Latest news with #SavingonaValuableEducation
Newsweek
9 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.
CNBC
13 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
CNBC
2 days ago
- Business
- CNBC
Federal student loans will still be a 'better bet' than private—even with coming changes, experts say
The question of whether college students should take out federal or private student loans to pay for their education may have just gotten harder to answer. That's due to a number of changes in President Donald Trump's so-called "big beautiful bill" that will affect many current and future federal student loan borrowers. The bill undoes several of the reforms President Joe Biden made during his time in office, such as protections for defrauded borrowers. It also eliminates repayment options and benefits like economic hardship deferrals that predate the Biden administration. Historically, federal student loans have generally been a better deal for borrowers, Kate Wood, a lending expert at NerdWallet, tells CNBC Make It. The coming changes won't necessarily make federal loans a "poor choice," she says, but the decision may not be as obvious as it once was. Lesley Turner, an associate professor at the University of Chicago Harris School of Public Policy, agrees. Turner has published several research papers on the role and impact of federal financing in higher education and previously served as an economic adviser within the Department of Education. "By reducing the available protections for federal student loans, all else equal, that does make private student loans more attractive," Turner says. If you're weighing private versus federal student loans to pay for your education, there are generally five major factors to consider. Here's a look at each. If you're enrolled at least part-time at an academic institution that participates in the federal direct loan program, you may be eligible to receive federal student loans. You must submit a Free Application for Federal Student Aid to see if you qualify, but there are no income limits. You must be a U.S. citizen or permanent resident, have a valid Social Security number, not be in default on another federal student loan and have a high school diploma or equivalent credential. Private student loans are subject to lender approval. It can be very difficult to get approved for a loan with poor or no credit history, but you can apply with a cosigner. You may have to meet enrollment, income and other eligibility requirements, depending on the lender. Currently, federal student loan borrowers have several options for repayment plans that best fit their needs. There's a standard repayment plan that keeps monthly payments fixed over the life of the loan and several income-driven repayment plans that are designed to make monthly payments affordable for lower-income borrowers. On the latter plans, borrowers have to certify their income annually, which can raise or lower monthly payments. Trump's policy bill narrows the number of available payment plans for future borrowers. Borrowers currently on the Pay as You Earn, Saving on a Valuable Education and Income-Contingent income-driven repayment plans will have to switch payment plans as the policy eliminates these options. But those borrowers will still have a standard and an income-driven repayment option. Private student loan terms can vary by lender and loan, Wood says. You'll typically have better options with federal loans as private loans typically don't offer income-driven payment plans. Repayment timelines are often shorter for private loans too, ranging from eight to 12 years, compared with up to 25 years for federal loans. All federal student loan interest rates are fixed for the life of the loan and determined by Congress each year. For the upcoming 2025-26 school year, they are 6.39% for undergraduate loans, 7.94% for graduate loans and 8.94% for parent and grad PLUS loans. Borrowers don't need a credit history to qualify and a good or bad credit score won't impact their interest rate. Undergraduate borrowers with demonstrated financial need have access to direct subsidized loans. With these loans, the federal government pays the interest while the borrower is in school and during certain deferment periods. Unsubsidized and subsidized loans have the same fixed interest rates. With private loans, however, your interest rate may be fixed or variable, depending on your loan terms. Lenders assign interest rates depending on the broader rate environment and borrowers' creditworthiness. It's feasible some creditworthy borrowers — or borrowers who have a cosigner with good credit — could get a better interest rate with a private loan. But it's fairly uncommon, Turner says. She cites a 2012 Consumer Financial Protection Borrower study — "the best evidence we have," she says — that found the average student loan borrower was always offered a higher interest rate from private lenders than the federal interest rate. A major advantage of federal student loans has been the economic hardship and unemployment deferments that allow current borrowers to pause their monthly payments for a limited period of time when experiencing certain financial hardships, Wood says. Currently, borrowers can receive economic hardship and unemployment deferments for up to three years and general forbearances for a maximum of 12 months at a time. However, Trump's policy reforms eliminate these options for future borrowers. Anyone who takes out loans after July 1, 2027 will be required to make monthly payments unless their loan servicer approves a general forbearance for situations like financial difficulties, medical expenses or changes in employment. The new policy will limit forbearances to a maximum of nine months in a two-year period. "On one hand, that's a lot worse than it used to be, but that's probably still better than what a lot of private lenders are going to offer you," Wood says. There's no law or regulation requiring private lenders to help you out if you fall on hard times while paying back your loan. Like credit card companies or other lenders, you may be able to negotiate a pause on your payments for a brief period if you have a good relationship with the lender and a history of on-time payments, but "it may come down to what your loan agreement allows," Wood adds. Plus, interest will likely continue accruing if you do successfully pause private loan payments, while interest may be paused for some federal loan forbearance periods. Though federal student loans may offer better terms, you may be limited in the amount you can borrow. Undergraduate dependent borrowers have a lifetime limit of $31,000 and annual limits depending on what year of school you're entering. The annual limits are as follows: Graduate and professional students have an annual loan limit of $20,500 and a lifetime limit of $138,500 including any amounts borrowed in undergrad. Grad students and parents of undergraduate students can also currently borrow up to the cost of attendance after any aid through PLUS loans, which have higher interest rates and slightly different protections than federal direct loans. The new law doesn't change the current loan limits for undergraduate students, but it does impose lower borrowing limits for graduate loans and parents taking out loans on behalf of undergraduate students by eliminating grad PLUS loans and capping parent PLUS loans for undergraduate students at $20,000 per student per year, up to an overall total of $65,000 per student. After July 1, 2026, grad students will be able to borrow up to $20,500 a year and a maximum of $100,000 over the course of their studies — not including undergraduate borrowing — or $50,000 a year and $200,000 in total for professional studies like law or medicine. For private loans, however, "ostensibly, no limits exist," Wood says. The amount a borrower can receive is up to the lender's discretion. "The amount that they're going to be open to lending you is going to depend on your characteristics as a borrower," Wood says. "Is your credit strong? Do you pay your bills on time? Are you likely to pay back this loan? The stronger financially that you are, the more a lender will be open to lending you." Though the list of benefits may be shrinking, both Wood and Turner recommend students and families exhaust their federal student loan options first before turning to private lenders if they need to borrow to pay for school. "For the majority of borrowers, federal loans will be the better product in terms of both interest rates and the protections that continue to exist after the [new Repayment Assistance Plan] goes into effect," Turner says. Not everyone will qualify for federal student loans, but you won't know until you file a FAFSA. The FAFSA determines whether you qualify for federal grants and scholarships that you don't have to pay back, as well as federal loans. "Everybody should still be submitting your FAFSA," Wood says. "You're not committing to anything. You're just finding out what you could get."
Time of India
4 days ago
- Business
- Time of India
Why student loan bills are doubling for millions as the SAVE plan ends this August
Millions must switch repayment plans as SAVE student loan relief expires. (AI Image) Millions of federal student loan borrowers across the US are expected to see their monthly repayments double as the Biden-era SAVE (Saving on a Valuable Education) plan comes to an end. The plan, which allowed interest-free forbearance on repayments, is now effectively defunct following recent policy changes announced by the Trump administration. The SAVE plan had enrolled nearly 7.7 million borrowers, according to the US Department of Education. Many of these borrowers are now required to transition to new repayment plans, most of which result in significantly higher monthly bills. The end of the SAVE programme will particularly affect borrowers who are unable to make payments that cover accruing interest, which resumes from August 1, as announced earlier this month. SAVE plan allowed reduced repayments for millions Under the SAVE plan, introduced during President Biden's term, borrowers were allowed to make payments based on just 5% of their discretionary income. This plan was described as 'incredibly generous' by Scott Buchanan, Executive Director of the Student Loan Servicing Alliance, a trade group for federal loan servicers, as reported by NBC News. While legal challenges to the SAVE plan were underway, the Biden administration placed enrolled borrowers in forbearance, which paused mandatory payments and interest accumulation. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Bangladesh: Dubai Villa Prices Might Be Cheaper Than You Think Villas Dubai | Search Ads Undo However, with the programme now defunct, this interest-free period is set to expire, and borrowers who do not switch to a new plan will begin to see their loan balances grow again. Borrowers advised to switch to income-based repayment plans US Secretary of Education Linda McMahon stated in a press release, as reported by NBC News, that borrowers in the SAVE programme should 'quickly transition to a legally compliant repayment plan — such as the Income-Based Repayment Plan.' According to NBC News, Buchanan explained that the IBR plan is now the most viable option for most former SAVE enrollees. The IBR plan calculates repayments at 10% of a borrower's discretionary income, a substantial increase from the 5% calculation under SAVE. For some borrowers with older loans, the share could rise to 15%. Higher repayment burdens under IBR plans The end of the SAVE plan is likely to impose financial pressure on many borrowers. Nancy Nierman, Assistant Director of the Education Debt Consumer Assistance Program in New York City, told NBC News that many federal student loan borrowers 'simply won't be able to afford the payments under IBR.' Other income-driven repayment plans created by Congress in the 1990s are also expected to be phased out under what President Donald Trump has referred to as his 'big beautiful bill,' as reported by NBC News. These plans typically cap monthly payments at a percentage of discretionary income and cancel remaining debt after 20 or 25 years. TOI Education is on WhatsApp now. Follow us here . Ready to navigate global policies? Secure your overseas future. Get expert guidance now!
Yahoo
5 days ago
- Business
- Yahoo
Student loan 'SAVE plan' interest to resume: What to know
Student-loan borrowers who are on the Saving on a Valuable Education (SAVE) plan will begin seeing interest accruing on their loans again, starting on August 1. Mark Kantrowitz, student loan expert and author of "How to Appeal for More College Financial Aid," joins Mind Your Money with Allie Canal to break down the details. To watch more expert insights and analysis on the latest market action, check out more Mind Your Money here. So Mark, if you're in the SAVE plan right now, what is going to happen to your loans? Well, starting August 1st, they will start accruing interest and that interest will be added to your loan balance. Uh, it won't be capitalized just yet, but, uh, you'll be in a general forbearance for at least another month, but you should consider switching into the income-based repayment plan so that those monthly payments count towards eventual forgiveness. So you you said you should expect to be in the forbearance period for at least another month. When should borrowers expect to start making payments again? Well, the Trump administration has not yet said when that forbearance will end. Based on previous announcements from the Biden administration, it suggests that they'll restart in September, but we haven't had any information one way or another from the US Department of Education. Is there anything borrowers with loans outside of the SAVE plan need to be doing right now? Well, uh, there's several different income driven repayment plans that are ending. It's not just the SAVE repayment plan, but any uh, repayment plan that was based on income contingent repayment such as the PAYE, the pay plan, and the repay plan, those will be ending. Uh, the income contingent repayment plan, they're going to start phasing that out because of the budget reconciliation bill. Um, and in general those don't count towards forgiveness of their own, the payments you make will count towards forgiveness under income-based repayment. So if you want to eventually receive forgiveness after 20 or 25 years, you need to switch into one of those repayment plans. You mentioned No, no, continue. Okay. There's a new income driven repayment plan called the RAP plan that was introduced by this new legislation. Uh, we expect that it will become available sometime, uh, this fall. So how does RAP stand up against some of the existing plans like SAVE and I know you mentioned IBR, that's the uh, interest um, or income-based repayment plan as well. Right. So comparing RAP with IBR, the monthly payments under RAP are a little bit lower than under IBR if your income is lower than about $80,000. So if you're lower modern income, uh, you'll have lower payments, but the number of payments you have to make until the remaining debt is forgiven is 30 years whereas IBR is 20 or 25 years depending on whether you have loans from uh, before July 1, 2014 or just afterwards. And let's talk policy too. How does President Trump's bill change the student loan repayment system at this point? Right. So for new borrowers as of July 1, 2026, they will have only two repayment plans available. A standard repayment plan, which is more like an extended repayment plan. The higher your debt, the longer the repayment term that's available to you. If your debt's under $25,000, you'll have a 10-year repayment term, and it goes all the way up to a 25-year repayment term. The other repayment plan is the RAP plan which bases the payments on a percentage of your adjusted gross income ranging from 1% to 10% uh, as your income grows. If your income is over $100,000, you'll pay 10% of income, uh, towards payments on that debt, and the remaining debt will be forgiven after 30 years in repayment. And when do these go into effect these new plans under the Trump administration? Um, for new borrowers as of July 1, 2026, uh, they will be in those repayment plans. Uh, they will also be phasing out the income contingent repayment plan uh, through July 1 of 2028. And then when you're talking to borrowers, what are some general tips when it comes to them paying back their student loans and and other resources that people can turn to to try and make this an easier process because it can be very complicated. Well, they can talk to the college financial aid administrator at their college, uh, who can provide them with some insights into these plans. Um, it is going to be simpler in a way because currently there are a dozen different repayment plans, including as many as four different income driven repayment plans, two extended repayment, two graduated repayment and one standard repayment. Uh, so it is going to get simpler. Um, but the only way to tell whether you're better off with the standard repayment plan or the RAP plan is to model it out for your own particular circumstances. There are very few rules of thumb that say which is better for you when. Related Videos 4 tips to save money on back-to-school shopping US Core Capital Goods Orders Slide Amid Tariff Uncertainty India's Goyal Sees UK Trade Deal as Win-Win German Exporters Can Live With 15% Tariff, Ifo Says 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
