logo
#

Latest news with #interestcharges

Senators Push Back On Education Department Over SAVE Interest
Senators Push Back On Education Department Over SAVE Interest

Forbes

timea day ago

  • Business
  • Forbes

Senators Push Back On Education Department Over SAVE Interest

UNITED STATES - JUNE 25: Ranking member Sen. Elizabeth Warren, D-Mass., questions Federal Reserve ... More Chairman Jerome Powell during the Senate Banking, Housing and Urban Affairs Committee hearing titled "The Semiannual Monetary Policy Report to the Congress," in Dirksen building on Wednesday, June 25, 2025. (Tom Williams/CQ-Roll Call, Inc via Getty Images) A group of Senators on Monday urged Education Secretary Linda McMahon to stop the plans to begin charging interest to the nearly 8 million student loan borrowers enrolled in the SAVE student loan repayment plan who are currently in forbearance. In a letter sent to the Secretary of Education, the Senators accused the Department of misleading the public by claiming that the interest restart was being required by a court order, though no such directive exists. The Department of Education announced on July 9 that interest charges would resume on August 1 for borrowers in forbearance due to the SAVE plan legal injunction. To compound matters, actual borrower communication didn't go out until later - leaving borrowers less than a month to assess their options. The Senators urged the Department of Education to stop the plan to restart interest, especially given that the Department has 'made no meaningful effort to restore timely access to other IDR plans' either. What's Happening With The SAVE Repayment Plan? The SAVE Plan was originally launched by the Biden Administration and promised to lower student loan payments for millions of borrowers. However, a group of Republican states sued the Biden Administration over the plan, and in July 2024 a Federal court judge issued an injunction, pausing the SAVE plan altogether. That ruling was upheld by the 8th Circuit Court of Appeals in February 2025. In response to the injunction, the Department of Education placed borrowers already in the SAVE plan into an administrative forbearance, where no payments were due and no interest was accruing. The idea behind this protection was that borrowers should not be harmed or held liable because of litigation or political challenges to the actual regulations. In early July 2025, the One Big Beautiful Bill officially ended the SAVE student loan repayment plan - on a timeline. The bill phased out the repayment plan with an end date no later than June 30, 2028 (though it can come earlier). The bill also said that borrowers who fail to select a new repayment plan would automatically be placed into a new version of Income-Based Repayment (IBR), which would go into effect on July 1, 2026. The bill also created a new repayment plan - the Repayment Assistance Plan (RAP) - which also goes into effect on July 1, 2026. This plan uses a slightly different formula to calculate monthly payments, and for borrowers who make less than $80,000 per year, it may actually be the less expensive option. The issue, though, is that borrowers in the SAVE plan who may want to change to these plans cannot do so until July 1, 2026 - especially borrowers in SAVE who may not have access to the current version of IBR due to the 'financial hardship' requirement, which is being eliminated in 2026. The RAP Plan may be a compelling option for borrowers, but it's simply not an option yet either. The Senators argue the Department of Education should continue the payment and interest waivers, especially in light of the fact that borrowers who may want to change plans simply cannot do so currently. Impact On Student Loan Borrowers Resuming interest on the SAVE plan forbearance could end up costing borrowers an additional $300 per month in interest charges, according to a study from The Student Borrower Protection Center. Borrowers in the SAVE forbearance have few options, because of the ongoing changes and backlogs in processing student loan repayment plan applications. Borrowers in SAVE can simply wait - no payments are due - but they'll see their loan balances grow and won't be making progress towards loan forgiveness. Borrowers can also change repayment plans. The Income-Based Repayment Plan (IBR) is available, along with Pay As You Earn (PAYE) and Income Contingent Repayment (ICR). However, for some borrowers this may not work until 2026, because of the previously mentioned financial hardship requirement. And PAYE and ICR are also being phased out between 2026 and 2028 - meaning borrowers who switch into these plans may end up switching again in a year or two. Furthermore, there is a massive backlog in IDR repayment plan applications, and some borrowers are reporting the processing taking 60-90 days, with no end in sight. All of these changes are creating a massive workload for loan servicers, who not only have to change their internal systems, but have to handle the flood of calls from concerned borrowers - who they may not even be able to give answers to yet. What Happens Next? The decision to restart the SAVE forbearance interest is also coming at a time when the Department of Education is moving ahead with massive layoffs, and dealing with the biggest changes to student loan repayment in decades. Borrowers have a choice to make: do they continue to wait in the SAVE forbearance despite interest accruing, or do they take steps to change repayment plans now - only to face potentially changing repayment plans again in 2026? While the letter from Senators Elizabeth Warren, Bernie Sanders, and Chuck Schumer is a positive sign of oversight, it's not likely to change the outcome for borrowers. Interest will be resuming, and borrowers will have to make tough choices on their loans.

Trump ends student loan subsidy for 7.7 million people who will soon see bills increase
Trump ends student loan subsidy for 7.7 million people who will soon see bills increase

The Independent

time6 days ago

  • Business
  • The Independent

Trump ends student loan subsidy for 7.7 million people who will soon see bills increase

The Trump administration announced Wednesday that it would restart interest charges for student loan borrowers enrolled in the Biden-era Saving on a Valuable Education plan, increasing bills for nearly 7.7 million people. On August 1, the Department of Education will resume interest on SAVE payments, giving enrollees just weeks to figure out a personal financial plan after spending the last year relieved from making interest-free payments while litigation played out. Borrowers can continue to defer payments but now those loans will accrue interest until forbearance ends. The education department previously said the temporary postponement would end in 'Fall 2025' but the date remains unclear due to pending legal challenges. SAVE, an income-based repayment plan, was a staple of former president Joe Biden's agenda that did not require student loan borrowers to pay interest, so long as the borrower's monthly payment was less than the amount of interest that accrued on the loan each month. While the plan was popular with borrowers, it was railed against by Republicans because the government would be responsible for paying the remaining interest, so an individual would not see their loan grow. Now, a typical borrower could see their payments increase by $300 per month or $3,500 per year due to the new interest policy, the Student Borrower Protection Center, a nonprofit that advocates for eliminating student debt, estimated. The organization said as a result, 'the Trump administration will pass on more than $27 billion in unnecessary costs to working families with student debt in the next 12 months alone.' In a statement, Secretary of Education Linda McMahon said resuming payments with interest was necessary to bring fiscal responsibility to the federal student loan portfolio. 'For years, the Biden Administration used so-called 'loan forgiveness' promises to win votes, but federal courts repeatedly ruled that those actions were unlawful,' McMahon said. 'Congress designed these programs to ensure that borrowers repay their loans, yet the Biden Administration tried to illegally force taxpayers to foot the bill instead,' she added. Last year, two Republican-led states challenged the SAVE plan in federal court, arguing that not only would it increase government debt, but that Biden overstepped his authority while developing the plan. For the last year, the plan has been in limbo. While courts have been determining the legality of the plan, none have directed the Education Department to resume charging interest. It's unclear why the department has chosen to do so now. When contacted for comment by The Independent, the department referred back to their announcement. '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,' the department said. '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,' it added. The Education Department's announcement arrives days after President Donald Trump signed his 'One Big Beautiful Bill' into law, which gets rid of the SAVE plan for new borrowers and gives current borrowers until July 2028 to exit the program. Beginning Thursday, the Education Department will send notices to borrowers enrolled in the program, giving them several options to switch to other income-based repayment plans or use an online loan calculator tool to estimate monthly payments and determine their next steps.

Millions of student loan borrowers to be hit with crippling interest charges as Trump ends Biden-era pause
Millions of student loan borrowers to be hit with crippling interest charges as Trump ends Biden-era pause

Daily Mail​

time7 days ago

  • Business
  • Daily Mail​

Millions of student loan borrowers to be hit with crippling interest charges as Trump ends Biden-era pause

The student loan balances for roughly eight million Americans are about to balloon now that the Department of Education plans to restart interest charges by August 1. This action affects the 7.7 million borrowers who are enrolled in the Biden-era Saving on a Valuable Education (SAVE) Plan, a program that shrunk payments to $0 a month for people under a certain income threshold. The interest charges for SAVE borrowers will kick in at the start of next month, though they won't have to resume making payments. The Education Department said the primary reason it restarted interest was because it sought to comply with a federal court injunction from July 2024 that blocked the full implementation of the SAVE plan. The injunction from the Eighth Circuit Court of Appeals is what placed borrowers in an indefinite period of forbearance, which postpones their payments. That was done so the federal government could figure out how to transition millions of people out of the program, later ruled to be illegal by the same court in February 2024. 'For years, the Biden Administration used so-called "loan forgiveness" promises to win votes, but federal courts repeatedly ruled that those actions were unlawful,' Education Secretary Linda McMahon said in a statement. 'Since day one of the Trump Administration, we've focused on strengthening the student loan portfolio and simplifying repayment to better serve borrowers,' she added. Guidance from the Education Department in January estimated that SAVE plan enrollees won't have to actually start paying servicers until December 2025. Mike Pierce, the executive director of the Student Borrower Protection Center, called the policy pivot by the Trump administration a 'betrayal' and attacked McMahon. 'Instead of fixing the broken student loan system, Secretary McMahon is choosing to drown millions of people in unnecessary interest charges and blaming unrelated court cases for her own mismanagement,' Pierce told ABC News in a statement. The Student Borrower Protection Center's mission is to reduce the federal student debt burden on Americans, which has swelled to over $1.6 trillion. Student debt is more difficult to get rid of than other types of debt, as it cannot be discharged in bankruptcy. More than a decade before championing student loan forgiveness as president, Joe Biden as a senator voted for a 2005 law that made it even harder for Americans to wipe out their education loans through the bankruptcy process. Pierce said the Trump administration's latest move, though framed as a way to end the debt crisis, will only exacerbate the problem. 'Every day we hear from borrowers waiting on hold with their servicer for hours, begging the government to let them out of this forbearance and help them get back on track -- instead McMahon is choosing to jack up the cost of their student debt without giving them a way out,' he said. 'These are teachers, nurses and retail workers who trusted the government's word, only to get sucker-punched by bills that will now cost them hundreds more every month,' Pierce added. The SAVE plan that is now being wound down was introduced by Biden in February 2024 after the Supreme Court ruled that his prior student loan forgiveness plan was unconstitutional. That program would have canceled $20,000 in loans for Pell Grant recipients and $10,000 for non Pell-Grant recipients. Forgiveness also would have only been reserved for people making less than $125,000 per year. The SAVE plan still aimed to cancel debt, though enrolled borrowers were required to make consistent payments for a maximum of 25 years to get their loan slate wiped clean, regardless of the amount borrowed. The interest restart for SAVE borrowers comes less than a week after President Donald Trump signed the Big Beautiful Bill into law. That law, Trump's signature domestic policy agenda for his second term, includes a provision that radically reduces the number of student loan repayment plans borrowers can use. Before the law's passage, there were about 12 different programs to choose from. Now there are just two: a standard repayment plan and a new income-driven repayment plan called Repayment Assistance Plan (RAP). Under RAP, borrowers' monthly payments will be set as a share of their income. For instance, if someone makes between $10,000 and $20,000, they would be obligated to pay 1 percent of that toward their loans. At the higher end of the scale people with incomes of $100,000 or more would have to pay 10 percent. In May, economist Jason Delisle, a nonresident senior fellow at the Urban Institute, put together his best estimate of what a single-person household would end up paying every month. Delisle compared the Big Beautiful Bill's approach to the income-based repayment plan passed under former President Barack Obama. People making $30,000 all the way up to $70,000 would actually pay less each month under the GOP plan, according to Delisle. The only groups who would have to pay more are those bring in no income, those who make $20,000 a year and people who earn upwards of $100,000. The standard repayment plan under the Big Beautiful Bill does not take income into account, rather it sets fixed monthly payments based on the size of the loan balance. Larger balances are also given longer time periods to pay off. For example, a collection of federal student loans worth less than $25,000 can be paid off in 10 years, while a loans exceeding $100,000 can be paid over a period of 25 years, according to the text of the law. Students who took out loans before July 1, 2026, will still have access to the myriad of repayment plans. The new changes Republicans passed will only affect people who take out loans after that date.

Nearly 8 Million US Student-Loan Borrowers to See Interest Charges Again
Nearly 8 Million US Student-Loan Borrowers to See Interest Charges Again

Bloomberg

time09-07-2025

  • Business
  • Bloomberg

Nearly 8 Million US Student-Loan Borrowers to See Interest Charges Again

The Education Department will soon begin to charge interest on student debt for an estimated 7.7 million borrowers who've been in legal limbo since a repayment plan created by President Joe Biden was blocked in court. The interest charges for people enrolled in the Saving on a Valuable Education, or SAVE program, will begin on Aug. 1, according to an Education Department official, although, for now, borrowers do not have to resume making loan payments.

Landlord hit with water bill interest 7 years after tenant moved out in Ottawa
Landlord hit with water bill interest 7 years after tenant moved out in Ottawa

CTV News

time27-06-2025

  • Business
  • CTV News

Landlord hit with water bill interest 7 years after tenant moved out in Ottawa

An Ottawa landlord says she's on the hook for hundreds of dollars in interest on a tenant's unpaid water bill, seven years after she says she was told the account was clear. Claire Lalonde, who has been a landlord for 16 years, says that when her tenant moved out in March 2018, she called the City of Ottawa to confirm everything was in order before transferring the water account to a new tenant, adding a city staff member assured her the account was 'all good' and were no arrears left by the previous tenant. Fast forward to May 1, 2025, when Lalonde received a letter from the city requiring she pay $549.87 in unpaid water and sewer charges, including $377 in interest, dating back to 2018. The original bill was $172.78. She was given notice to pay or risk the charge being added to her property tax bill, along with a $53 administrative fee. In a series of letters and phone calls to city departments since June, Lalonde has tried to get the interest removed. 'I don't mind paying the water bill,' she said. 'I don't want to be charged seven years of interest when I was never told that there was an issue.' Lalonde says city staff told her their hands were tied. A late fee interest rate of 1.25 percent is compounded to the outstaying bill each month. 'I tried to negotiate with them and say, listen, I'll pay the original bill, just don't charge me the interest because I was never informed,' she said. 'And they don't even want to take off a hundred bucks, nothing.' Documents reviewed by CTV News Ottawa show the city maintains it followed proper procedure under Ontario's Municipal Act. In responses from city collections staff, officials say Lalonde had signed a tenant authorization agreement in 2018 allowing her tenant to be billed directly for water and sewer services, and that all subsequent communication, including overdue notices, was sent to the tenant. Staff added that due to privacy laws, information about tenant accounts can't be disclosed to landlords, unless a water certificate is formally requested. One response from the city notes it is limited on what they can disclose about collections from the tenant. 'They're [city staff] telling me there's an online system,' said Lalonde. 'But that's not what they told me when I called.' City staff she spoke with, likely pointing to My ServiceOttawa portal, which allows property owners and tenants to check water account balances and billing history. While the online verification system did exist back in 2018, it is not proactive. Property owners must manually sign up, log in, and check the account themselves. The city also offers a formal water utility certificate, for a fee, that confirms whether any amounts are outstanding as of a given date. City officials acknowledged that collection efforts are 'manual and iterative,' and that 13 per cent of cases fail to recover funds from former tenants or owners. When all attempts are exhausted, the Municipal Act allows the city to transfer the amount to the current owner's tax roll. 'No billing error occurred,' the City of Ottawa stated in another letter, adding that penalties and interest are applied to all overdue accounts and cannot be waived unless the city made a mistake. But Lalonde argues there needs to be some accountability for the time delay. 'Seven years later, they come up with an amount and they're charging me for seven years of interest,' she said. 'If I would have known I had an arrear, I would have paid the bill immediately.' In one city letter, officials recommended she contact a lawyer or her insurance provider, an option Lalonde says isn't practical. 'It's going to cost me more than that to get a lawyer, unfortunately,' said Lalonde. 'And I think they know that and that's why they get away with it.' Lalonde says she has no way of reaching her former tenant and feels stuck between a bureaucratic system and a bill she believes is not fair. 'I'd like the city to be accountable for not telling the people in time,' she added. 'Two months or three months later, that would have been acceptable. Seven years, not acceptable.'

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store