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Business Insider
2 days ago
- Business
- Business Insider
Major student-loan repayment changes are one step closer for parents, grad students, and millions more borrowers
Millions of student-loan borrowers could see major changes to their repayment plans under the Senate's new education spending proposal. On Tuesday, Sen. Bill Cassidy — chair of the Senate education committee — unveiled the education portion GOP lawmakers are seeking to include in President Donald Trump's spending bill. After the House passed its version of the sweeping spending legislation in late May, the Senate is now moving forward with its own amendments to the legislation before aiming to get it passed this summer. Some elements of the legislation are the same as the ones that the House passed, like condensing existing income-driven repayment plans, while other areas, like caps on loans for parents and graduate students, have changed. "We need to fix our broken higher education system, so it prioritizes student success and ensures Americans have the skills to compete in a 21 st century economy," Cassidy said in a statement. "President Trump and Senate Republicans are focused on delivering results for American families and this bill does just that." The Senate's bill proposes eliminating existing income-driven repayment plans, including PAYE, income-contingent repayment, and former President Joe Biden's SAVE plan, and replacing them with two new plans. The first plan — the standard repayment plan — allows borrowers to make fixed payments for 10-25 years based on the original amount they borrowed, while the second plan — the repayment assistance plan — sets payments at 1-10% of a borrower's income with a minimum monthly payment of $10. The plan would waive unpaid interest, and any remaining balance would be forgiven after 30 years. This matches the House's proposal, and if signed into law, it would mean borrowers would have fewer options to repay their loans under less generous terms than the existing plans. The bill also proposes some new changes to loan limits. It would eliminate graduate PLUS loans, which allow graduate students to cover up to the full cost of attendance, cap unsubsidized loans for graduate school, like a master's degree, at $20,500 per year, and cap professional loans, like law school, at $50,000 per year. It would also cap parent PLUS loans at $20,000 per student per year, and eliminate loan deferment for economic hardship and unemployment. Some advocates expressed concern with the proposed caps on borrowing. Melanie Storey, president and CEO of the National Association of Student Financial Aid Administrators, said in a statement that "there are several concerning aspects of this bill that would ultimately make college less affordable for students." Those include "the elimination of the Grad PLUS loan program, the elimination of deferment options for student loan borrowers facing economic hardship or unemployment, and new limits imposed on the Parent PLUS loan program that may drive borrowers to riskier private loans, which are not available to all borrowers," Storey said. The legislation could still face changes before it goes to the Senate floor for a vote. More broadly, millions of student-loan borrowers are facing a slew of other changes to the student-loan system. Trump restarted collections on defaulted student loans on May 5, and while the administration said it would pause Social Security garnishment, it still expects to begin wage garnishment for defaulted borrowers later this summer. Sameer Gadkaree, president of The Institute for College Access and Success, said in a statement that the GOP spending bill could add to challenges of the collections restart by "making student debt much harder to repay" and "unleashing an avalanche of student loan defaults."
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
Washington Post
13-03-2025
- Business
- Washington Post
Federal student loan site down Wednesday, a day after layoffs gutted Education Department
WASHINGTON — An hours-long outage Wednesday on the federal website for student loans and financial aid, underscored the risks in rapidly gutting the Department of Education , as President Donald Trump aims to dismantle the agency . Hundreds of users reported FAFSA outages to Downdetector starting midday Wednesday, saying they were having trouble completing the form, which is required for financial aid at colleges nationwide. The National Association of Student Financial Aid Administrators, a group of people who handle colleges' financial aid awards, also received reports of users experiencing technical issues and having trouble completing the FAFSA .
Chicago Tribune
29-01-2025
- Business
- Chicago Tribune
Despite chaos over Trump White House's funding pause, FAFSA forms and student loans still available
A temporary freeze imposed briefly this week by the White House on federal grants and loans left many students wondering about the impact to the FAFSA form used to apply for financial aid. President Donald Trump's administration on Wednesday rescinded the memo freezing spending. The U.S. Department of Education said even if the pause had taken effect, it would not have applied to direct assistance to Americans including federal student loans. And FAFSA apparently remained available during the confusion. The National Association of Student Financial Aid Administrators, a nonprofit membership organization, said Wednesday it had not received complaints about FAFSA availability from administrators at any schools. Still, many borrowers were asking online if the FAFSA was affected. Is the FAFSA form paused? No. Student loans, Pell Grants and other forms of student aid provided directly to individuals were not affected by the freeze. The Free Application for Federal Student Aid application itself is available for students to complete at 'We continue to award and disburse federal student aid, ″ the Federal Student Aid Office of the U.S. Department of Education says in a statement on its website. FAFSA applications for the 2024-2025 academic year are due June 30, after which the application will be unavailable on the student aid website. Colleges can have their own deadline and often require applications be submitted before the federal deadline in the summer. How were college students affected by the Trump administration's funding pause? Colleges across the U.S. released statements saying the impact of the memorandum was unclear and they were working to better understand how it could affect students, staff and programs. But students who rely on financial aid to pay for tuition and other costs were not expected to see any disruptions from the pause. 'Funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused,' the U.S. Office of Management and Budget said in a statement.
The Hill
29-01-2025
- Business
- The Hill
Despite chaos over Trump White House's funding pause, FAFSA forms and student loans still available
A temporary freeze imposed briefly this week by the White House on federal grants and loans left many students wondering about the impact to the FAFSA form used to apply for financial aid. President Donald Trump's administration on Wednesday rescinded the memo freezing spending. The U.S. Department of Education said even if the pause had taken effect, it would not have applied to direct assistance to Americans including federal student loans. And FAFSA apparently remained available during the confusion. The National Association of Student Financial Aid Administrators, a nonprofit membership organization, said Wednesday it had not received complaints about FAFSA availability from administrators at any schools. Still, many borrowers were asking online if the FAFSA was affected. Is the FAFSA form paused? No. Student loans, Pell Grants and other forms of student aid provided directly to individuals were not affected by the freeze. The Free Application for Federal Student Aid application itself is available for students to complete at 'We continue to award and disburse federal student aid, ″ the Federal Student Aid Office of the U.S. Department of Education says in a statement on its website. FAFSA applications for the 2024-2025 academic year are due June 30, after which the application will be unavailable on the student aid website. Colleges can have their own deadline and often require applications be submitted before the federal deadline in the summer. How were college students affected by the Trump administration's funding pause? Colleges across the U.S. released statements saying the impact of the memorandum was unclear and they were working to better understand how it could affect students, staff and programs. But students who rely on financial aid to pay for tuition and other costs were not expected to see any disruptions from the pause. 'Funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused,' the U.S. Office of Management and Budget said in a statement. ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
