Latest news with #SavingforaValuableEducation
Chicago Tribune
3 days ago
- Business
- Chicago Tribune
Terry Savage: Grace period on student loan repayment is over
Student loans have been looming in the background for more than five years, ever since payment requirements were suspended during the pandemic. During that five-year period, borrowers had several opportunities to reorganize their debts, based on more generous income provisions, to lower the monthly payments. Many took advantage of those plans, and resumed their payments at a lower level. But others simply ignored that huge cloud of debt, since it was not accruing interest during the suspension, until fall of 2023 when interest started accruing again. Of the nearly 43 million people who owe money, only about one-third have made regular payments, according to the Department of Education. At least 5 million borrowers are considered to be in default — not having made a payment in nine months. Millions more are expected to fall into default in the coming months as they are made aware of the repayment restart. Until now, the government did not institute collection procedures. But that grace period ended May 5. And the repayments are coming back with a vengeance. The headline that has shocked many borrowers is the fact that the government is now using its power to grab any tax refunds and other federal benefits, or even Social Security benefits (in the case of co-signing parents). Even more scary, the administration will start the process of garnishing wages on defaulted loans! And default will impact your credit score. All delinquent borrowers should have received an email notifying them of their status. But it's entirely possible that the Department of Education has lost track of your contact information — although not of your Social Security number! It's up to you — the borrower — to make sure that your information is updated. Do that at where you will use your original FSA ID number to sign in. There you can find not only the status of your loans but also who your current servicer is. Most student loans have changed servicing companies at least once, if not several times, since you graduated and first made your repayment plans. It is critical that you get in touch with the company servicing your loan to at least make sure they have your contact information. The next steps depend on whether you can now afford to make the full required monthly payment. For most people that will be quite a chore. But there are still plans (though less generous than two years ago) to help you deal with those payments and create reductions — if you act promptly. At you can learn about and apply for the remaining income-driven repayment plans for which you might qualify. Note that Parent Plus loans might also qualify for income-driven repayment plans, but only after the loans are consolidated. The previous administration's popular Saving for a Valuable Education (SAVE) plan is no longer available because of court challenges to its generous terms. But borrowers can still get into the PAYE (Pay as You Earn) plan, in which payments are capped at 10% of a borrower's income. And if you're able to pay more and want to pay down the loan faster, check out the Income-Contingent Repayment plan. Since these income-based plans are calculated based on family size and your discretionary income, you must recertify each year. Thus, if you are currently on an income-driven plan, it might also be time to recertify at There are several other alternatives for dealing with your student loans. Forbearance is still a possibility to temporarily stop payments or make substantially lower ones. But that won't make the problem go away — and interest continues to accrue. Graduated payment plans can help those whose incomes should rise in the future. And deferment is another possibility in case of extreme hardship. At you can compare the impact of those plans over the long run. And Public Service Loan Forgiveness remains in place, though the Trump administration is already limiting the jobs that are considered public service. Congress is now considering substantial changes to the various student loan plans, including doing away with 'subsidized' loans, which do not accrue interest while the student is still in school. Also on the potential chopping block are graduate student loans. In fact, the administration is even talking about ending or reorganizing the entire Department of Education. But that's not your immediate concern. The real challenge now is figuring out a repayment plan for your current loans. It's tempting to try to forget they exist. But the government is going to find you. And you'll have a lot more options if you find them first — and make an attempt at repayment. And that's The Savage Truth.
Yahoo
25-02-2025
- Business
- Yahoo
Income-Driven Repayment Plans: What to Know
Advocates display a hand-painted sign on the Ellipse in front of The White House on June 15, 2021. Credit - Paul Morigi—We TheThe future of income-driven repayment (IDR) plans is in doubt after the Department of Education shut down applications on Friday. The decision to cease applications came after the 8th Circuit Court of Appeals upheld a temporary block of the Saving for a Valuable Education (SAVE) plan on Feb. 18, siding with a coalition of Republican-led states that sued to block the program. 'A federal court issued an injunction preventing the U.S. Department of Education from implementing parts of the Saving on a Valuable Education (SAVE) Plan and other IDR plans,' a notice at the top of the federal student aid site reads. Read More: How Schools Are Navigating Trump's Immigration Policies The change has put the 8 million borrowers enrolled in SAVE, and others enrolled in one of three other IDR plans, in limbo. The SAVE plan was touted as the 'most affordable repayment plan' by the Biden Administration as, similar to other IDR plans, SAVE personalized borrowers' monthly student loan payments to their income and family size. SAVE borrowers who made less than $15 an hour, for instance, had a $0 monthly payment towards their student loans—which an estimated 4.6 million SAVE borrowers qualified for. The program also promised borrowers who took out $12,000 or less in student loans forgiveness after a decade of payments. Still, it is unclear how the 8 million SAVE borrowers will be affected under the Trump Administration. The Department of Education did not immediately respond to a request for comment on how the court injunction would affect SAVE borrowers, and those on other IDR plans. Prior to the most recent court decision, SAVE borrowers were enrolled in general forbearance, meaning they did not have to make any monthly payments and interest was not accruing on their loans. The Office of Federal Student Aid predicted that they would be unable to calculate accurate monthly payments for borrowers until September 2025, according to the Education Department information page that was last updated in January. The Department of Education previously stated that all forgiveness promised for borrowers enrolled in an income-driven repayment plan was enjoined. Student loan advocates have little hope for forgiveness under the Trump Administration, as some organizations have claimed that the actions taken go beyond what the court legally required. 'Shutting down access to all income-based repayment plans is not what the 8th Circuit ordered—this was a choice by the Trump Administration and a cruel one that will inflict massive pain on millions of working families,' said Student Borrower Protection Center Deputy Executive Director and Managing Counsel Persis Yu, in a Monday statement. Contact us at letters@
Yahoo
19-02-2025
- Business
- Yahoo
Was SAVE Just Dealt Its Final Blow? What the Latest Court Decision Means for Student Loan Borrowers
It looks like the end of the line for SAVE after a US appeals court blocked the student loan debt relief program. The Eighth Circuit Court of Appeals ruled Tuesday that former President Joe Biden's administration exceeded its authority by designing the Saving for a Valuable Education plan to largely forgive loans rather than requiring borrowers to repay them. While the plan was stuck in limbo, borrowers had been told their payments would likely remain on pause until December. This week's ruling could change that. "Now that the SAVE repayment plan is blocked by the appeals court, the interest-free forbearance will end, probably within a few months," said student loan expert Mark Kantrowitz. SAVE, which offered millions of borrowers lower monthly payments and a shorter timeline for loan forgiveness, was challenged by Republicans after its launch in 2023. President Donald Trump has made it clear he isn't a fan of broad student loan forgiveness, and experts don't expect him to defend the plan. If you're worried about the fate of your student loans, here's what you need to know. The Biden administration launched SAVE with an executive order in August 2023. It lowered monthly student loan payments and offered multiple paths to forgiveness. Seven Republican-led states, opposed to broad student loan forgiveness, sued to block the plan, saying the Department of Education overstepped its authority by modifying the existing student loan repayment plan that had been approved by Congress. A federal court issued an injunction in 2024 that prevented the department from using the SAVE plan to forgive loans that had earned forgiveness under the SAVE, Pay As You Earn (PAYE) and income-contingent repayment (ICR) plans. It's unclear if SAVE borrowers will automatically be enrolled in a standard repayment plan, but the federal student loan website says eligible borrowers may now enroll in PAYE and ICR Plans. The timeline for rolling over loans is also unclear, although experts predict borrowers will likely have 90 days or less to move to another plan. "If you're currently enrolled in SAVE, my advice is to stay informed and proactive," said Ken Ruggiero, CEO of Ascent Funding, a private student loan lender. "While legal challenges unfold, your loan servicer should continue processing payments as usual." Even though SAVE is gone, there are still options for borrowers seeking relief, according to Kantrowitz. "[Income-base repayment plans] and PAYE continue to forgive the remaining debt after 25 and 20 years of payments because the forgiveness appears in the statutory language," he said. However, not all SAVE borrowers will be eligible to enroll in other income-driven repayment plans. It's a smart idea to review alternative repayment options using the student loan simulator from You'll be able to compare different payment plans and get an idea of what your new monthly payment will look like. If you're in the Public Service Loan Forgiveness Program and close to meeting the 120 payments required for forgiveness, consider enrolling in the PSLF Buyback program. Eligible borrowers can make up payments that were skipped during forbearance. More changes to student loans could be on the way as Trump has called for eliminating the Department of Education entirely. For now, keep an eye out for emails from the student aid office and your servicer, and check for updates.
