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CNBC
18-07-2025
- Politics
- CNBC
Supreme Court allows Trump to proceed with Department of Education layoffs—what it means for student loan borrowers
The Supreme Court handed a victory to President Donald Trump on Monday, allowing the administration's massive layoffs at the Department of Education to remain in effect. In March, the department laid off around 1,400 staffers as part of Trump's broader efforts to ultimately dismantle the agency, which he cannot do without congressional action. In May, a federal judge in Massachusetts placed an injunction on the layoffs, arguing that the reduction in force would inhibit the agency from carrying out its congressionally mandated duties, including administering financial aid, supporting students with special needs and maintaining civil rights. The Supreme Court's decision to lift the injunction came without an explanation, although Justices Ketanji Brown Jackson, Elena Kagan and Sonia Sotomayor issued a 19-page dissent. Secretary of Education Linda McMahon praised the Supreme Court's decision, calling it a "win for students and families" in a press release. She insisted the department will still be able to carry out its necessary functions. "As we return education to the states, this Administration will continue to perform all statutory duties while empowering families and teachers by reducing education bureaucracy," McMahon said in the statement. Some education stakeholders may already be feeling the impact of the agency's downsizing. In May, a survey of 900 educational institutions conducted by the National Association for Student Aid Administrators found widespread issues with financial aid administration following the layoffs. Over 40% of institutions surveyed reported delays, unresolved inquiries and miscommunications in regards to federal student aid. In response to the Supreme Court ruling, NASFAA expressed concerns over the department's ability to continue supporting institutions, students and families. "Our students and our members need clarity and reliable support for these critical [financial aid] programs," Melanie Storey, NASFAA president and CEO said in a statement. "At the end of the day, the Trump administration — all administrations — must deliver on the promise and the programs that Congress passed to support students who wish to pursue postsecondary education." The decision to keep the layoffs in place also comes at a time when millions of current student loan borrowers may be trying to change their payment plans. The Department of Education recently announced that interest will resume accruing for borrowers enrolled in the Saving on a Valuable Education income-driven repayment plan. Borrowers who want to avoid ballooning interest need to either make interest payments — which will be around $300 a month for a typical borrower, according to Student Borrower Protection Center estimates — or switch into another payment plan. The layoffs could make it difficult for borrowers to get the support they need when exploring their repayment options, Abby Shafroth, managing director of advocacy at the National Consumer Law Center, told CNBC Make It in February. "I think there's a real question about whether [Department of Education] call centers will be either shut down entirely or dramatically scaled back, which could mean no access to getting a human on the phone to help talk through your financial aid or your payment options, or to troubleshoot when something goes wrong," she said. The department is dealing with a backlog of income-driven repayment plan applications preventing current federal student loan borrowers from enrolling in affordable payment plans. At the end of June, over 1.5 million borrowers were awaiting IDR application processing, according to a court filing. That figure is just 4.5% lower than the number of pending applications the department reported at the end of May. The agency maintains that the backlog is due to President Joe Biden's administration pausing processing on these applications. But Federal Student Aid, the arm of the Education Department that manages the federal student loan program, lost around half of its staff from a combination of buyouts offered ahead of the mass layoffs and the March reduction in force, NPR reported that month.
Time of India
25-06-2025
- Business
- Time of India
International students in US could bear the brunt as universities face steep federal aid cuts
As federal funding cuts and policy changes loom, US colleges are preparing for major shifts in how they offer financial aid to local and international students . Aid officials across the country are warning that institutional aid budgets may shrink, raising out-of-pocket costs and threatening access for many students, Times Higher Education reports. The warning comes as financial aid administrators gather in Anaheim, California, for the annual National Association of Student Financial Aid Administrators (NASFAA) conference. The atmosphere at the event is marked by uncertainty. Lawmakers are moving ahead with a proposal to overhaul federal student aid policies, including cuts to Pell Grants, loan caps for graduate students, and the elimination of programs like TRIO that support college access. 'Financial aid budgets thrive on predictability,' said NASFAA president Melanie Storey. 'Right now, that's in short supply.' She added that students 'will be expected to pay more for college' if the cuts move forward. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 23.7% Returns in last 5 years with Shriram Life's ULIP Shriram Life Insurance Undo Financial aid officers from both public and private colleges told Inside Higher Ed that they are already planning for possible reductions. At some institutions, offers made to incoming students for the fall are now uncertain. One senior official at a public research university, speaking anonymously to Times Higher Education, said, 'I think some vulnerable student populations are really going to suffer, or may not be able to attend at all.' (Join our ETNRI WhatsApp channel for all the latest updates) Colleges are not just facing aid cuts. They are also dealing with losses in research funding and possible reductions in state support. In Maine, a free community college program may end after just three years due to budget constraints. Across states, similar aid initiatives could face rollbacks. Live Events MORE STORIES FOR YOU ✕ What are 'digital undertakers' and why you might need one before a US visa application Indian students bare their digital souls to win US visas Social media scans for student visas: The platforms US wants to monitor, and what they're looking for « Back to recommendation stories I don't want to see these stories because They are not relevant to me They disrupt the reading flow Others SUBMIT In Washington, Congress is also considering raising the tax on large college endowments from 1.4% to 8%. Anne Harris, president of Grinnell College, said that the new tax would put pressure on even well-funded schools. 'We will try to keep our no-loan promise, but the strain on aid budgets will increase,' she said. Experts agree that financial aid offices now play a critical role in institutional planning. Some colleges may shift enrolment strategies, such as admitting more out-of-state or international students, to increase revenue. However, that approach is also complicated by tighter immigration policies. For students, this could mean smaller aid packages or the need to turn to private loans.
Yahoo
20-05-2025
- Business
- Yahoo
Many Will Lose Access to Student Loan Forgiveness Programs If GOP Gets Its Way: See If You'll Be Affected
Student loan forgiveness has been a hot-button issue in the U.S., and the subject was a cornerstone of the Biden administration's efforts. Over the past several years, there has been an unprecedented amount of student loan forgiveness, which has brought significant financial relief to millions of Americans. Find Out: Try This: The National Association of Student Financial Aid Administrators (NASFAA) reported that former President Joe Biden approved student loan forgiveness for 5.3 million borrowers — a total of $188.8 billion. However, under the Trump administration and a GOP-controlled Congress, things are looking quite different. Here's what President Donald Trump and the GOP are looking to do to limit student loan forgiveness. At present, the Public Service Loan Forgiveness (PSLF) program offers student loan forgiveness to those working full-time for a government or not-for-profit organization and who have made 120 qualifying monthly payments under an accepted repayment plan. But Trump wants to make a significant change to the existing program. On March 7, 2025, Trump signed an executive order targeting the PSLF program. The order directs Linda McMahon, the current Secretary of Education, to revise the PSLF program to 'exclude from eligibility organizations that engage in activities that have a substantial illegal purpose.' The Trump administration claims that the program had been 'abused' by the Biden administration to forgive the loans of more than 1 million under the PSLF program. The intention of this order is to direct taxpayer funds used in the PSLF program towards more traditional, 'essential public service roles,' such as nursing, and away from any programs the administration considers ineligible. Ineligible organizations include those the Trump administration finds 'advance' causes such as 'radical' diversity, equity and inclusion (DEI) agendas. As of mid-May, there have not been any changes implemented to the existing PSLF program, but it remains to be seen if that will change. For You: House Republicans are also working to reform and limit pathways to student loan forgiveness. The House Education and Workforce Committee recently released a plan that, if implemented, would bring sweeping changes to existing student loan plans. If passed by Congress, student loan borrowers currently enrolled in an income-driven repayment (IDR) plan, such as SAVE, PAYE or the ICR plan, would have their plans terminated. Borrowers would be transitioned to an income-based repayment (IBR) plan, which has stricter terms. Depending on the plan, student loan borrowers with an IDR plan may receive loan forgiveness after 20 or 25 years of payment. The IBR plan, on the other hand, requires 25 years of payments and, Finger Lakes 1 reported, usually carries higher monthly payments — 10% to 15% of your discretionary income. To add, Parent PLUS loan borrowers would also be impacted. By eliminating the ICR plan, which is the only income-driven option for Parent PLUS loans, many could completely lose their pathway to forgiveness, if no other option is introduced. The impact on student borrowers remains to be seen, but many borrowers should prepare for an increased financial burden if these changes are implemented. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates The 5 Car Brands Named the Least Reliable of 2025 Sources National Association of Student Financial Aid Administrators, 'Biden Administration Announces 'Final' Student Loan Debt Relief Approvals.' House Education and Workforce Committee, 'Providing for reconciliation pursuant to 14, the Concurrent Resolution on the Budget for Fiscal Year 2025.' Finger Lake 1, 'Student loan forgiveness update: GOP moves to cut key programs.' This article originally appeared on Many Will Lose Access to Student Loan Forgiveness Programs If GOP Gets Its Way: See If You'll Be Affected Sign in to access your portfolio
Yahoo
29-04-2025
- Business
- Yahoo
Federal student loan collections to resume May 5. How Charlotte college students are preparing:
CHARLOTTE, N.C. (QUEEN CITY NEWS) – For the first time in five years, the U.S. Department of Education is starting collections on defaulted federal student loans. The process resumes on Monday, May 5. Finals are days away at UNC Charlotte – and so are collections on defaulted federal student loans. Current students get a six-month grace period, but some said they already have a plan to keep good credit like finance student Tanner Freeze. 'I have auto payment plans set up on all of my student loans and all of my anything that I have to pay, like my car loan, just to make sure that I avoid any of those potential issues in the future,' Freeze said. 'I just want to really kind of focus in and try to pay down as much as I can the first few years when I'm out of school to try to bring down as much of the principal as I can upfront so that I pay less over time.' Grad student Vanessa Jones studying kinesiology said she is getting ahead on paying back loans while she can. 'Paying back loans, I don't know, this is very scary,' Jones said. 'It's adulting, but it's scary.' Sarah Austin is a policy analyst for the National Association of Student Financial Aid Administrators (NASFAA). 'Defaulted student loan borrowers may now be subject to having federal payments such as better tax refunds or Social Security benefits, other federal payments – those will now potentially be withheld and applied to their defaulted student loans,' Austin said. The U.S. Department of Education said more than five million borrowers have not made a monthly payment in over 360 days and sit in default. Justin Howard is studying public health and said even though he is not directly impacted, his friend is. 'My friend, he's been kind of a little stressed out about it,' Howard said. 'It's really been something that's bothering him, but I've been doing my best to kind of support him and try to help him apply for scholarships and things like that.' Austin said you could be in default and might not know it – so be on the lookout for an email from the Department of Education. They should be sent out before May 5. 'There's so many borrowers that have never been in a normal repayment landscape. If they've entered repayment at any time in the last five years, they don't really know what the normal process is,' Austin said. 'I think it's quite reasonable to assume there are some defaulted student loan borrowers who may not even know they are in default until they miss maybe one of these payments or have their wages garnished.' Austin said this could impact your paycheck later this summer. Each individual situation can be different. To find out what could be withheld from you, visit NASFAA also has a toolkit to help you determine what to do when entering repayment for student loans. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
