Latest news with #SAVE
Newsweek
12 hours ago
- Business
- Newsweek
Map Shows States Where Student Loan Delinquency Is Increasing the Most
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. Student loan delinquency is rising across the country as President Donald Trump's administration makes major changes to the Department of Education. A new report from WalletHub found that Missouri, Hawaii and Vermont experienced the highest surge in student loan delinquency, while borrowers from Alaska, Delaware and Rhode Island saw some of the lowest delinquency rates. Why It Matters Borrowers are facing repayment after a multi-year student loan payment pause that began during the coronavirus pandemic. They are also navigating several changes under Trump's Education Department. The Saving on a Valuable Education (SAVE) plan, a Biden-era option that generally offered the lowest monthly payments, has been abolished. In place, the Department of Education is offering a revised 10-year standard repayment plan and a new Repayment Assistance Plan. Borrowers who find themselves delinquent on their loans could experience major impacts to their credit, affecting their ability to own a home, buy a car or even rent an apartment. What To Know The WalletHub study analyzed proprietary user data from Q4 2024 through Q1 2025 and discovered that the following 10 states saw student loan delinquency rates spike the most during that time: Missouri Hawaii Vermont West Virginia Arizona Michigan New Mexico Massachusetts Arkansas Kansas In Missouri, residents were delinquent on 59.6 percent more student loans in Q1 2025 than in Q4 2024. Not far behind was Hawaii, where residents were behind on payments for 53.8 percent more student loans in Q1 2025 compared to Q4 2024. This is despite the state ranking 51st among the states with the most student debt. Vermont also experienced a significant uptick in student loan delinquency, even though it ranks 37th among the states with the most student debt. This could mean excessive borrowing is less likely to be the culprit for the rising rates, according to WalletHub. At the bottom of the list were Alaska, Delaware and Rhode Island, where borrowers tended to be in better shape. Graduates, faculty, and family gather in Harvard Yard on May 28, 2025, in Cambridge, Massachusetts. Graduates, faculty, and family gather in Harvard Yard on May 28, 2025, in Cambridge, People Are Saying WalletHub editor John Kiernan said in the report: "Being delinquent on student loans has the potential to ruin your finances and your credit score, but if you've only recently become delinquent you do have time to get back on track. Federal student loans don't get reported to the credit bureaus as delinquent until you're 90 days behind on payments, though private loans may report delinquency after as few as 30 days. If you're having trouble paying, it's important to contact your lender as soon as possible to try to work out a solution." Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "What will either surprise—or perhaps not surprise—so many with this list is there aren't any state trends. From West Virginia to Hawaii, a diverse group of socioeconomic states are all seeing increasing levels of delinquency. It's an incredibly worrisome sign, as it points not just to the general struggles with cost of living we know are already in place, but also the feeling for more student borrowers of hopelessness and the desire to simply give up." Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "Defaults seem to spread across all states, which may point to evidence that the driver of student loan delinquency is not the overall economy, it's your own personal economy. The repercussions of holding a delinquent loan are real. It affects your credit score which cascades into multiple areas, including future home and auto loans, your ability to lease a rental property, and rates on personal insurance." What Happens Next As the Department of Education continues to update its loan repayment programs, borrowers are unlikely to see proposals for student loan forgiveness that became prevalent under the Biden administration. "The student debt they accumulated isn't going away, and delinquency could result in wage garnishing and a deeper financial burden," Beene said.
Newsweek
15 hours ago
- Politics
- Newsweek
Student Loans Update: Trump Admin Touts Forgiveness in ICE Recruitment Push
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. In an effort to attract more recruits, United States Immigration and Customs Enforcement (ICE) is touting its student loan forgiveness program, along with up to $50,000 in signing bonuses. Homeland Security Secretary Kristi Noem said the benefits were possible because of the One Big Beautiful Bill Act (OBBBA), but loan forgiveness has been the agency's policy since the Biden administration, which expanded repayments in an effort to attract new agents. Why It Matters Touting student loan forgiveness for ICE recruits comes as the Trump administration has sought to overturn former President Joe Biden's student loan forgiveness policies, some of which are on hold because of legal proceedings. The Department of Education has said it needs to reevaluate how it will restart the programs, if at all. Federal agents, including members of ICE, patrol the halls of immigration court at the Jacob K. Javitz Federal Building on July 24, 2025, in New York City. Inset: President Donald Trump on an ICE recruitment... Federal agents, including members of ICE, patrol the halls of immigration court at the Jacob K. Javitz Federal Building on July 24, 2025, in New York City. Inset: President Donald Trump on an ICE recruitment campaign poster. More/DHS What To Know The Department of Homeland Security (DHS) said Tuesday that it launched its recruitment campaign to seek out "brave and heroic Americans" to enforce immigration laws, specifically arresting and detaining suspected illegal immigrants. Under the OBBBA, ICE has been allowed to hire thousands more agents and offer signing and retention bonuses to deliver on President Donald Trump's promise of mass deportations. While student loan repayment and forgiveness programs are not new and apply to many federal government workers, the offer could be appealing at a time when more widespread programs have been put on hold. The Biden-era plans—SAVE, Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE)—are on hold as of July because of court challenges regarding claims that Congress overstepped its authority by offering student loan forgiveness. When Trump's reconciliation bill was signed into law in early July, warnings were raised about the impact on college graduates, with the Student Debt Crisis Center saying that about 45 million Americans could be impacted by adjustments to various programs, as well as new repayment plans and caps on loans. As for ICE, the agency has been empowered by the Trump White House to take bolder action on immigration enforcement, with a sharp rise in detentions under the previous budget and larger, targeted actions in communities across the U.S. Despite this, there has also been pressure to drastically increase deportation numbers, with the new budget likely to aid the effort once staffing is increased. What People Are Saying Homeland Security Secretary Kristi Noem, in a press release: "Your country is calling you to serve at ICE. In the wake of the Biden administration's failed immigration policies, your country needs dedicated men and women of ICE to get the worst of the worst criminals out of our country." President Donald Trump, on Truth Social: "We need MORE courageous men and women to, MAKE AMERICA SAFE AGAIN. Join ICE now. We will take GREAT care of you, just like you take care of us!" What Happens Next DHS said recruitment materials would be distributed across major U.S. cities, with recruitment fairs and college campuses also targeted.
Time of India
15 hours ago
- Business
- Time of India
Student loan interest resumes on August 1: What 7.7 million SAVE plan borrowers need to know
Student loan interest under SAVE plan to resume August 1 onwards. From August 1, interest will start accruing again on federal student loans under the SAVE repayment plan, affecting more than 7.7 million borrowers across the United States. The move comes after nearly a year-long pause in interest, prompted by legal challenges and policy uncertainty surrounding the Biden-era student loan reform. With SAVE now set to be phased out over the next few years, and new repayment rules in place, borrowers must reassess their repayment strategies to avoid unexpected debt growth. Why interest is returning The Education Department had paused interest and payments for SAVE borrowers in response to lawsuits challenging the legality of the program. But a court injunction has forced the department to resume charging interest, even though borrowers are not yet required to resume monthly payments. This means that while SAVE enrollees can remain in the plan for now, their balances will start increasing due to accumulating interest, starting August 1. The SAVE plan is being phased out The SAVE plan, introduced in 2023 as a more generous income-driven repayment (IDR) option, is being formally ended under a new tax law signed this month. Under the new law: New borrowers won't be allowed to join SAVE after July 1, 2026 . Existing enrolees will be required to exit the plan by July 1, 2028 . This phase-out could happen even sooner if federal courts rule against the program in the ongoing lawsuits filed by Republican-led states. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like When Knee Pain Hits, Start Eating These Foods, and Feel Your Pain Go Away (It's Genius) Read More Undo What repayment options will replace SAVE? Two new plans are being introduced to replace SAVE for future borrowers: The Standard Plan will stretch payments across 10 to 25 years, based on how much the borrower owes. Those with lower debt will repay over a shorter period, while high-debt borrowers may have terms extending to 25 years. The Repayment Assistance Plan (RAP) will base payments on total income, ranging from 1 to 10 percent. Unlike SAVE, this plan introduces a minimum payment of $10 per month and eliminates the zero-payment option for low-income borrowers. It also offers partial interest waivers and small monthly forgiveness, but full forgiveness will only be granted after 30 years of repayment. What should current SAVE borrowers do? Current borrowers have a few options. They can continue under SAVE for now but should be aware that interest will now grow even if payments are postponed. Borrowers nearing forgiveness thresholds—especially under public service programs—may benefit from switching to a different plan to keep progressing toward cancellation. Alternatives like Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) remain open for now. However, after July 2028, only IBR will be available to those who remain in the federal loan system. For public service workers pursuing loan forgiveness Borrowers working in public service or nonprofit sectors and aiming for forgiveness through the Public Service Loan Forgiveness (PSLF) program need to ensure they are in a qualifying repayment plan. Months spent in SAVE's forbearance do not currently count toward PSLF. However, the Department of Education is offering a 'buyback' option that allows borrowers to retroactively earn PSLF credit by making a lump-sum payment for those missed months. This option may be particularly relevant for those nearing the 120-payment requirement. What borrowers should do now Borrowers are encouraged to check their loan status on and consider switching to a more stable repayment plan if SAVE no longer aligns with their financial goals. Those who submitted IDR applications between July 2024 and April 2025 may need to resubmit their forms due to technical and legal changes. There is also a backlog of over 1.5 million IDR applications, which may slow down processing times. Being proactive now can help avoid higher interest charges and delays in receiving credit toward loan forgiveness. In summary The return of interest on August 1 marks a turning point for the SAVE plan and its borrowers. With the program's future now limited, understanding available alternatives and acting early can help borrowers manage repayment more effectively and avoid unexpected debt accumulation in the coming years. TOI Education is on WhatsApp now. Follow us here . Ready to navigate global policies? Secure your overseas future. Get expert guidance now!
CNBC
16 hours ago
- Business
- CNBC
38-year-old woman has already waited eight months in a 65,448-person backlog for Public Service Loan Forgiveness
Katy Punch has worked as a librarian in North Carolina for more than a decade — a stretch of time that makes her eligible to get her federal student debt excused under the Public Service Loan Forgiveness program. PSLF, which President George W. Bush signed into law in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 120 payments, or 10 years. However, recent changes to the student loan system have made it difficult, if not impossible, for public servants to access that relief. Under the Biden administration, Punch, like millions of other borrowers, enrolled in the Saving on a Valuable Education repayment plan. But when SAVE became mired in political challenges brought by GOP-led states, Punch's monthly loan payments were paused in a forbearance during the summer of 2024 — and, along with it, her progress towards PSLF. More from Personal Finance:Trump's 'big beautiful bill' includes these key tax changes for 2025Student loan bills to double for some borrowers as Biden-era relief expiresWhat a Trump, Powell faceoff means for your money The timing for Punch couldn't have been more frustrating: When the Biden administration put SAVE borrowers into forbearance, she was just five payments away from getting her roughly $30,000 student debt balance wiped away. But her loans have now been in the SAVE forbearance for around a year. "It feels like I'm having the rug pulled out from under me when I was so close to the finish line," said Punch, 38. The Biden administration created a program that should have been perfect for people like Punch: PSLF Buyback. The opportunity allows borrowers who've hit 120 months of qualifying employment to submit a request to the Education Dept. to retroactively pay for any months they missed because of a forbearance or deferment. However, buyback applications have piled up under the Trump administration. Punch submitted her buyback request in November. Around eight months later, she still hasn't heard anything. "I will gladly pay the five months, but the Department of Education will not let me," Punch said. Tens of thousands of borrowers find themselves stuck in the same predicament as Punch. Roughly 65,448 PSLF buyback requests were pending with the U.S. Department of Education as of the end of June, according to recent court documents. The bottleneck has only worsened since May, when close to 59,000 applications were under review by the Trump administration. "The Biden Administration introduced the Public Service Loan Forgiveness buy-back program to allow borrowers to 'buy' eligibility into the program — weaponizing a legal discharge plan for political purposes," said Ellen Keast, deputy press secretary at the Education Dept. "The Department is working its way through this backlog while ensuring that borrowers have submitted the required 120 payments of qualifying employment," Keast said. The numbers show that PSLF and the buyback option are "functionally unavailable," said Randi Weingarten, president of the American Federation of Teachers. (The Education Dept. has regularly shared the data on pending buyback requests as part of a lawsuit AFT filed against it. The teacher's union alleges the agency is blocking borrowers from their rights.) "It is clear that this administration has no intention of helping working people," Weingarten said. The backlog means that borrowers who believe they're entitled to student loan forgiveness are still stuck carrying their debt and possibly making payments, said higher education expert Mark Kantrowitz. "It is inappropriate for the U.S. Department of Education to slow-walk the forgiveness," Kantrowitz said. At its current rate, it would take the federal government more than two years to process the current applications, he said, "even as the backlog continues to grow due to new applications." The Trump administration's mass terminations at the Education Dept. are to blame, at least in part, for the pileup, said Stephanie Sampedro, who used to work in the Federal Student Aid office at the agency. The department announced a reduction in force on March 11 that gutted the agency's staff by half. "With the layoffs, there are fewer staff to review, calculate buyback payments and process applications for borrowers," said Sampedro, who was part of those March terminations. "Waiting for debt relief hurts everyone," Sampedro added. "People are stressed and trying to plan for the future with total uncertainty." While the Education Department works through the buyback pileup, borrowers can either stay in the SAVE forbearance, where their debt will continue to accrue interest starting again in August, or enroll in another PSLF-eligible repayment plan where they're required to make monthly payments. Yet borrowers who believe they're eligible for loan forgiveness now — or, in Punch's case, since November — may not want to spend months switching into a new repayment plan and then making payments on a debt they shouldn't owe anymore. In the meantime, the delayed student loan forgiveness can trigger a cascade of financial consequences for borrowers, consumer advocates said. Research has found student loan payments make it harder for people to save for their futures, open businesses and start families. Recently, Punch feels like her life is on hold while she waits to hear if her debt will be excused. If the Trump administration forgives her loans, she said, she'd be able to save more for retirement and salt away money toward her child's education down the line. She could also finally get some of the repairs and needed improvements done on her house that she's put off because of her student debt. "I have dedicated my life to serving in public libraries," Punch said. "That something I earned has been delayed is really upsetting." Are you also waiting for student loan forgiveness under PSLF buyback? If you're willing to share your experience for a story, I'd love to hear from you at
Forbes
2 days ago
- Business
- Forbes
Student Loan Interest Jumps This Week For 7.7 Million Borrowers
UNITED STATES - MAY 21: Education Secretary Linda McMahon testifies during the House Appropriations ... More Subcommittee on Labor, Health and Human Services, Education, and Related Agencies hearing on the Department of Education's budget in Rayburn building on Wednesday, May 21, 2025. McMahon announced in July that the department would resume charging interest on student loans covered by the SAVE plan forbearance. (Tom Williams/CQ-Roll Call, Inc via Getty Images) Millions of federal student loan borrowers will see their interest rates jump this week as the Trump administration moves forward to end benefits for borrowers enrolled in the SAVE plan. For more than a year, nearly eight million borrowers who had enrolled in the SAVE plan have remained in a forced administrative forbearance due to a lawsuit brought by a coalition of Republican-led states. The involuntary forbearance, which has suspended monthly payments and set interest rates to zero since last summer, was put into effect after a federal appeals court issued an injunction blocking SAVE while the legal challenge proceeded. But following the Trump administration's announcement earlier this month that interest accrual will resume during the SAVE plan forbearance, millions of borrowers will see their rates jump from zero percent to the interest rates established by their loan promissory note, which could be anywhere from around five percent to more than eight percent. The Department of Education characterized the move as necessary 'to bring fiscal responsibility to the federal student loan portfolio" in a statement issued earlier this month. The student loan interest rate hike will go into effect on Friday, August 1. Here's what borrowers need to know. Department Of Education Blames Court Ruling For Student Loan Interest Resumption The Trump administration suggested that the resumption of interest for SAVE plan borrowers was the result of another recent court ruling in the ongoing litigation over the future of the program. 'The Department will take this action to comply with a federal court injunction that has blocked implementation of the SAVE Plan, including the Department's action to put SAVE borrowers in a zero percent interest rate status,' said the department in its prior statement. 'The Department had the authority under the SAVE plan to prevent borrowers from going into negative amortization, which is the authority the Department relied on to put borrowers in zero percent interest rate status. Outside of that regulatory provision in SAVE (which is enjoined), the Department lacks the authority to put borrowers into a zero percent interest rate status.' However, critics of the move argued that nothing in the recent rulings associated with the SAVE plan litigation requires that the department start charging interest again. And no court has ordered the department to do so. 'No court has ordered the Department to resume charging interest to borrowers in the SAVE forbearance,' said the Student Borrower Protection Center in an analysis after the department's announcement. 'On February 18, 2025, the U.S. Court of Appeals for the 8th Circuit upheld the District Court for the Eastern District of Missouri's preliminary injunction temporarily blocking the SAVE plan itself, and instructed the lower court to widen the injunction in accordance with its analysis. Nowhere in the 8th Circuit's opinion or order is there any discussion of the legality of the Department's temporary, interest-free SAVE forbearance.' Student Loan Payments For SAVE Plan Will Remain Paused For Now While interest will start accruing again on August 1 for federal student loans that are in the involuntary SAVE plan forbearance, borrowers still won't have to make payments, at least for the time being. 'Under this general forbearance, you don't have to make your monthly payments on your student loans,' says updated Department of Education guidance. But, 'interest does accrue, starting Aug. 1, 2025.' The time spent in the forbearance still won't count toward student loan forgiveness under income-driven repayment plans or Public Service Loan Forgiveness. That has been the case since last year, and that won't change once interest starts accruing again. The SBPC argued that even though payments aren't due, borrowers in the SAVE plan forbearance will still pay a price for the department's decisions to restart interest, as their overall balances increase over time. 'Nearly 8 million people will be charged $27 billion in interest charges each year,' said the SBPC in its analysis. 'Borrowers from working class families will bear the brunt of these costs. We estimate that over 40% of the borrowers who would be forced to pay interest while in forbearance make under 225% of the federal poverty line.' The SBPC also found that the lowest income borrowers will be charged more than $3,000 per year in interest as a result of the department's decision. Student Loan Borrowers In SAVE Plan Will Eventually Need To Switch While those in the SAVE plan forbearance don't yet need to make payments on their student loans, even as interest starts accruing again, these borrowers will eventually need to switch plans, as SAVE will not be returning. Earlier this month, President Trump signed the 'Big, Beautiful Bill,' reconciliation legislation that passed Congress on a party-line vote. The bill repeals SAVE, as well as the PAYE and ICR plans, by July 1, 2028. Prior to that date, borrowers will need to switch to a different repayment plan. For those borrowers who want to continue making payments based on their income, their only choices would be Income-Based Repayment, or IBR, which is the only current IDR option preserved by the bill; or, they will need to select the Repayment Assistance Plan, a new IDR program that the bill directs the Department of Education to create. While RAP retains some of the key benefits of the SAVE plan, such as a subsidy designed to prevent student loan balances from ballooning over time due to interest accrual, many borrowers will have higher monthly payments under RAP than they would have had under SAVE. And borrowers will have to make payments for far longer under RAP (in some cases, for an 10 additional years) before they can qualify for student loan forgiveness. So far, the Department of Education has not provided SAVE plan borrowers with concrete information on when they will need to select a different repayment plan. While the 'Big, Beautiful Bill' indicates that SAVE would be officially repealed by July 1, 2028, most observers expect the department to force borrowers to switch repayment plans much sooner than that, particularly if a federal court winds up striking down the program entirely. Options For Student Loan Borrowers Student loan borrowers in the SAVE plan forbearance who are concerned about the resumption of interest accrual have a menu of imperfect options. They can remain in the SAVE plan forbearance even while interest accrues, given that payments still aren't due. But that means that their student loan balances will start increasing again, which could increase their monthly payments once the forbearance ends if they opt out of income-driven repayment altogether. Alternatively, borrowers can make voluntary payments while in the SAVE plan forbearance to cut down on the interest accrual. But voluntary payments made while their student loans are in a forbearance status would still not count toward student loan forgiveness under both IDR and PSLF. Another option is changing to a different repayment plan, which the Department of Education is encouraging borrowers to do. 'The Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan – such as the Income-Based Repayment Plan,' said Secretary of Education Linda McMahon in a statement earlier in July. "Borrowers in SAVE cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress.' However, the department has also paused student loan forgiveness under the IBR plan, and has provided no timeline on when loan forgiveness processing will resume. Meanwhile, the department is contending with a massive backlog of more than 1.5 million IDR applications. The department has indicated that borrowers who apply online to switch IDR plans and utilize the IRS data retrieval tool to import their income information into the online application can expect faster processing, notwithstanding the backlog.
