Latest news with #loanforgiveness
Forbes
4 days ago
- Business
- Forbes
5 Big Student Loan Updates After A Hugely Consequential Month
WASHINGTON, DC - MAY 22: U.S. Speaker of the House Mike Johnson (R-LA) speaks to the media after the ... More House narrowly passed a bill forwarding President Donald Trump's agenda at the U.S. Capitol on May 22, 2025 in Washington, DC. The tax and spending legislation, in what has been called the "big beautiful bill", redirects money to the military and border security and includes cuts to federal student loan forgiveness and repayment programs. (Photo by) The last several weeks have been hugely consequential for more than 40 million student loan borrowers, with some of the most significant updates in more than a year. And the impacts of these recent events could touch every aspect of student debt from disbursement to loan repayment and student loan forgiveness. Between court actions, legislation working its way through Congress, and regulatory updates, nearly every single federal student loan borrower may eventually be impacted by these recent changes. And for some borrowers, the consequences could be enormously costly. Here's a breakdown. The federal student loan repayment system may have never been in as much turmoil as it is today. At least eight million borrowers who had enrolled in the SAVE plan, a Biden administration income-driven repayment program, continue to be stuck in a forbearance due to an ongoing legal challenge over the future of the program. As a result, these borrowers have no payments due and their balances are not accruing interest, but they cannot make progress toward student loan forgiveness. This is true for both income-driven repayment plans, as well as Public Service Loan Forgiveness, or PSLF. Meanwhile, much of the rest of the IDR application system remains stuck in administrative uncertainty. The Trump administration had essentially shut down the entire IDR application system in February following a new court ruling related to the ongoing SAVE plan legal challenge. That action has had profound downstream effects for borrowers in other IDR plans that have nothing to do with SAVE, including those in IBR, ICR, and the PAYE plan. After a national teacher's union and student loan borrower legal group filed a lawsuit against the Trump administration over the IDR system shutdown, the Department of Education resumed application processing in April. But the department revealed in a court filing in May that more than 1.9 million IDR applications remain unprocessed, and less than 80,000 applications were fully adjudicated during the month of April. As a result, hundreds of thousands of borrowers have been unable to change their repayment plan or recalculate their monthly payments – options that the Department of Education is required to offer borrowers under federal law. According to anecdotal reports, loan servicers are first prioritizing IDR applications submitted by single student loan borrowers with a family size of 1, as they can be faster to process than IDR requests submitted by married borrowers due to additional complexities associated with those applications. But it is unclear if the Department's slow processing pace will accelerate. Another status report is due to be filed in less than two weeks. The Department of Education also revealed in the same court filing that only a fraction of more than 50,000 PSLF Buyback applications have been processed. Many of these applications have been sitting with the department's PSLF Reconsideration unit for six months or longer. PSLF Buyback is supposed to give borrowers an opportunity to receive credit toward Public Service Loan Forgiveness for certain past periods of deferment and forbearances, which usually cannot count toward student loan forgiveness under the program. The buyback program allows borrowers, upon approval, to make a lump sum payment equivalent to what they would have paid if they had been making qualifying PSLF payments during the period, provided that they were also working in qualifying public service employment at the time. Many borrowers who have been stuck in the SAVE plan forbearance, are pursuing PSLF, and are nearing their eligibility threshold for student loan forgiveness have been trying to utilize the PSLF buyback program to qualify for a discharge. But according to last month's court filing, the Department of Education has processed less than 2,000 applications out of more than 50,000 that remain in the queue. Department officials have provided no explanation for the delays, and have not signaled when – or whether – processing will accelerate. Another update is expected in two weeks. Meanwhile, last month House Republicans narrowly passed sweeping legislation that would fundamentally reshape the federal student loan system. The so-called 'One Big Beautiful Bill Act,' intended to slash government spending to offset the costs associated with massive tax cuts, would impact nearly every element of federal student aid including disbursement, repayment, and loan forgiveness. Under the terms of the legislation, the Graduate PLUS and Parent PLUS programs would be phased out or severely limited, which advocates have warned will force millions of families to turn to riskier and costlier private student loans, or forego higher education altogether. The bill would also repeal several popular student loan repayment plans including the SAVE plan, ICR, PAYE, and a newer and more affordable version of IBR. Borrowers who have been enrolled in these plans would be forced to change to a modified version of IBR that could result in much higher payments. One student loan borrower advocacy organization estimated that some borrowers could pay $5,000 or more per year in additional payments as a result. The bill would also create a new IDR plan that may be somewhat more affordable, but would add five to 10 years of additional repayment to a borrower's term before they would qualify for any student loan forgiveness, forcing many borrowers to remain in debt for 30 years or longer. The bill now heads to the Senate, where it may undergo further changes before the legislation can receive final approval from Congress. It would then be sent to President Trump for his signature. As Republican lawmakers in Congress take steps to remake the federal student loan system through legislation, Trump administration officials at the Department of Education are making moves to reshape key federal student loan forgiveness and repayment programs through regulatory changes. Last month, the department moved ahead with negotiated rulemaking, a lengthy process that would result in changes to federal regulations. The department is specifically targeting Public Service Loan Forgiveness in this negotiated rulemaking session. While administration officials have not expressly revealed what, specifically, they want to change about PSLF, most observers expect the department to try to enact regulations implementing President Trump's March executive order to cut off PSLF eligibility for organizations that engage in activities the administration deems to be 'illegal' or 'improper.' Some legal experts have warned that if elements of the order are enacted, it could unlawfully allow the administration to deny student loan forgiveness eligibility for organizations or government entitles that simply oppose the administration's priorities. The department's negotiated rulemaking process is also targeting the PAYE and ICR plans, two popular IDR plans that allow borrowers to make payments based on their income, with eventual student loan forgiveness after 20 or 25 years in repayment. As with PSLF, the department has not confirmed what officials want to change about these programs. But some observers expect the department to try to eliminate student loan forgiveness under these plans, based on a recent court ruling from a federal appeals court that questioned the programs' underlying legal authority. It is unclear what would happen to borrowers who reach the threshold for student loan forgiveness and then have the benefit cut off by the anticipated regulatory updates. Last month, the Department of Education also resumed collections actions against borrowers in default on their federal student loans. Such actions had been largely suspended for the last several years due to pandemic-era relief programs and associated extensions. In early May, millions of borrowers began receiving notices that they would be referred to the Treasury Offset program in the coming weeks. Treasury Offset allows the government to garnish the wages of federal employees, offset Social Security benefits, and intercept federal tax refunds. Starting as soon as this month, the Department of Education may initiate administrative wage garnishment proceedings, which would allow the government to seize a portion of wages from defaulted federal student loan borrowers working in non-federal employment. More than five million defaulted federal student loan borrowers are currently in the department's crosshairs. But that figure could double by the end of the year as hundreds of thousands of additional borrowers fall behind on their monthly payments. The department has said it is engaging in a robust communications campaign to notify borrowers of the coming risks, encourage them to get out of default, enroll in IDR plans, and pursue federal student loan forgiveness programs. But advocacy groups have warned that given the current turmoil facing many of these programs, a significant number of borrowers are going to fall through the cracks. And the financial ramifications could be enormous.
CNET
6 days ago
- Business
- CNET
I'm a Student Loan Expert. Here Are the 6 Things Borrowers Should Do Now
Getty Image/Zooey Liao/CNET Are you finding it difficult to keep up with student loan news? Whether it's the end of the Saving on a Valuable Education plan, the prospect of higher student loan payments or the ramp-up of wage garnishment efforts, there are a lot of changes happening to student loan programs. I get it. As a student loan policy expert who's worked in the industry for more than 15 years, the past few years have been trying ones for borrowers. It's easy to feel like everything happening with student loans is out of your hands. One thing I know for sure is that there are ways for you to take charge of your student loans. If you're enrolled in SAVE, working toward Public Service Loan Forgiveness or a searching for a more affordable payment plan, here's what I recommend doing now. Read more: SAVE Student Loan Borrowers Likely Won't Make Payments This Year, but Should Do This One Thing Now Figure out your student loan balance Do you know how much you owe in total on your student loans? It's a question that many borrowers can't answer when I ask them. You might have an idea (or think you do). But it's important to check, especially if you think you may be behind on your payments. Many borrowers I've worked with are surprised to find they owe more than they initially borrowed when it's time to start repayment. This is because most loans, except subsidized ones, begin accruing interest from the moment they are disbursed. Outstanding interest, which has not been capitalized or added to your loan, is listed separately from the principal balance. To fully understand your loan balance, it's important to carefully review your statements. If you know who your student loan servicer is, you can log into your online account to check your balance. If you're not sure, you can find out by logging into your Federal Student Aid account and visiting the My Aid page. Read more: 5 Ways to Pay Off Your Student Loans Even Faster Prepare to restart payments If you are enrolled in the Saving on a Valuable Education Plan, your loans have been in an administrative forbearance since summer 2024 due to the plan's legal challenges. You haven't been able to make payments, and your interest rate has been set to zero. This payment hold is temporary and will likely end soon. It's a good idea to explore other income-driven repayment plans so you can plan for your new monthly payment. You can use the US Department of Education's Loan Simulator to estimate your payments and check eligibility for specific plans. Read more: My Student Loan Payment Will Jump From $0 to $488 After SAVE Ends. Yours Might Too Earning less? Recertify your income A lot has changed since the first administrative forbearance in 2020, and if you're facing financial hardship or making less money than you were five years ago, you may want to apply to have your income recertified to potentially lower your student loan payment if you're on an income-driven repayment plan. To recertify your income, visit IDR application page and select "Recertify or Change Your Income-Driven Repayment Plan." Apply for the PSLF buyback program, if you're eligible The Public Service Loan Forgiveness program offers debt cancellation for teachers, nurses and other public service employees who work in a qualifying job for 10 years and make 120 payments on their loans. If you're enrolled in SAVE and were close to reaching your 120 total payments, the recent payment pause may have delayed your forgiveness. In this case, you might benefit from the PSLF buyback program. The PSLF buyback program lets you "buy back" months where your loans sat on hold during a forbearance period -- but only if doing so brings you to 120 total payments. For example, let's say you had already made 115 qualifying payments before your loan entered the SAVE Plan forbearance. You could apply for the PSLF buyback program to buy back five of the months where your loans were in forbearance to reach the 120-payment requirement. You'll apply for the program online, and once approved, you'll have 90 days to pay off what you owe for the number of months you buy back. So, if your monthly payment was $100, you'd need to pay $500 to receive forgiveness. You'll also need to make sure you meet all other PSLF eligibility criteria, such as working for a qualifying employer and having the correct loan type. If you think you're eligible and want to confirm your payment count, you can find qualifying payment amounts in your account. Expert tip: Note: Many borrowers have been waiting to find out the status of their PSLF buyback request, but it's still worth applying if you meet the requirements. Read more: More Student Loan Forgiveness Is on the Way for PSLF Borrowers. What's Next for Debt Relief? Pay off your interest while you're in school If you're still in college, your student loans likely haven't entered repayment yet. While it's difficult to predict what repayment options will be available in the future, there are proactive steps you can take now. One recommendation is to pay off any interest that accrues while you're still in school. Even small contributions can help reduce the overall cost of your loans in the long run. If your federal student loan hasn't yet entered repayment, you won't be eligible to enroll in a repayment plan. Repayment starts six months after graduation or if your enrollment drops below half-time, unless you enroll in another program, like graduate school, before the grace period ends. Read more: What's the Future of Student Loans and FAFSA if the Department of Education Goes Under? Don't count on student loan forgiveness Many borrowers have turned to income-driven repayment plans to reduce their monthly payments and potentially qualify for student loan forgiveness. However, forgiveness is not guaranteed, especially as legal challenges continue to threaten SAVE and some of the other IDR repayment plans. Programs like PSLF and forgiveness under the Income-Based Repayment Plan carry less risk, since they would require congressional action to be altered or eliminated. That said, it's always wise to plan for full repayment of your student loans, regardless of any current potential forgiveness opportunities.
Daily Mail
28-05-2025
- Business
- Daily Mail
Student debt cut in Australia: When Labor will reduce your payments under landmark legislation
Anthony Albanese 's government will cut 20 per cent off all student loan debts, wiping around $16billion in student debt for around three million Australians. The policy - central to Mr Albanese's re-election campaign - is now set to be implemented following his election victory as of June this year. Under the plan, a graduate with an average student debt of $27,600 will see their loan reduced by $5,520, according to government figures. Mr Albanese's proposed reform would apply to all Higher Education Loan Program, Vet Student Loans, Australian Apprenticeship Support Loans and other income-contingent student loans. 'Our whole nation benefits when we make it easier for people to access education. This is about opening the doors of opportunity – and widening them,' he previously said when announcing the plan. The reforms would also raise the threshold for repayment from $54,000 to $67,000 and lower the rate to be repaid. For someone on an income of $70,000, this will mean they will pay around $1,300 less per year in repayments. Education minister Jason Clare said the cuts to student loans will be the first piece of legislation that Labor introduces when Parliament returns on July 22. The legislation will cut 20 per cent off your student debt and backdate it to 1 June, before indexation was applied,' Clare said. 'This is a game-changer for the more than three million Australians with a student loan.' This builds on a $3billion policy introduced last year, which links student debt indexation to the lower of the wage price index or the consumer price index. Without it, graduates could have faced another steep increase, like in 2023, when indexation soared to 7.1 per cent - up from 3.9 per cent the year before - adding $1,759 to the average student debt of $24,770. Mr Dutton had vowed to scrap Labor's student debt relief if the Coalition had won the election arguing its unfair on tradies who didn't go to university.
Daily Mail
28-05-2025
- Business
- Daily Mail
Biden gave loan relief only to minority farmers, whistleblower says
The Biden Administration secretly discriminated against white farmers when it came to loan forgiveness, a whistleblower said. A USDA employee told NewsNation that the agency, while under Biden, radically profiled farmers and only forgave loans of minority borrower. 'It was to pay off anyone who wasn't a white male's loan,' the whistleblower said. 'That was the only qualification for this loan forgiveness. 'They were trying to keep this hushed because of the obvious implications of race-based loan forgiveness.' The green-light for the program was buried in the American Rescue Plan Act, which allowed the government to pay up to 120 percent of the outstanding debt of 'each socially disadvantaged farmer or rancher,' NewsNation found. After the program was struck as unconstitutional, the Biden Administration allegedly sent an email to minority farmers about the Inflation Reduction Act, which was intended to provide financial assistance to borrowers who were over 60 days behind on payments. The whistleblower said white farmers were not sent this email, which provided $3.1billion of relief. 'It wasn't about hardship,' white farmer, James Dunlap, of Baker City, Oregon, told NewsNation. 'It wasn't about financial situations. It was about that box you checked under ethnicity line under your application.' Dunlap works two additional jobs to keep his farm afloat, he told NewsNation, yet he still didn't qualify for the loan forgiveness. The Oregon farmer was one of the many who sued the Biden Administration over the American Rescue Plan Act, claiming that it was race-based and violated the Constitution. A federal judge ruled the white farmers had been constitutionally harmed in ways that 'cannot be undone.' Following the decision, the Biden Administration still sent the Inflation Reduction Act email. The January 10, 2023, letter shared 'information about new payments and/or loan modifications that may assist you,' NewsNation, which obtained a copy of the letter, reported. The whistleblower said the letter was only sent to those who qualified as a 'socially disadvantaged farmer' under the American Rescue Plan Act. 'You are receiving this letter because you were previously informed of your potential eligibility as a Farm Loan Programs borrower for a payment under Section 1005 of the American Rescue Plan Act' the letter read, according to NewsNation. The letter informed farmers that the USDA could not grant loan forgiveness to them anymore, but the Inflation Reduction Act could, the outlet reported. The whistleblower also alleged the USDA workers were instructed to tell some minority farmers to stop paying, so the loans would be forgiven. 'It's not right,' he told NewsNation. 'It was discriminatory, unethical. 'And the people who pushed it are still in charge of the agency … [those] at the national office. Trump hasn't gotten rid of them.' In a statement to NewsNation, a current USDA spokesperson did not address the specifics of the program, but slammed the Biden Administration for leaving the agency in 'complete disarray and dysfunction'. 'And that's why farmers were being left behind,' the spokesperson said. 'The entire farm economy has been hurt by Biden's inaction. 'It is absurd that while the Biden Administration was driving up inflation, American taxpayers were forced to fund billions in woke DEI initiatives. 'No one should be shocked that Biden weaponized bipartisan farm programs to discriminate and provide taxpayer dollars to one group based on race and not on merit. 'Instead, USDA is reprioritizing unity, equality, meritocracy, and color-blind policies,' the statement continued. The spokesman added that the new Secretary of Agriculture under the Trump Administration Brooke Rollins is reviewing the situation. 'Secretary Rollins directed USDA to review Inflation Reduction Act funding to ensure that it honors the sacred obligation to American taxpayers - and to ensure that programs are focused on supporting farmers and ranchers, not DEI programs or far-left climate programs,' he said. 'Unlike the Biden Administration, under Trump, USDA does not discriminate and single out individual farmers based on race, sex, or political orientation.' Biden's Agriculture Secretary, Tom Vilsack, told that the 'loan servicing done while I was in office would reflect those farmers and ranchers in financial distress that could be helped were helped.' 'Our guiding principle was doing everything we could to help farmers and ranchers in financial stress stay on the farm,' he said.
Daily Mail
28-05-2025
- Business
- Daily Mail
How Biden administration secretly discriminated against white farmers
The Biden Administration secretly discriminated against white farmers when it came to loan forgiveness, a whistleblower said. A USDA employee told NewsNation that the agency, while under Biden, radically profiled farmers and only forgave loans of minority borrower. 'It was to pay off anyone who wasn't a white male's loan,' the whistleblower said. 'That was the only qualification for this loan forgiveness. 'They were trying to keep this hushed because of the obvious implications of race-based loan forgiveness.' The green-light for the program was buried in the American Rescue Plan Act, which allowed the government to pay up to 120 percent of the outstanding debt of 'each socially disadvantaged farmer or rancher,' NewsNation found. After the program was struck as unconstitutional, the Biden Administration allegedly sent an email to minority farmers about the Inflation Reduction Act, which was intended to provide financial assistance to borrowers who were over 60 days behind on payments. The whistleblower said white farmers were not sent this email, which provided $3.1billion of relief. 'It wasn't about hardship,' white farmer, James Dunlap, of Baker City, Oregon, told NewsNation. 'It wasn't about financial situations. It was about that box you checked under ethnicity line under your application.' Dunlap works two additional jobs to keep his farm afloat, he told NewsNation, yet he still didn't qualify for the loan forgiveness. The Oregon farmer was one of the many who sued the Biden Administration over the American Rescue Plan Act, claiming that it was race-based and violated the Constitution. A federal judge ruled the white farmers had been constitutionally harmed in ways that 'cannot be undone.' Following the decision, the Biden Administration still sent the Inflation Reduction Act email. The January 10, 2023, letter shared 'information about new payments and/or loan modifications that may assist you,' NewsNation, which obtained a copy of the letter, reported. The whistleblower said the letter was only sent to those who qualified as a 'socially disadvantaged farmer' under the American Rescue Plan Act. 'You are receiving this letter because you were previously informed of your potential eligibility as a Farm Loan Programs borrower for a payment under Section 1005 of the American Rescue Plan Act' the letter read, according to NewsNation. The letter informed farmers that the USDA could not grant loan forgiveness to them anymore, but the Inflation Reduction Act could, the outlet reported. The whistleblower also alleged the USDA workers were instructed to tell some minority farmers to stop paying, so the loans would be forgiven. 'It's not right,' he told NewsNation. 'It was discriminatory, unethical. 'And the people who pushed it are still in charge of the agency … [those] at the national office. Trump hasn't gotten rid of them.' In a statement to NewsNation, a USDA spokesperson did not address the specifics of the program, but slammed the Biden Administration for leaving the agency in 'complete disarray and dysfunction'. 'And that's why farmers were being left behind,' the spokesperson said. 'The entire farm economy has been hurt by Biden's inaction. 'It is absurd that while the Biden Administration was driving up inflation, American taxpayers were forced to fund billions in woke DEI initiatives. 'No one should be shocked that Biden weaponized bipartisan farm programs to discriminate and provide taxpayer dollars to one group based on race and not on merit. 'Instead, USDA is reprioritizing unity, equality, meritocracy, and color-blind policies,' the statement continued. The spokesman added that the new Secretary of Agriculture under the Trump Administration Brooke Rollins is reviewing the situation. 'Secretary Rollins directed USDA to review Inflation Reduction Act funding to ensure that it honors the sacred obligation to American taxpayers - and to ensure that programs are focused on supporting farmers and ranchers, not DEI programs or far-left climate programs,' he said. 'Unlike the Biden Administration, under Trump, USDA does not discriminate and single out individual farmers based on race, sex, or political orientation.'
