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Harvard students are 'frantic' after Trump administration blocks international enrollment, college consultant says
Harvard students are 'frantic' after Trump administration blocks international enrollment, college consultant says

CNBC

time23-05-2025

  • Politics
  • CNBC

Harvard students are 'frantic' after Trump administration blocks international enrollment, college consultant says

Immediately after the Trump administration blocked Harvard University on Thursday from enrolling future international students and retaining currently enrolled foreign students, some members of next year's freshman class started scrambling. "I was on the phone with a parent who was visibly shaken and completely frantic," said Christopher Rim, president and CEO of college consulting firm Command Education. Rim, who works with a large share of international students from abroad, said a few of his clients were accepted into the Class of 2029 and committed to Harvard on May 1, also known as National College Decision Day, which was just three weeks ago. Now, they don't know what to do. "This is a major moment in these students' lives," Rim said. "Given the circumstances and policies and laws that we have right now, we are advising these families to look into taking a gap year — hopefully by then, the Trump administration and Harvard can come to an agreement." On Thursday, the Department of Homeland Security terminated Harvard's student and exchange visitor program certification, therefore blocking foreign students from enrolling and forcing existing foreign students to transfer or lose their legal status. Harvard sued the Trump administration on Friday, asking a federal judge to reverse the ban on international students. International students accounted for 27% of Harvard's total enrollment in the 2024-25 academic year. That's up from 20% during 2006-07. More from Personal Finance:Wage garnishment for defaulted student loans to beginWhat loan forgiveness opportunities remain under TrumpIs college still worth it? It is for most, but not all The latest move came amid an escalating standoff between the government and the Ivy League school after Harvard refused to meet a set of demands issued by the Trump administration's Task Force to Combat Anti-Semitism "It is a privilege, not a right, for universities to enroll foreign students and benefit from their higher tuition payments to help pad their multibillion-dollar endowments," Homeland Security Secretary Kristi Noem said in a statement Thursday. In a statement on Friday, Harvard called Thursday's action "unlawful and unwarranted." "It imperils the futures of thousands of students and scholars across Harvard and serves as a warning to countless others at colleges and universities throughout the country who have come to America to pursue their education and fulfill their dreams," Harvard said. "It's a shock," said Hafeez Lakhani, founder and president of Lakhani Coaching in New York. "At a time when international applications — and international yield — are under pressure, this sends a signal to the rest of the world that not only is Harvard closed to the international best and brightest, but that the U.S. is not a welcome place for international students," Lakhani said. International enrollment is an important source of revenue for schools, which is why colleges tend to rely on a contingent of foreign students, who typically pay full tuition. Altogether, international student enrollment contributed $43.8 billion to the U.S. economy in 2023-24, according to a report by NAFSA: Association of International Educators. During that academic year, there were more than 1.1 million international undergraduate and graduate students in the U.S., mostly from India and China, making up slightly less than 6% of the total U.S. higher education population, according to the latest Open Doors data, released by the U.S. Department of State and the Institute of International Education. In the 2023-24 academic year, the U.S. hosted a record number of students from abroad, marking a 7% increase from the previous year. The Trump administration's move puts Harvard international students in a "limbo state," said Mark Kantrowitz, a higher education expert. His advice to admitted or enrolled international students: Start exploring your options but don't make any sudden moves until you hear from the university. "Harvard is going to be scrambling to deal with this, and they will issue guidance to admitted students and the enrolled students," Kantrowitz said. In its statement, Harvard called international students and scholars "vital members of our community." "We will support you as we do our utmost to ensure that Harvard remains open to the world," it said. Kantrowitz doesn't expect the Trump administration to prevail in Harvard's lawsuit, though of course it's a possibility, he said. Transferring to another U.S. school may have its own risks. "I've heard from [Harvard] students who are seeking to transfer," Kantrowitz said. "But that might be jumping from the frying pan into fire. These other colleges could be targeted soon enough." It may also be difficult for Harvard's incoming freshman class to transfer to another university, Kantrowitz said. Many institutions may already be at full enrollment for the coming academic year, he said. There are currently more than 300 U.S. schools still accepting applications for prospective first-year and transfer students for the upcoming fall term, according to the National Association for College Admission Counseling. Harvard students who require financial aid may have a tougher time transferring, depending on the university, compared to those who don't need assistance, Kantrowitz said. That's because many schools use "need sensitive" or "need aware" admissions for international students, Kantrowitz said. That means they consider the student's financial need when choosing whether to accept the student. Already, some of Lakhani's college-bound clients have started considering schools outside the U.S., fueled by fear about rapid policy changes, he said. Indeed, some schools overseas are trying to woo Harvard's international students in light of the Trump administration's recent maneuver. The Hong Kong University of Science and Technology, for example, issued an "open invitation" to Harvard students on Friday to continue their education there, to "pursue their educational goals without disruption." "This sends a clear signal for the best and brightest to look elsewhere — including other countries — to thrive intellectually," Lakhani said.

As student loan delinquencies spike, borrowers risk 'potential spillovers' with other late payments, NY Fed says
As student loan delinquencies spike, borrowers risk 'potential spillovers' with other late payments, NY Fed says

CNBC

time20-05-2025

  • Business
  • CNBC

As student loan delinquencies spike, borrowers risk 'potential spillovers' with other late payments, NY Fed says

The Trump administration's resumption of collection efforts on defaulted federal student loans has far-reaching consequences for delinquent borrowers. For starters, borrowers who are in default may have wages, tax returns and Social Security payments garnished. But involuntary collections could also have a "spillover effect," which puts consumers at risk of falling behind on other debt repayments, according to a recent report from the Federal Reserve Bank of New York, "We were obviously somewhat concerned about potential spillovers to delinquencies on other types of debt," the New York Fed researchers said on a press call earlier this month. "During the period where people were not required to make payments on their student loans, they could have used that money to pay their credit card bills and auto loans," the researchers said. "Now they have to make these payments again on their student loans, so that could put pressure on their ability to pay these other loans." More from Personal Finance:Wage garnishment for defaulted student loans to beginWhat loan forgiveness opportunities remain under TrumpIs college still worth it? It is for most, but not all The U.S. Department of Education's crack down on student loan repayments could take billions of dollars out of consumers' pockets, reports show. Monthly collections on defaulted loans may reduce disposable personal income between $3.1 billion to $8.5 billion a month, according to research by JPMorgan. "Part of the reason that some people are adding to credit card debt is because they have student loan payments — that's the spillover effect," said Ted Rossman, senior industry analyst at Bankrate. "Something's got to give." Until earlier this month, the Department of Education had not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That on-ramp officially ended on Sept. 30, 2024, and the Education Department restarted collection efforts on defaulted student loans on May 5. Whether borrowers face garnishment, or opt to resume payments to get current on their loan, that's likely to have a significant impact on their wallet. "It's just money that can't go to other financial things," said Matt Schulz, chief credit analyst at LendingTree. After the five-year pause ended and collections are resumed, the delinquency rate for student loan balances spiked, the New York Fed found. Nearly 8% of total student debt was reported as 90 days past due in the first quarter of 2025, compared to less than 1% in the previous quarter. Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default, according to the Education Department. Another 4 million borrowers are in "late-stage delinquency," or over 90 days past due on payments. Among borrowers who are now required to make payments — not including those who are in deferment or forbearance or are currently enrolled in school — nearly one in four student loan borrowers are behind in their payments, the New York Fed found. As borrowers transition out of forbearance and into repayment, those borrowers may also face challenges making payments, according to a separate research note by Bank of America. "This transition will likely drive delinquencies and defaults on student loans higher and could have further knock-on effects for consumer finance companies," Bank of America analyst Mihir Bhatia wrote to clients on May 15. In a blog post, the New York Fed researchers noted that "it is unclear whether these penalties will spill over into payment difficulties in other credit products, but we will continue to monitor this space in the coming months."

Social Security benefits are at risk for student loan borrowers in default. What to know
Social Security benefits are at risk for student loan borrowers in default. What to know

CNBC

time14-05-2025

  • Business
  • CNBC

Social Security benefits are at risk for student loan borrowers in default. What to know

Social Security beneficiaries are at risk of receiving a smaller benefit if they've fallen behind on their student loans. The Trump administration recently announced it would move to offset defaulted student loan borrowers' federal benefits, and warned that payments could be garnished as soon as June. That involuntary collection activity could have serious consequences on those who rely on the benefits to pay most, if not all, of their bills, consumer advocates say. More from Personal Finance:Wage garnishment for defaulted student loans to beginWhat loan forgiveness opportunities remain under TrumpIs college still worth it? It is for most, but not all There are some 2.9 million people age 62 and older with federal student loans, as of the first quarter of 2025, according to Education Department data. That is a 71% increase from 2017, when there were 1.7 million such borrowers, according to the data. More than 450,000 borrowers in that age group are in default on their federal student loans and likely to be receiving Social Security benefits, the Consumer Financial Protection Bureau found. Here's what borrowers need to know. Social Security recipients can typically see up to 15% of their monthly benefit reduced to pay back their defaulted student debt, but beneficiaries need to be left with at least $750 a month, experts said. The offset cap is the same "regardless of the type of benefit," including retirement and disability payments, said higher education expert Mark Kantrowitz. The 15% offset is calculated from your total benefit amount before any deductions, such as your Medicare premium, Kantrowitz said. Student loan borrowers facing offsets of their federal benefits seem to be getting less notice under the Trump administration, Kantrowitz said. While a 65-day heads-up used to be the norm, it seems the Education Department is now assuming borrowers who are in default were already notified about possible collection activity prior to the Covid-19 pandemic, he said. "The failure of the U.S. Department of Education to provide the 65-day notice limits the ability of borrowers to challenge the Treasury offset of their Social Security benefit payments," Kantrowitz said. Still, borrowers should get at least a 30-day warning, Kantrowitz said. The notice should be sent to your last known address, so borrowers should make sure their loan servicer has their most recent contact information. The Education Department provided defaulted federal student borrowers with the required notice, a spokesperson told CNBC after collections efforts resumed May 5. "The notice may be sent only once, and borrowers may have received this notice before Covid," the spokesperson said. Once you receive a notice that your Social Security benefits will be offset, you should have the option to challenge the collection activity, Kantrowitz said. The notice is supposed to include information on how you can do so, he said. You may be able to prevent the offset if you can prove a financial hardship or have a pending student loan discharge, Kantrowitz added. "Borrowers who receive these notices should not panic," said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program. "They should reach out for help as soon as possible." The best way to avoid the offset of your Social Security benefits is to get current on your loans, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit. You can contact the government's Default Resolution Group and pursue several different avenues to get out of default, including enrolling in an income-driven repayment plan. "If Social Security is their only income, their payment under those plans would likely be zero," Mayotte said.

As student loan default rate spikes, some borrowers face 'grave consequences,' New York Fed says
As student loan default rate spikes, some borrowers face 'grave consequences,' New York Fed says

CNBC

time13-05-2025

  • Business
  • CNBC

As student loan default rate spikes, some borrowers face 'grave consequences,' New York Fed says

Between their credit card balances, mortgages, auto loans, home equity lines of credit and student debt, Americans owe a record $18.2 trillion, according to a new quarterly report on household debt from the Federal Reserve Bank of New York. Still, for the most part, borrowers are managing that debt relatively well — with one exception. "Transition rates into serious delinquency have leveled off for credit card and auto loans over the past year," Daniel Mangrum, research economist at the New York Fed, said in a statement. "However, the first batch of past due student loans were reported in the first quarter of 2025, resulting in a large jump in seriously delinquent borrowers." The delinquency rate for student loan balances spiked after a nearly five-year pause due to the pandemic, the New York Fed found. Nearly 8% of total student debt was reported as 90 days past due in the first quarter of 2025, compared to less than 1% a year earlier. More from Personal Finance:Wage garnishment for defaulted student loans to beginWhat loan forgiveness opportunities remain under TrumpIs college still worth it? It is for most, but not all Although the student loan delinquency rate is "likely to go up a little bit more," it is "still comparable to what it was in 2020," the New York Fed researchers said on a press call Tuesday. However, in a blog post, the researchers noted that "the ramifications of student loan delinquency are severe." Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default, according to the U.S. Department of Education. Another 4 million borrowers are in "late-stage delinquency," or over 90 days past due on payments. Among borrowers who are now required to make payments — not including those who are in deferment or forbearance or are currently enrolled in school — nearly one in four student loan borrowers are behind in their payments, the New York Fed found. "For many, this had grave consequences for their credit standing," the New York Fed researchers said. The Education Department restarted collection efforts on defaulted student loans on May 5, which includes the garnishment of wages, tax returns and Social Security payments. Until last week, the Education Department had not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That on-ramp officially ended on Sept. 30, 2024 and delinquencies began appearing on credit reports in the first quarter of 2025. Both VantageScore and FICO reported a drop in average scores starting in February as early- and late-stage credit delinquencies rose sharply, driven by the resumption of student loan reporting. The Federal Reserve Bank of New York also cautioned in a March report that student loan borrowers who are late on their payments could see their credit scores sink by as much as 171 points as collection activity resumes. A separate analysis by TransUnion found that consumers who faced default in recent months have seen their credit scores fall by 63 points, on average. For super prime borrowers — or those with credit scores above 780 — who were seriously delinquent, scores sank as much as 175 points. Credit scores typically range between 300 and 850.

Student loan default has 'dramatic and immediate' credit score impact, expert says — with drop of up to 175 points
Student loan default has 'dramatic and immediate' credit score impact, expert says — with drop of up to 175 points

CNBC

time05-05-2025

  • Business
  • CNBC

Student loan default has 'dramatic and immediate' credit score impact, expert says — with drop of up to 175 points

As of Monday, the U.S. Department of Education is restarting "involuntary collections" on federal student loans that are in default, which may seriously damage the credit scores of millions of borrowers. Student loan collections efforts have largely been on pause since the pandemic began in March 2020. A new analysis by TransUnion found that consumers who faced default in recent months have seen their credit scores fall by 63 points, on average. For super prime borrowers — or those with credit scores above 780 — who were seriously delinquent, scores sank as much as 175 points. Credit scores typically range between 300 and 850. "Consumers may find themselves shocked by the dramatic and immediate impact that a default can have on their credit scores," Joshua Trumbull, senior vice president and head of consumer lending at TransUnion, said in a statement. More from Personal Finance:Trump administration restarts student loan collectionsWhat loan forgiveness opportunities remain under TrumpIs college still worth it? It is for most, but not all The credit score implications worsen for borrowers with better scores, research shows. "The bigger they are, the harder they fall," said Ted Rossman, senior industry analyst at Bankrate. Because borrowers in less risky credit tiers typically have fewer dings on their credit, any derogatory mark "has the potential to have a significant and jarring impact," according to TransUnion. In general, the higher your credit score, the better off you are when it comes to getting a loan. "Somebody with excellent credit could see a drop of 100 points or more — that's massive," Rossman said. "That's going to make it hard to even get credit and if you do, you will face a sharply higher interest rates on everything from mortgages to car loans." As collection activity resumes, the federal government can seize some or all of certain federal payments including tax refunds and Social Security benefits as well as withhold a portion of borrowers' paychecks. "Borrowers who don't make payments on time will see their credit scores go down, and in some cases their wages automatically garnished," U.S. Secretary of Education Linda McMahon wrote in a Wall Street Journal op-ed last month. The Federal Reserve Bank of New York cautioned in a March report that student loan borrowers who are late on their payments could see their credit scores sink by as much as 171 points. Initially, those borrowers benefitted from the pandemic-era forbearance on federal student loans, which marked all delinquent loans as current. Median credit scores for student loan borrowers rose by 11 points between the end of 2019 to the end of 2020, the Fed researchers found. However, that relief period officially ended on Sept. 30, 2024. "We expect to see more than nine million student loan borrowers face substantial declines in credit standing over the first quarter of 2025," the Fed researchers wrote in a blog post. "Although some of these borrowers may be able to cure their delinquencies," the Fed researchers said, "the damage to their credit standing will have already been done and will remain on their credit reports for seven years." Lower credit scores could result in reduced credit limits, higher interest rates for new loans and overall lower credit access, the researchers also said. Both VantageScore and FICO reported a drop in average scores starting in February as early- and late-stage credit delinquencies rose sharply, driven by the resumption of student loan reporting. Borrowers who are late on their payments could see their credit scores tank by as much as 129 points, VantageScore reported at the time. Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default, according to the Education Department. Another 4 million borrowers are in "late-stage delinquency," or over 90 days past due on payments. One in five student loan borrowers were reported as being over 90 days past due by the end of February, the data from TransUnion showed. "It's surprising how many people who should be paying have been reported as not paying," said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion, and those "delinquencies will likely tick higher."

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