Latest news with #studentLoanForgiveness
Yahoo
07-07-2025
- Politics
- Yahoo
Student loan cancellation program could become Trump retribution tool, some advocates fear
WASHINGTON (AP) — President Donald Trump is reshaping a student loan cancellation program into what some fear will become a tool for political retribution, taking aim at organizations that serve immigrants and transgender youth. The Education Department is preparing an overhaul of the Public Service Loan Forgiveness program that would strip the benefit from organizations involved in 'illegal activities" and allow the U.S. education secretary to decide which should lose eligibility. A draft proposal released by the department includes definitions of illegal activity that center on immigration, terrorism and transgender issues. Several advocates invited to weigh in on the draft proposal raised concerns it would give the department subjective authority to decide if an organization is engaged in anything illegal — a power that could be used to remove entire hospital systems or state governments from the program. 'That's definitely an indicator for me that this is politically motivated and perhaps will be used as a tool for political punishment,' said Betsy Mayotte, president of the Institute of Student Loan Advisors and one of the advocates asked to review the policy as part of a rulemaking process. Plan could block many from loan relief More than 1 million Americans have had loans canceled through the program, including teachers, nurses, firefighters and others. Congress created the program in 2007 to encourage college graduates to work in the public sector. It promises to cancel all remaining debt after borrowers make 120 monthly loan payments while working for any level of government. Currently, nonprofits also are eligible if they focus on certain areas including public interest law, public health or education. A federal database of eligible employers currently includes some that provide grants to transgender youth and their families so they can travel to states that permit gender-affirming care for minors. It also includes some that provide legal services to immigrants regardless of their legal status. Trump ordered changes to the program in March, declaring it had 'misdirected tax dollars into activist organizations' that harm national security. He directed the Education Department to remove organizations tied to illegal activities, singling out those that work with immigrants or transgender youth or those that support terrorism — a label he often applies to pro-Palestinian activists. His plan has the potential to block huge numbers of student loan borrowers from cancellation. Those who work for an ineligible employer would no longer be able to make progress toward cancellation, effectively forcing them to find a new job or forgo loan relief. Hospitals, schools, and nonprofits could be at risk The proposal's definitions of illegal activity largely mirror those laid out by Trump. They include 'aiding or abetting" in the violation of federal immigration law, and supporting any group designated as a foreign terrorist organization. Also on the list are violations of the Civil Rights Act of 1964, a law Trump officials have invoked to root out diversity, equity and inclusion policies. Also considered illegal is 'engaging in the chemical and surgical castration or mutilation of children in violation of Federal or State law.' It says that includes the use of hormone therapy or drugs that delay puberty. It defines children as those under 19. It raises concerns that entire hospital systems could become ineligible if a single department provides certain care to transgender youth. Likewise, the federal government could potentially strip the benefit from entire cities that limit cooperation with federal immigration officials. 'I could see entire cities and entire civil structures being targeted," said Alyssa Dobson, financial aid director at Slippery Rock University and a member of the rulemaking panel. It could also give the administration another tool in its campaign against universities that run afoul of the president's politics, she said. 'This unfortunately may allow them to further chase the undesirable institutions, in their view,' she said. When determining if an employer should be deemed ineligible, the department's proposal would take into account court judgments and other legal findings. But it leaves room for at least some degree of subjectivity, giving the education secretary the authority to exclude organizations without proof of a conviction or settlement. Advocates see ambiguity in the definition of illegal activity If used widely, the policy could worsen shortages of doctors and nurses, said Emeka Oguh, CEO of PeopleJoy, a company that helps employers provide student loan relief. A member of the panel, he encouraged the department to use the power surgically, going after individual hospital divisions rather than systems as a whole. Oguh said department officials were unable to provide examples of organizations that might be found to be involved in illegal activities. When pressed for detail, officials said it would not be considered illegal for a hospital to treat an immigrant in the country illegally, he said. Less certain was how the department would handle teachers or schools teaching lessons considered DEI. 'There was a lot of ambiguity there,' Oguh said. Some others raised concerns with a provision that requires employers to certify they do not engage in illegal activities. Failure to certify could also render an organization ineligible, raising the risk that paperwork problems could jeopardize cancellation for huge numbers of borrowers. The department said it's open to making changes based on the panel's concerns. Ultimately, it's free to shape the proposal as it pleases. The agency is now preparing a formal proposal that will undergo a public comment period before it's finalized. It would be expected to take effect in July 2026. Last week, the Education Department thanked the experts and said they 'helped fulfill one of President Trump's promises to ensure that PSLF does not subsidize organizations that are breaking the law.' ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
The Independent
07-07-2025
- Politics
- The Independent
Student loan cancellation program could become Trump retribution tool, some advocates fear
President Donald Trump is reshaping a student loan cancellation program into what some fear will become a tool for political retribution, taking aim at organizations that serve immigrants and transgender youth. The Education Department is preparing an overhaul of the Public Service Loan Forgiveness program that would strip the benefit from organizations involved in 'illegal activities" and allow the U.S. education secretary to decide which should lose eligibility. A draft proposal released by the department includes definitions of illegal activity that center on immigration, terrorism and transgender issues. Several advocates invited to weigh in on the draft proposal raised concerns it would give the department subjective authority to decide if an organization is engaged in anything illegal — a power that could be used to remove entire hospital systems or state governments from the program. 'That's definitely an indicator for me that this is politically motivated and perhaps will be used as a tool for political punishment,' said Betsy Mayotte, president of the Institute of Student Loan Advisors and one of the advocates asked to review the policy as part of a rulemaking process. Plan could block many from loan relief More than 1 million Americans have had loans canceled through the program, including teachers, nurses, firefighters and others. Congress created the program in 2007 to encourage college graduates to work in the public sector. It promises to cancel all remaining debt after borrowers make 120 monthly loan payments while working for any level of government. Currently, nonprofits also are eligible if they focus on certain areas including public interest law, public health or education. A federal database of eligible employers currently includes some that provide grants to transgender youth and their families so they can travel to states that permit gender-affirming care for minors. It also includes some that provide legal services to immigrants regardless of their legal status. Trump ordered changes to the program in March, declaring it had 'misdirected tax dollars into activist organizations' that harm national security. He directed the Education Department to remove organizations tied to illegal activities, singling out those that work with immigrants or transgender youth or those that support terrorism — a label he often applies to pro-Palestinian activists. His plan has the potential to block huge numbers of student loan borrowers from cancellation. Those who work for an ineligible employer would no longer be able to make progress toward cancellation, effectively forcing them to find a new job or forgo loan relief. Hospitals, schools, and nonprofits could be at risk The proposal's definitions of illegal activity largely mirror those laid out by Trump. They include 'aiding or abetting" in the violation of federal immigration law, and supporting any group designated as a foreign terrorist organization. Also on the list are violations of the Civil Rights Act of 1964, a law Trump officials have invoked to root out diversity, equity and inclusion policies. Also considered illegal is 'engaging in the chemical and surgical castration or mutilation of children in violation of Federal or State law.' It says that includes the use of hormone therapy or drugs that delay puberty. It defines children as those under 19. It raises concerns that entire hospital systems could become ineligible if a single department provides certain care to transgender youth. Likewise, the federal government could potentially strip the benefit from entire cities that limit cooperation with federal immigration officials. 'I could see entire cities and entire civil structures being targeted," said Alyssa Dobson, financial aid director at Slippery Rock University and a member of the rulemaking panel. It could also give the administration another tool in its campaign against universities that run afoul of the president's politics, she said. 'This unfortunately may allow them to further chase the undesirable institutions, in their view,' she said. When determining if an employer should be deemed ineligible, the department's proposal would take into account court judgments and other legal findings. But it leaves room for at least some degree of subjectivity, giving the education secretary the authority to exclude organizations without proof of a conviction or settlement. Advocates see ambiguity in the definition of illegal activity If used widely, the policy could worsen shortages of doctors and nurses, said Emeka Oguh, CEO of PeopleJoy, a company that helps employers provide student loan relief. A member of the panel, he encouraged the department to use the power surgically, going after individual hospital divisions rather than systems as a whole. Oguh said department officials were unable to provide examples of organizations that might be found to be involved in illegal activities. When pressed for detail, officials said it would not be considered illegal for a hospital to treat an immigrant in the country illegally, he said. Less certain was how the department would handle teachers or schools teaching lessons considered DEI. 'There was a lot of ambiguity there,' Oguh said. Some others raised concerns with a provision that requires employers to certify they do not engage in illegal activities. Failure to certify could also render an organization ineligible, raising the risk that paperwork problems could jeopardize cancellation for huge numbers of borrowers. The department said it's open to making changes based on the panel's concerns. Ultimately, it's free to shape the proposal as it pleases. The agency is now preparing a formal proposal that will undergo a public comment period before it's finalized. It would be expected to take effect in July 2026. Last week, the Education Department thanked the experts and said they 'helped fulfill one of President Trump's promises to ensure that PSLF does not subsidize organizations that are breaking the law.' ___ The Associated Press' education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at
Forbes
25-06-2025
- Business
- Forbes
Trump Administration Unveils Sweeping Student Loan Forgiveness Restrictions
US President Donald Trump holds an executive order after signing it alongside US Secretary of ... More Education Linda McMahon (R) during an education event in the East Room of the White house in Washington, DC, March 20, 2025. The Trump administration is moving forward with proposed new rules to restrict student loan forgiveness under the PSLF program. (Photo by ROBERTO SCHMIDT / AFP) (Photo by ROBERTO SCHMIDT/AFP via Getty Images) The Trump administration this week proposed sweeping new restrictions on student loan forgiveness for public service borrowers, potentially threatening to shut down debt relief for millions of people based on the activities of the organizations they work for. The newly unveiled regulations would limit relief under the Public Service Loan Forgiveness program, which offers student loan forgiveness for borrowers who devote at least 10 years to working for qualifying nonprofit organizations or government entities. The Department of Education released proposed rules on Tuesday that would block PSLF for entire organizations or governments that the administration determines are engaged in activities that have a 'substantial illegal purpose.' Advocacy groups slammed the draft regulations as an illegal and unfair attempt to weaponize the PSLF program against organizations and state governments that run afoul of the Trump administration's policy priorities. The groups have warned that if the rules are successfully implemented, many borrowers would be cut off from student loan forgiveness. Here's the latest. New Rules Would Restrict Student Loan Forgiveness Under PSLF The Department of Education's release of the new PSLF regulations follows an executive order President Trump issued in March, instructing the department to draft new rules to curtail student loan forgiveness under the program. 'Instead of alleviating worker shortages in necessary occupations, the PSLF Program has misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means,' said Trump in the order. 'The PSLF Program also creates perverse incentives that can increase the cost of tuition, can load students in low-need majors with unsustainable debt, and may push students into organizations that hide under the umbrella of a non-profit designation and degrade our national interest, thus requiring additional Federal funding to correct the negative societal effects caused by these organizations' federally subsidized wrongdoing.' Trump provided no evidence to substantiate his assertions. The proposed new PSLF regulations unveiled this week would make sweeping restrictions on student loan forgiveness eligibility based on whether an organization's activities have a 'substantial illegal purpose.' The Trump administration would define 'substantial illegal purpose' to include: Under the proposed rules, which would be effective as of July 1, 2026, the Department of Education would prevent borrowers from receiving PSLF credit toward student loan forgiveness for employment with any organization found to be engaged in these activities. The regulations would allow the department, via the Secretary of Education, to make a determination of PSLF employment eligibility based on a "preponderance of the evidence.' The rules would also expressly prevent student loan borrowers from contesting any determination of employer PSLF eligibility. Advocacy Groups Slam New Student Loan Forgiveness Rules As Vast Government Overreach Student loan borrower advocacy organizations criticized the new PSLF rules as an unlawful government overreach that could cut off student loan forgiveness for potentially millions of borrowers who work for nonprofit organizations and state or municipal governments that run afoul of Trump administration policy priorities. The Student Borrower Protection Center characterized the draft regulations as 'thinly-veiled fascism' that would allow Secretary of Education Linda McMahon 'to police the ways in which state, county, municipal, and tribal governments and non-profit organizations serve their communities' needs.' 'The law does not empower the Secretary of Education to opine on the supposed illegality of a public service employer's mission—an unprecedented exercise of executive power that extends far beyond the Higher Education Act," said SBPC Executive Director Mike Pierce in a statement on Tuesday. 'This proposal empowers Secretary McMahon to block all government workers with student debt, including first responders, social workers, and teachers, from receiving Public Service Loan Forgiveness in retaliation if she decides that a local or state government policy conflicts with her extreme, right-wing views on immigration, civil rights, or free speech.' Previously, a coalition of nearly 200 advocacy groups (including labor unions and civil rights organizations) warned that the Trump administration's attempts to limit student loan forgiveness under PSLF could have major implications for borrowers. 'Efforts to limit access to or weaponize PSLF will threaten critical public service fields and harm our most vulnerable communities' the coalition wrote in a letter submitted to the Federal Registrar last month. 'We were incredibly troubled to see President Trump's executive order aimed at limiting access to PSLF for public service workers employed at organizations engaging in work that is not in line with President Trump's agenda. The Department's efforts to engage in rulemaking to make 2 unlawful changes to PSLF eligibility are directly related to the goals of this executive order, exceed the Administration's authority outright, and have already had a chilling effect on public service organizations doing necessary work on behalf of our most vulnerable communities.' What Comes Next For PSLF As New Student Loan Forgiveness Rules Advance For now, the PSLF regulations have not been finalized. The Department of Education must continue with negotiated rulemaking – a lengthy process that requires public input and the convening of a committee of key stakeholders that must evaluate the proposal. However, some critics have argued that the department's negotiated rulemaking committee is being stacked against the interests of borrowers pursuing student loan forgiveness. In the meantime, some student loan borrower legal groups have threatened to sue the Trump administration if the proposed rules restricting student loan forgiveness under PSLF ultimately go into effect. 'Threatening to punish hardworking Americans for their employers' perceived political views is about as flagrant a violation of the First Amendment as you can imagine," said National Student Legal Defense Network President Aaron Ament in March, following President Trump's executive order. "If the Trump Administration follows through on this threat, they can plan to see us in court.' Note: The author previously worked with National Student Legal Defense Network on an unrelated student loan-related case.
Forbes
23-06-2025
- Politics
- Forbes
Student Loan Forgiveness Case Resumes At Supreme Court—What To Know
The Supreme Court said Monday that a case over a Biden-era student loan forgiveness rule will resume—after the Trump administration briefly put the litigation on hold—which could affect thousands of borrowers who want to have their loans discharged after their schools closed or defrauded them. The Guardian or Authority of Law, created by sculptor James Earle Fraser, rests on the side of the ... More Supreme Court on Sept. 28, 2020 in Washington. (Photo by) Getty Images The Supreme Court agreed Monday to resume Department of Education v. Career Colleges and Schools of Texas, a dispute over a 2022 rule that streamlines the process for borrowers to have their federal loans discharged if their schools closed or engaged in misconduct. While borrowers have always been able to try to get out of defaulting on their loans by alleging misconduct by their school, the 2022 rule—created after a huge influx of complaints led to a significant backlog—defined clear grounds for borrowers to be able to have their loans discharged before they default on them, making the process of challenging them much easier. Under the rule, known as 'Borrower Defense Loan Discharge,' borrowers can challenge their loans if their school commits misconduct through misrepresentation, substantial omission of fact, breach of contract or aggressive or deceptive recruitment, if if there's a court ruling that the school violated the law, or the Department of Education takes away the school's ability to participate in federal student loan programs based on any misconduct. The rule also allows loans to be discharged if a borrower's school closed while they were enrolled or if they withdrew from the school less than 180 days before it closed, and makes it easier for groups to collectively seek relief from student loans, such as on behalf of borrowers who attended a specific school during the same years. A federal appeals court struck down the 2022 rule and made it even harder for borrowers to get out of paying their loans due to misconduct, saying they could only present those defenses in court after already defaulting on their loans. The Biden administration asked the Supreme Court to overturn the appeals court's ruling and the court agreed in January to take up the case for oral arguments, but the Trump administration then put the case on pause for a few months while it considered whether it agreed with the Biden administration's argument—ultimately saying in May it does agree and the court should resume the case. The Supreme Court still hasn't scheduled the case for oral arguments yet, though it's expected to be heard at some point during the court's next term, which runs from October through June 2026. A decision in the case would be announced by the end of June 2026. Can Borrowers Challenge Their Loans Now While The Case Is Pending? The Education Department is not adjudicating any requests while the litigation is pending for borrowers to have their loans discharged for either misconduct or a school closing. Borrowers can still submit an application for relief under the rule in the meantime, but must continue paying their loans until the program resumes—if it does—and they're notified the application was successful and their loans are discharged. If their loans are discharged, then borrowers may be able to have the loan payments they previously made refunded, per the Department of Education's guidance, in addition to no longer having to make loan payments going forward. Borrowers should consult their loan servicer to determine their specific eligibility for a refund. If the Supreme Court rules against the government and upholds the appeals court ruling, that would mean borrowers whose schools committed misconduct or closed would likely only be able to use that as a defense if they default on their loans, rather than being able to use it preemptively as a way to have their loans forgiven. The Biden administration warned that would lead to a huge backlog of complaints and strain the government's resources, should thousands of borrowers now have to present their cases in court, and would harm borrowers by forcing them to default on their loans in order to possibly get relief. 'Taxpayer resources would be spent resolving hundreds of thousands of collection suits in which there is no real controversy because both the lender and the borrower agree that the borrower has a valid defense to repayment,' the Biden administration argued, also claiming 'vulnerable borrowers who are subject to fraudulent schemes would be saddled with debt that they cannot discharge without first risking wage garnishment, credit-report damage, and offsets against federal benefits.' The Trump administration told the Supreme Court it will aim to create a replacement rule that would be similar in trying to streamline the process for seeking loan forgiveness, should the high court strike the 2022 rule down. Key Background The 2022 rule making it easier for borrowers to challenge their loans was part of a broader slew of measures on student loan forgiveness that came out during the Biden administration. The Biden administration broadly sought to relieve student debt, but faced challenges in its efforts to provide more universal loan relief, with the Supreme Court ultimately striking down the government's program to provide sweeping forgiveness to tens of millions of federal borrowers. The administration instead implemented a series of more targeted measures aimed at specific groups of borrowers, saying in January it had approved $188.8 billion in student loan forgiveness. The Trump administration's decision to continue the lawsuit over the Borrower Defense Loan Discharge program comes as top officials have otherwise been largely opposed to student loan forgiveness, with Education Secretary Linda McMahon saying in April that 'American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.' The White House has made several changes to the federal student loan program, most notably by trying to move it to the Small Business Administration and by resuming collections on defaulted loans. President Donald Trump's signature policy bill would also broadly overhaul student loans and student loan repayment plans, including by abolishing current income-driven repayment plans and imposing caps on new student loans. That legislation passed the House but is still pending in Congress, with the Senate expected to begin voting on it this week. Forbes How Trump's Spending Bill Could Impact Student Loans—Including Higher Payments And More Restrictions By Alison Durkee Forbes Trump Resumes Defaulted Student Loan Collections Today—Impacting Millions Of Borrowers. Here's What To Know. By Alison Durkee Forbes Trump's Presidency And Student Loans: What Move To Small Business Administration Means For Borrowers By Alison Durkee
Forbes
19-06-2025
- Business
- Forbes
Student Loan Forgiveness Tracker Will Return For Millions Of Borrowers, Says Top Official
A critical tool that allowed millions of Americans to track their student loan forgiveness progress will soon be restored after the Trump administration's abrupt removal earlier this year. The announcement was made by Senator Elizabeth Warren (D-Mass) last week, who said that U.S. Secretary of Education Linda McMahon confirmed the details to her during a meeting. The move would be welcome news for millions of borrowers who have been left in the dark about where they stand on student loan forgiveness under income-driven repayment plans. And it comes as uncertainty continues to grip much of the federal student loan repayment system following efforts by Republicans lawmakers in Congress and the Department of Education to potentially make substantial changes to affordable repayment programs and student loan forgiveness options. Here are the details. Until this year, millions of borrowers enrolled in income-driven repayment (or IDR) plans had no easy way to determine where they stood on their repayment term. IDR plans such as Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn offer borrowers affordable monthly payments tied to their income and family size, with the possibility of student loan forgiveness for any remaining balance after 2o or 25 years in repayment. But unlike other programs like Public Service Loan Forgiveness, borrowers enrolled in IDR plans could not ascertain how close they were to the student loan forgiveness threshold. In January, the Biden administration finally released a long-awaited IDR payment tracker for borrowers in IDR plans, displayed via their accounts. The tracker provided a 'counter' graphic detailing how many months and years a borrower had remaining until qualifying for IDR student loan forgiveness, as well as a more detailed month-by-month breakdown showing which months were counting and which were not (similar to the PSLF tracker, also displayed through This helped borrowers determine how much more time they had left in repayment, and when to expect that they would receive loan forgiveness – critical information for budgeting and tax planning, particularly since IDR student loan forgiveness can be a taxable event. But in April, the Department of Education abruptly removed the IDR student loan forgiveness tracker. The department provided little in the way of explanation, but suggested this was done so that the data underlying the tracker could be improved. Some borrowers did report that there were problems with the IDR tracker, resulting in some trackers displaying incorrect or incomplete information on student loan forgiveness progress, or didn't appear at all. Other observers noted that due to legal challenges, student loan forgiveness has been blocked under the ICR, PAYE, and SAVE plans, but this was not reflected in the IDR tracker. Last week, Senator Warren reported back on a meeting she held with Education Secretary Linda McMahon. Warren indicated that McMahon confirmed that the IDR tracker would be returning soon. 'Secretary McMahon stated that she intends to soon restore the income-driven repayment (IDR) payment count tracker to allowing borrowers to track their progress towards receiving debt relief, after taking down the tracker earlier in the Trump administration,' said Senator Warren in a statement last week. 'My job as a U.S. Senator is to conduct oversight and hold officials' feet to the fire when they are actively harming the American people," she said. 'I was able to secure important commitments from Education Secretary McMahon, which will make a real difference for people with student loans.' In addition to assurances that the IDR tracker would return, Senator Warren also outlined additional commitments from Secretary McMahon, including: 'At a time when President Trump and Republicans in Congress are trying to make it more expensive for students from working-class families to get ahead, I will not stop fighting to ensure that every student has access to affordable, quality education in America,' said Warren. While the assurance that the IDR student loan forgiveness tracker will return soon is welcome news for many borrowers, the announcement comes amid growing doubts about the future of several IDR plans. The SAVE plan, which has been blocked by a federal appeals court since last summer, appears increasingly likely to not return as a repayment option. SAVE was created by the Biden administration to be the most affordable federal student loan repayment plan. The Department of Education has also suspended student loan forgiveness under the ICR and PAYE plans, which were created under the same legal authority as the SAVE plan, following the appeals court's most recent ruling in February. 'Forgiveness as a feature of the SAVE, PAYE, and ICR Plans is currently paused, because those plans were not created by Congress,' said the department in an update in April. 'ED can and will still process loan forgiveness for the IBR Plan, which was separately enacted by Congress. Payments on PAYE, SAVE, and ICR are counted toward IBR Plan forgiveness if the borrower enrolls in IBR.' Meanwhile, Republican lawmakers in Congress have taken significant steps to enact legislative changes that would fundamentally change the IDR system. Under separate bills in the House and the Senate, most current IDR options including SAVE, ICR, and PAYE would be repealed if the legislation is enacted. IBR would be preserved for current federal student loan borrowers, although this plan may be significantly more expensive than the repealed programs, resulting in higher monthly payments for many Americans. The bill would also create a new IDR option called the Repayment Assistance Plan, or RAP. But RAP would increase the monthly payments for the lowest-income borrowers, and would extend the repayment term to 30 years (rather than 20 or 25) before borrowers could qualify for student loan forgiveness. The House passed its version of the bill last month, while a companion bill introduced in the Senate last week is still pending.
