The secretary of education is attempting to end a loan forgiveness program. Applying these tax return funds to your outstanding student loan debt can save you years off your repayment time. It's unclear how much the program will cost the government when its starts to forgive those debts.
A lot of people who went to grad school, or who are at least thinking about it, are going to be extremely unhappy if not outright panicked when the Trump administration releases its first detailed budget next week. Overall, the proposed budget would cut $10.6 billion in federal education programs-but put $400 million in expanding charter schools and school vouchers and dedicate $1 billion to encouraging public schools to incorporate "choice-friendly" policies. Congress would have to approve the department's proposed changes for them to take effect.
The Department of Education did not respond to CNNMoney's requests for comment, and "had no immediate comment" for the Washington Post.
And though funding will remain for Pell Grants-these serve lower-income students who require financial aid-over $700 million would be eliminated from the Perkins loan program, which many disadvantaged students turn to to help cover the cost of their education. "It would be the equivalent of pulling the rug out from under us", said Daniel J. Crooks III, a government attorney who is expecting loan forgiveness from the public service program in six years.
Almost half of defaulted student-loan borrowers who worked with debt collectors to return to good standing on their loans defaulted again within three years, according to an analysis by the Consumer Financial Protection Bureau. NCHER President James Bergeron said the feds need to simplify the various repayment plans they offer and "do a better job" helping previously defaulted borrowers get into repayment plans. Public Service Loan Forgiveness (PSLF) was created under George W. Bush in 2007, meaning the first crop of borrowers will be eligible for forgiveness later this year.
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"Too many Americans are facing crushing student loan debt that feels like a millstone around their necks", Merkley said. In 2015 former President Barack Obama proposed limiting the federal forgiveness loan amount to $57,500, but under the Trump-DeVos proposed budget the program would be cut entirely. A lawsuit filed in December claims four borrowers were misled into believing they qualified for the program.
The CFPB has received complaints from borrowers who were told they were not enrolled after years of making payments they thought counted towards the 120 needed for debt relief.
"A college education is one of the most valuable investments a family can make but rising costs often make it hard for students to attend without borrowing enormous amounts of debt", said Congressman Courtney. All that's needed to enroll is some paperwork that enables contracted loan servicers to confirm borrowers' annual earnings, but experts inside and outside the government say they don't know why this step isn't completed, and distressed borrowers are left stuck in debt collectors' sights. But that's not all, the new plan also will make changes to the income-based repayment system.
The median borrower in the program has more than $60,000 in student debt and nearly 30 percent of them have more than $100,000 in debt, according to a Brookings report. But the Government Accountability Office has estimated that as many as a quarter of US workers could qualify based on the definition of eligible jobs.
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