As You Earn plans are also suspended. The SAVE Plan was the most inexpensive repayment plan offered by Federal Student Aid. Borrowers under this plan have been in forbearance since August due to the litigation against it. On Jan. 15, days before Trump was sworn into office, the Department of Education published an update on the SAVE Plan, noting that borrowers will remain in 0% interest forbearance until the fall of 2025. The Department of Education has updated its guidance to say that payments will not resume until December at the earliest. For borrowers working toward Public Service Loan Forgiveness, time spent in forbearance does not count toward loan forgiveness. "There were already 8 million people enrolled in SAVE," Aissa Canchola Bañez, policy director of the Student Borrower Protection Center, told UPI. "We also know there are 40 million-plus borrowers that have student loan debt. Many are already struggling with rising costs across the board. We knew we had a backlog of around 1 million applications before the Trump administration removed the online application." "We are hearing from borrowers every day who are terrified of the fact they could potentially see payments spike or just cannot afford to keep up with their payments," she continued. The American Federation of Teachers labor union filed a lawsuit against the Department of Education last week for blocking access to income-driven repayment applications. The lawsuit argues that this puts borrowers at risk of defaulting on their loans and denies public service workers from working toward student loan forgiveness. The Trump administration has not given notice of when applications will be available online again. It has also not offered guidance about what will happen to borrowers who are enrolled in the SAVE Plan. Plans of action As borrowers wait for new developments on income-driven repayment plans, such as the return of online applications, Bañez suggests taking steps to ensure repayment progress is protected. "The advice we have been giving to borrowers is to protect yourself," she said. "Do this by going into the [Federal Student Aid] web portal. Download payment history. Take screenshots of IDR forgiveness. Save that information into your records and have that handy for if there are any major changes made that could result in any of that information being lost." Borrowers are also advised to contact their loan servicer to better understand what relief or assistance may be available to them. One lesser-known option, according to Bañez, is casework assistance offered by members of Congress. Borrowers can contact their representatives and senators demanding casework assistance if they are experiencing issues with federal student loans or loan servicers. This includes difficulty contacting loan servicers, errors with credit reporting, lost paperwork or loan information and problems filing applications. "Take advantage of this tool, reach out to your members of Congress and request casework assistance," she said. "Demand that they help." Borrowers may be able to get on hardship forbearance or a deferment if they are struggling to pay their loans at the time. Betsy Mayotte, president of the Institute of Student Loan Advisors, told UPI there is unlikely to be a repayment plan as inexpensive as the SAVE Plan for most borrowers. "They're going to have to try to budget for the next lowest repayment plan. It's probably Pay As You Earn of what's called the new IDR," she said. Education Department impact on student loans The potential ending of the Department of Education and shift of student loans to the Small Business Administration are not simple propositions. The Department of Education is a congressionally approved cabinet-level agency. Congressional action is required to abolish it. Partisan talk about dismantling the department has carried on for decades but this has not gained momentum with a majority of lawmakers historically. "If they change where the loans are serviced, and that is a big if, all that means is a different agency is overseeing the program," Mayotte said. "That doesn't change the terms and conditions of the loan." Mayotte explained that most of the day-to-day operations related to managing student loans is done by vendors or student loan servicers, not the Department of Education directly. "If the loans move, I don't expect there will be a big change in the day-to-day for student loan borrowers. I don't even expect there will be a database change," she siad. If changes in which department oversees student loans somehow invalidated the estimated $1.8 trillion in student debt, those changes would not be made, Mayotte added. "I expect that if that legal theory has any legs at all they're not going to move the loans," she said. "Or Congress will change the law." As for shifting the responsibility of student loans to the Small Business Administration, Walter expects it to be challenging. "The SBA is not set up to manage $1.8 to $2 trillion in federal student loans," Walter said. "Moving FSA to the Small Business Administration would be such a dramatic restructuring that it would come with a host of logistical and legal implications. It would require not only transferring the administration of aid over but oversight. There's no way it doesn't cause disruptions to students receiving their aid." Budget reconciliation House Republicans have a goal to cut trillions in federal spending through the process of budget reconciliation. They plan to cut about $300 billion from education spending. How the SAVE Plan ultimately ends will have major implications on how Congress cuts funding from other education services, Mayotte said. "We know SAVE is done. What we don't know is who is going to bury the body: the court or Congress" she said. "If it's Congress, that means Congress 'saved' $130 billion. If the court kills it, Congress has to find another $130 billion. Then I worry about other services." Paul Peterson, director of Harvard University's Program on Education Policy and Governance, told UPI there is much uncertainty over how Congress will move forward and how the judicial branch will react to the Trump administration's actions on education. The courts limited the Biden administration's plans for student loan forgiveness and debt relief with the Supreme Court affirming those limitations. Notably, President Joe Biden's attempt to grant broad student loan forgiveness was through executive order. "There's a lot of variation of opinion among the conservative side of the Supreme Court," Peterson said. "The Supreme Court recently decided that if it's a major issue, the executive branch cannot change policy. It has to be done by statutory enactment if it's a major policy issue. That placed important limits on the Biden administration." "'They said you don't have the power to do this. This belongs to Congress,'" Peterson continued. "If the Supreme Court said that in the case of the Biden administration, are they going to turn around and rule differently in the case of the Trump administration?"
