Future Federal Loan Developments
With borrowers owing the federal government around $1.6 trillion in loan repayments, it stands to reason that repayment will resume in the coming months. Still, considering the country is in the midst of an election year, much could change. Macielaks advice to borrowers? Pay attention.
Change is always imminent in the student loan world, he said. Continue to read the papers and monitor whats happening in Congress. Just in the last 10 years, look how much has changed. PSLF wasnt around 11 years ago same too with these income-driven repayment plans.
Stay up on the industry, Macielak advised.
The AMA hascurated a selection ofresources to assist residents and medical students during the COVID-19 pandemicto help manage the shifting timelines, cancellations and adjustments to testing, rotations, and other events.
*The 0.25% AMA member interest rate discount is available only to current AMA members in good standing. The rate discount will end if AMA notifies Laurel Road that the borrower is no longer in good standing. The offer cannot be combined with other offers, except for any discount for making automatic payments.
An additional 0.25% automatic payment discount is available for making automatic payments from a bank account. These discounts do not reduce the monthly payments, instead the discounts are applied to the principal to help pay the loan down faster.
White House Signals Willingness To Consider Executive Action On Student Debt Cancellation
White House press secretary Jen Psaki said Thursday the Biden administration is looking into whether it can use executive authority to cancel some portion of the $1.6 trillion in federal student loans owed by 43 million Americans.
The President continues to support the cancelling of student debt to bring relief to students and families, Psaki said in a tweet. Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress.
This is the first time the administration has publicly signaled a willingness to consider executive action to forgive student loans. Biden said canceling at least $10,000 in education debt would be a part of his economic recovery plan after his election in November. Liberal consumer groups were disappointed when the policy was excluded from the presidents sweeping $1.9 trillion rescue package and pressured him to use his administrative authority.
Biden has previously said he was skeptical about the extent of his authority and backed congressional legislation to cancel $10,000 in education debt.
But congressional Democrats have become unrelenting in urging the president to move on his own.
At a White House briefing before her tweet Thursday afternoon, Psaki reiterated the presidents support for Congress to take up legislation on debt cancellation.
Will Trump Lower My Student Loan Payment
You probably dont need to wait for Trump to reduce your payment, you may be able to decrease your payment today. See Income-Driven Repayment programs or private loan consolidations today. Based on his reports so far probably he will stay with the Income-Driven Repayment program that supports borrowers reduce their payment to a flexible amount.
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Full Debt Forgiveness For Approved Borrower Defense To Repayment Discharge Claims
The Trump administration implemented a scheme in which defrauded borrowers received only partial forgiveness of their loans. The partial relief methodology was flawed. The U.S. Department of Education has decided that all borrowers whose borrower defense claims were approved will receive a full discharge of their loans. This will affect 72,000 borrowers who were subject to predatory student lending.
A Federal Judge Intervened To Address The Borrower Defense Rule
A federal judge previously ordered DeVos to comply with the borrower defense rule. However, rather than comply with the judges order, the Education Department instead did the following, according to the Project on Predatory Student Lending at Harvard Law School.
- The Department demanded incorrect loan payment from 16,034 students
- Of those students, 3,289 student borrowers made one or more loan payments because of these demands, which they were not actually supposed to pay
- The Department has still not confirmed that 1,147 students loans are in the correct status, leaving those students in limbo
- The Department has harmed the credit of 847 non-defaulted students
- The Department subjected 1,808 students to involuntary debt collections
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Restoration Of Total And Permanent Disability Discharges
Some disabled borrowers who qualified for a Total and Permanent Disability Discharge had their repayment obligation reinstated because they failed to submit the annual earnings paperwork during the pandemic. The U.S. Department of Education will reverse the reinstatements and provide other student loan debt relief for 230,000 borrowers with Total and Permanent Disability Discharges.
Student Loan Forgiveness: Which Loans Are Eligible
Only direct loans made by the federal government are eligible for forgiveness. Stafford loans, which were replaced by direct loans in 2010, are also eligible. If you have other federal loans, you may be able to consolidate them into one direct consolidation loan that would make you eligible. Non-federal loans do not qualify for forgiveness.
In addition, borrowers with federal student loans who attended for-profit colleges and seek loan forgiveness because their school defrauded them or broke specific laws were recently dealt with a setback. On May 29, 2020, former President Trump vetoed a bipartisan resolution that overturned new regulations that make it much more difficult to access loan forgiveness. The new, more onerous regulations went into effect on July 1, 2020.
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It’s Time To Forgive The Student Loans Of Military Members Senators Say
With the end of federal student loan forbearance just under 10 weeks away, a group of U.S. senators led by Nevada Sen. Catherine Cortez Masto are urging the Biden administration to implement loan forgiveness for military service members.
Cortez Mastos was the lead signature on a letter by 14 senators to Department of Education Secretary Michael Cardona. Fellow Nevadan Sen. Jacky Rosen also signed.
An estimated 200,000 service members now owe more than $2.9 billion in student loans, according to the senators letter.
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Many of them planned their financial futures around the promise of eventual student debt relief, the senators wrote. However, a recent Government Accountability Office report indicated that approximately 94% of service members and civilian employees of the U.S. Department of Defense who previously applied for relief through the program have been denied.
In October, the U.S Department of Education announced it would overhaul the Public Student Loan Forgiveness program, which promises to forgive the remainder of a borrowers federal student loans, if that borrower worked for 10 years in the public or nonprofit sector and made qualified income-based payments during that time. The PSLF program has proven cumbersome for borrowers to navigate and has an abysmal approval rate, once reported as around 2%.
Trump Ordered The Education Department To Eliminate Every Penny Of Federal Student Loan Debt Owed By American Veterans Who Are Completely And Permanently Disabled
- 22 August 2019
This article was republished here with permission from The Associated Press, however it is no longer available to read on Snopes.com.
LOUISVILLE, Ky. Hundreds of millions of dollars in federal student loan debt owed by tens of thousands of disabled military veterans will be erased under a directive President Donald Trump signed. Trump ordered the Education Department to eliminate every penny of federal student loan debt owed by American veterans who are completely and permanently disabled. Trump said they wont have to pay federal income tax on the forgiven debt and called on states
Emergency Waiver On Student Loan Payments And Interest
Update: On March 13, 2020, as part of his emergency declaration for the coronavirus, Trump announced that he would be freezing/waiving student loan interest AND payments on student loans held by the Federal government. President Biden extended the waiver through January 31, 2022.
It’s important to note that this is pretty limited for borrowers. Loans held by the Federal government refers to “Direct” student loans and some FFEL loans, not all FFEL loans, Perkins loans, or private loans. That means if you have FFEL loans or private loans, you don’t qualify for this waiver of interest.
Also, any loans in collections will have collection activities suspended for the time being.
Finally, if you’re going for loan forgiveness programs like Public Service Loan Forgiveness, the payments “missed” during this pause will still count towards your eligible payments.
This program is very helpful for borrowers trying to navigate the pandemic. By pausing student loan payments and interest, Trump has freed-up much needed spending in people’s budgets. Yes, there are other ways to help, but this is an easy solution to help borrowers.
For borrowers losing work and income due to the coronavirus, it’s essential that you immediately update or apply for income-driven repayment with an income that reflects what you’re currently earning . This is the best course of action to not go into default on your student loans after the Covid-19 student loan deferment ends.
Trump Student Loan Forgiveness Proposals
There have been a lot of proposals that people have been concerned about with the Trump administration. It’s important to note that none of these proposals are the law, but that doesn’t mean they aren’t changes the President wants to see.
Whether you’re for or against these changes, you need to know what they are and what they could mean. Then you should voice your concerns to your representative in Congress.
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Student Loan Debt Has Not Been Canceled
Though federal student loan payments have been paused, there has been no action by Congress or Biden to cancel student loan debt.
Biden’s outline for a $1.9 trillion coronavirus relief package excluded student loan debt cancellation. The package would include $1,400 checks for Americans, investing $20 billion in a national vaccination program and $400 per week in unemployment insurance benefits.
None of Biden’s executive orders refers to student debt cancellation.
Details of the coronavirus relief plan continue to be negotiated in Congress. In a news briefing Feb. 4, Psaki said the White House was reviewing whether it could provide debt relief through executive order while calling on Congress to pass legislation.
“The president has and continues to support canceling $10,000 of federal student loan debt per person as a result of the COVID crisis,” Psaki said. “If it is passed and sent to his desk, he will look forward to signing it.”
How To Apply For Public Service Loan Forgiveness
To apply for PSLF, you must fill out an Employment Certification Form every year and make pay stubs, W-2 forms or other documentation available as requested.
If you have met the repayment requirements, submit a PSLF application to the Department of Education. If its approved, the remaining balance of your loan will be forgiven.
But be aware, the whole PSLF program is in limbo until President Biden or Congress submit a plan for changing the program. Its possible that monthly payments would also be slashed. People earning less than $25,000 a year and couples earning less than $50,000 would pay nothing toward their loans until their incomes rose above those levels.
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Other Proposals In Trumps 2021 Budget
In addition to the student loan forgiveness program, Trumps 2021 budget also proposes to eliminate subsidized student loans. The end of subsidized student loans would mean that the federal government would no more bear the interest cost on federal student loans while borrowers are in school.
Trumps 2021 budget also proposes to limit Parent PLUS borrowing and Graduate Borrowing. Parent PLUS borrowing allows parents to meet the undergraduate education costs of their dependent children. Graduate student loans, on the other hand, allow borrowers to fund their graduate school education.
Parent PLUS loans carry a high interest rate of about 7%. Thus, it could lead to financial woes for those in or near retirement. Trump proposes to limit such loans to ensure that parents, grandparents and graduate students borrow less, thus reducing financial hardship and potential default.
Trumps biggest push is at the K-12 level. The budget proposes a $5 billion tax break to support private school tuition and other education-related expenses. Such a measure could appeal to parents looking for more school choices. The same proposal was included in last years budget as well, but it failed to gain support.
If the proposal is passed this year, it could prove a significant shift of federal tax money to private education. Moreover, Trumps proposals, if approved, would reduce the federal role in education and allow states to set their own priorities.
Should You Pay Student Loan Debts Now Or Wait
“In order to make a payment on your loans, you had to actually proactively do something,” said Mark Kantrowitz, author of five books on scholarships and financial aid. “Whereas if you didn’t do anything, you were automatically in the payment pause and interest waiver.”
Travis Smith seems like one of those proactive people. He has opted to use the pause period to try and aggressively pay down his remaining debt of $30,000. That has translated to payments of about $2,000 to $3,500-a-month.
Smith, a doctoral student at Indiana University in Bloomington who also works in the athletic department, said he and his wife had been in the middle of paying off all their debts when the pause started. So they live off her salary, and direct his earnings toward the debt.
“I just got basically sick of the principal never changing on loans,” he said. “We knew how big of a deal that was to be able to knock the principal down, so I hope others recognize that too.”
The principal is generally the original amount of money a borrower agreed to pay back.
Kantrowitz said the zero percent rate does mean borrowers who make payments can chip away their loans more quickly. But that doesn’t mean all borrowers would benefit most from that route.
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Trump Administration Tries To Hamstring Biden On Student Loan Forgiveness
Education Department officials released a memo that concludes that the agency lacks the power to unilaterally forgive federal student loan debt on the scale that some Democrats want.
In this May 17, 2018, file photo, new graduates line up before the start of the Bergen Community College commencement at MetLife Stadium in East Rutherford, N.J. | Seth Wenig, File/AP
01/13/2021 06:23 PM EST
The Trump administration on Wednesday sought to throw up a bureaucratic roadblock to progressives push for the incoming Biden administration to cancel large swaths of outstanding student loan debt through executive action.
Education Department officials released a memo, signed by an outgoing political appointee, that concludes that the agency lacks the power to unilaterally forgive federal student loan debt on the scale that some Democrats want.
The eight-page memo says that the Secretary does not have statutory authority to provide blanket or mass cancellation, compromise, discharge, or forgiveness of student loan principal balances, and/or to materially modify the repayment amounts or terms thereof, whether due to the COVID-19 pandemic or for any other reason.
The document was signed on Tuesday evening by Reed Rubinstein, who is serving as the acting general counsel of the Education Department. It was first reported by the Wall Street Journal.
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