“Last week, the federal pause on student-loan payments ended — after over three years, interest started accruing again on borrowers' balances on Friday, and their first bills will be due in October. ”

“The Biden administration announced Tuesday that 4 million student loan borrowers have been enrolled in the new Saving on a Valuable Education (SAVE) income-driven repayment (IDR) plan two weeks after it was officially launched.”

“SAVE won't bail out everyone's budget. But it could work well for millions of borrowers who might be buried in other debt, like high cost credit cards, or find themselves wondering how to pay the rent.

One of the best features: The interest on those federal student loans won't build up and trap you if you consistently make the required payments under the SAVE plan. About 70% of borrowers on income-driven repayment plans before the pandemic-related pause are expected to benefit from this change alone, according to the U.S. Department of Education.

The change addresses a problem involving negative amortization.

Total student loan balances grew significantly over the years for many borrowers in plans that didn't cover all the interest owed each month. You run into a situation where negative amortization takes place when your loan payment amount is less than the new interest that accrues each month.

When interest is added to the balance, it drives up the total balance over time — and triggers a great deal of stress for many borrowers who feel they're never going to get ahead.

If the borrower qualifies for loan forgiveness down the line, it can work out fine. But that's not always the case. The SAVE plan offers a fix to that potential problem.

”

“"The hypocrisy of Republican elected officials is stunning," Biden added. "They had no problem with billions in pandemic-related loans to businesses – including hundreds of thousands and in some cases millions of dollars for their own businesses. And those loans were forgiven. But when it came to providing relief to millions of hard-working Americans, they did everything in their power to stop it."”

“TOTENBERG: So what was the bottom line today? Unless the court decides that the states have no standing to sue and throws the case out of court, the Biden student loan forgiveness program will likely be struck down. Nina Totenberg, NPR News, Washington.
”

“The Biden administration has said more than half of borrowers eligible had applied for forgiveness before the program was halted, and the Education Department approved some 16 million applications. The department recently told borrowers that the administration will discharge the debt if and when it prevails in court.
The legal battles over the debt relief plan have led the administration to extend the pause on federal student loan payments. The pandemic-era freeze, which has been extended multiple times since it was imposed by the Trump administration, had been set to expire on Dec. 31.
Payments will now resume 60 days after the Education Department is allowed to implement the program or the litigation is resolved, officials said. If that hasn’t happened by June 30, payments will resume 60 days later or on Sept. 1. The administration wants to lower borrowers’ balances, or wipe out their debt altogether, before payments resume.”

“The Education Department announced it is permanently expanding what types of payments count as qualifying. Under the new regulations, borrowers can receive credit toward PSLF on payments that are made late, in installments, or in a lump sum. Prior rules would disqualify a payment if it was even a few cents short or late more than 15 days.

The department clarified that full-time employment is now defined as 30 hours per week with more specific guidelines for adjunct faculty and lecturers.

The new regulations also expand the types of situations in which it's OK for a borrower to defer or pause their payments. Before the change, deferment for things like cancer treatment or economic hardship could derail borrowers in the program.

Two dates to know
Eligible borrowers with federal Direct Loans and Federal Family Education Loans, or FFEL, that are managed by the Education Department will see these changes applied to their accounts in July 2023, as part of a one-time account adjustment, the department said.

Borrowers who don't currently have eligible loans, including those with commercially held FFEL loans, can still benefit from these changes and the one-time account adjustment if they consolidate into Direct Loans by May 1, 2023.”

“the Joint Consolidation Loan Separation Act, which President Biden is expected to sign this week, closes a loophole created in the 1990s, when Congress began allowing married couples to consolidate their student loans for a lower interest rate. It seemed like a good idea back then – a way for couples to save money on their loans and have a single monthly payment. Congress shuttered the program in 2006, but never passed a way to separate the loans.

Sixteen years later, about 14,000 borrowers are still shackled to each other – even after divorce, an NPR investigation found. In some cases, borrowers are being held responsible for debt that was linked with an abusive former spouse, forced to choose between paying a debt that isn't theirs or tanking their credit as they wait for a solution.

Powell's ex-spouse has not made regular payments to their loans since 2016, despite holding almost double the amount of debt back when they consolidated — leaving her with a monthly payment of $1,942.50.
...
The new legislation will allow borrowers with joint consolidation loans to separate them proportionally based on their initial loan amount.

Borrowers must apply through the U.S. Education Department, which will ask both parties attached to the loan to sign a form separating the debts. However, if a borrower can show they experienced domestic violence or economic abuse from their former partner, or they are unable to reach their former partner, they can initiate the separation by themselves.

For many, the Joint Consolidation Loan Separation Act will also open a path to having their loans erased as part of the federal government's Public Service Loan Forgiveness (PSLF) program.

...
"I'm elated! Just over the moon. I am so, so, so, so happy," she says.

But, unfortunately, experts are less hopeful. That's because PSLF comes with its own complications. The troubled program has been plagued by mismanagement, and last year the Biden administration created a temporary waiver to make it easier for borrowers to qualify. That waiver expires at the end of October, giving borrowers who will benefit from the Joint Consolidation Loan Separation Act little time to separate their consolidated debts, then convert their loans into federal direct student loans and then apply for the PSLF waiver.
”

“In an era of declining wages and rising debt, Americans are not aging out of their student loans—they are aging into them.

Americans aged sixty-two and older are the fastest-growing demographic of student borrowers. Of the forty-five million Americans who hold student debt, one in five are over fifty years old. Between 2004 and 2018, student-loan balances for borrowers over fifty increased by five hundred and twelve per cent. Perhaps because policymakers have considered student debt as the burden of upwardly mobile young people, inaction has seemed a reasonable response, as if time itself will solve the problem. But, in an era of declining wages and rising debt, Americans are not aging out of their student loans—they are aging into them.

Credit supposes that which we cannot afford today will be able to be paid back by tomorrow’s wealthier self—a self who is wealthier because of riches leveraged by these debts. Perhaps no form of credit better embodies the myth of a future, richer self than student loans. Under the vision of the free-market economist Milton Friedman, student loans emerged in the nineteen-fifties as an outgrowth of “human capital” theory, which posits the self as, above all, a unit of investment. Lending money for people to be educated was not only a sound investment—borrowers were sure to get high-paying jobs that would allow them to repay the loan—but smart macroeconomics: more educated people would increase the nation’s G.D.P. Education would be an incidental benefit.

But the surge of aging debtors calls into question the premise of education for human capital. Eroding union density, declining wages, and skyrocketing tuition have all made college less a path to high-paying jobs than an escape hatch from the worst-paying ones. Those who have taken on debt are increasingly unable to pay it off; many haven’t even received diplomas. The student-debt crisis is particularly dire for Black borrowers. Racial wealth gaps mean that Black debtors borrow more to attend college and carry balances for a longer time, effectively paying more for the same degree than their white classmates. Four years after graduating, nearly half of Black graduates owe more on their loans than their initial balance, compared with just seventeen per cent of white graduates. As a researcher and organizer with the Debt Collective, the nation’s first debtors’ union, I’m well versed in the notion of debt as a poor tax—those who have the least end up paying the most. But it was a revelation to me when I realized that elders are the fastest-growing population of student debtors. Debt, I have since understood, is also a time tax—it seizes the future, and corrodes the present, wearing down health, wealth, and pursuits of happiness.”

“As we enter spring, the 43 million Americans with student loan debt likely have their eyes on the month of May.

That’s when federal student loan payments are currently slated to start back up — after over two years of pandemic relief.

It’s left a lot of borrowers with a lot of questions, including you. We tackle your queries about student loans with our panel of experts.
GUESTS
Michael Stratford
education reporter, Politico
Michelle Singletary
personal financial columnist, The Washington Post; author, "What to Do with Your Money When Crisis Hits: A Survival Guide"
Betsy Mayotte
founder and president, The Institute of Student Loan Advice
”

“Joe Biden has canceled more student loan debt than any other President – a notable fact that’s flown under the radar.

Taking a piecemeal approach, the Biden administration has expanded existing loan forgiveness programs for borrowers who work in the public sector, those who were defrauded by for-profit colleges and borrowers who are now permanently disabled.

Those moves have delivered significant relief to more than 700,000 borrowers, totaling more than $17 billion.
...
Yet some voters feel misled by the President, who had supported canceling $10,000 for each of the 43 million federal student loan borrowers while on the campaign trail.
About a year ago, a Monmouth University poll found that 61% of adults supported canceling $10,000 in college debt for anyone with an outstanding federal loan. Fewer people, 45%, supported canceling $50,000 in debt per borrower.”

“"Joe Biden is the only president in history where no one's paid on their student loans for the entirety of his presidency," Klain said on the podcast, clearly test-driving a talking point for borrower-voters.”

“There are about 9 million federal student loan borrowers whose loans are in default. Roughly half are parents with dependent children, who are eligible for the child tax credit.
Monthly installments of the credit paid from July through December were protected from garnishment for federal debts. That’s not true for the rest of the credit paid as a refund this tax season.
The federal student loan pause protects those refunds issued before May 1. An Education Department official said it won’t seize the tax credit past that date, either.”

“Student loan scams are on the rise. We cover some of the red flags”

“The College Scorecard has gotten a makeover. And no, this has nothing to do with your March Madness bracket. The Scorecard is an online trove of federal data that can help prospective students choose the college that's right for them – and, just maybe, avoid a lifetime of student debt and heartache.

The site, collegescorecard.ed.gov, can tell you a lot about a school – from its graduation rate and the earnings of former students, to how much debt you can expect to take on. Earlier this month, the U.S. Department of Education updated the site, adding new data, details and restoring a few statistics that the Trump administration had scrapped.

The updated scorecard lets you compare schools based on graduates' earnings, then see how those earnings compare to workers without a degree. It even shows how well a school serves its low-income students.
”

“Nearly 16,000 federal student loan borrowers who were misled by for-profit colleges will have $415 million in debts erased, according to the U.S. Department of Education. These borrowers — who attended DeVry University, ITT Technical Institute and other schools — will receive relief through a legal provision known as borrower defense, which promises loan relief for defrauded borrowers.

With this announcement, the Biden administration says it has approved roughly $2 billion in loan relief for more than 107,000 borrowers through borrower defense.

Wednesday's news stands out not only for the borrowers it will help, but because this is the first time the department has said it will grant borrower defense claims — acknowledging students had been defrauded — while a school accused of defrauding them, DeVry University, remains open for business and still enjoys access to millions of dollars in federal student loans.

Biden pledged to forgive $10,000 in student loan debt. Here's what he's done so far
EDUCATION
Biden pledged to forgive $10,000 in student loan debt. Here's what he's done so far
According to the department, approximately 1,800 former DeVry students will receive more than $70 million in loan relief after the department "determined that the institution made widespread substantial misrepresentations about its job placement rates."
”

“There are about 9 million federal student loan borrowers whose loans are in default. Roughly half are parents with dependent children, who are eligible for the child tax credit.
Monthly installments of the credit paid from July through December were protected from garnishment for federal debts. That’s not true for the rest of the credit paid as a refund this tax season.
The Education Department official said the agency won’t withhold refunds attributable to the child tax credit for borrowers in default. The agency clarified its position after CNBC published a story Tuesday morning about the issue, for which the bureau did not initially offer a comment.

“The continued pause on student loan payments has helped protect Child Tax Credits for millions of borrowers, including those in default,” the official, who spoke on condition of background, wrote in an e-mailed statement. “The Department of Education will ensure that families will not see their CTC benefits garnished through Treasury offset this tax season, including those refunds issued after May 1.””

“Angela Powell met her "prince" during her freshman year of college. She had dreams of a happy marriage, a successful career and a couple of great kids. After graduation, she got married and started on the other two, attending business school while her husband got his law degree, before the two settled down to start a family in Arizona.

Around that time, they decided to consolidate their loans under a new Department of Education program for married couples. The perks were high — a lower interest rate for their debt and only one payment to worry about per month.

"I didn't think it was a big deal because we're going to pay all this off. We're going to be married forever, right?" Powell said. "Fast-forward to the housing market crisis in 2009/2010. Not a happy marriage anymore. Everybody loses their jobs."

After the divorce, Powell's relationship with her ex soured. Documents reviewed by NPR show he has not made regular payments to the loan since 2016. That's despite the fact he'd originally taken out almost double her debt. Through consolidation, they are now on the hook together for nearly $200,000 — more than five times the amount of Powell's initial loan.

"I'm stuck with having this thing on my back," says Powell, "and knowing that at the end of the day, if he chooses not to pay, guess what? My monthly payment is $1,942.50."

More than 14,000 borrowers participated in the short-lived program, which Congress shuttered in 2006. It seemed like a simple concept: Joint consolidation loans allowed for couples to have one single monthly payment with a lower interest rate. The problem came when trying to separate loans in the case of divorce or domestic violence. The program has no way to disentangle the debts.
”

“The Department of Education has said payments will resume on May 1. What should borrowers be doing to prepare? Betsy Mayotte has some ideas. She's the founder of the Institute of Student Loan Advisors, a nonprofit organization that offers free counseling to borrowers. Here are her seven tips for borrowers ahead of the May 1 restart:”

“The loan servicing giant Navient has agreed to cancel $1.7 billion in student loan debts owed by roughly 66,000 borrowers, as part of a settlement announced Thursday with 39 state attorneys general.

The settlement ends a years-long legal fight with states in which Navient faced two serious allegations. First, the company was accused of steering student borrowers into expensive forbearances instead of more flexible, income-driven repayment plans.
”

“Biden has focused on preexisting forgiveness programs
The Biden administration's approach to student loan relief began with improving, extending or expanding a handful of programs that were already on the books.
While it's not loan forgiveness, Biden extended the pandemic pause on federal student loan payments; that pause is now slated to lift in February. His other actions essentially keep promises the U.S. government had already made to borrowers — rather than make new ones. For example:

Total and permanent disability discharge: In August, Education Secretary Miguel Cardona announced that the department would erase the federal student debts of thousands of borrowers with permanent disabilities. A 2019 NPR investigation found that, even though eligible borrowers have been legally entitled to a full discharge of their loans, the process was so complicated that fewer than half were able to shed their debts. The latest data from the Education Department suggests that these changes will help at least 370,000 borrowers drop more than $6.5 billion in student debts.
Borrower defense and closed-school discharge: The Biden administration has dramatically expanded efforts to help students who have been defrauded by for-profit colleges and/or whose schools have been forced to close. Defrauded students who previously filed "borrower defense" claims but were given only partial relief under Trump administration rules will now see the rest of their federal student loans discharged.
Public Service Loan Forgiveness (PSLF): The program meant to forgive borrowers' debts after 10 years of public service and steady loan payments has been notoriously stingy, with complex rules and serial mismanagement pushing out many eligible borrowers. In October, though, the department used its expanded pandemic authority to retroactively loosen those rules and give borrowers credit for disqualified loan payments. According to the department, the overhaul has already forgiven $2 billion in debts.”

“The U.S. Department of Education says it will reach out to federal student loan borrowers who may have been prematurely denied loan forgiveness under the revamped Public Service Loan Forgiveness (PSLF) program and will reprocess their applications.

The move comes after an NPR review of borrower documents, as well as information provided by people familiar with the rollout, revealed that FedLoan Servicing, which manages PSLF, continued to operate under the loan forgiveness program's old rules for weeks after the overhaul's Oct. 6 rollout. As a result, for at least three weeks, the servicer rejected the applications of some borrowers who appear to qualify for forgiveness under the new terms.

”

“Public service is still non-negotiable, as are the 120 required payments — though what now qualifies as a payment has expanded dramatically.

The department says it also plans to use the rulemaking process to improve PSLF moving forward, so more changes may be on the way.

To benefit from the temporary changes the department is making, borrowers who have not yet applied for PSLF must do so before Oct. 31, 2022. For borrowers with FFEL or Perkins loans, the department says they must consolidate those loans and submit a PSLF form. The Department of Education says it will post more information about its PSLF waiver at StudentAid.gov/PSLFWaiver.”

“Students and recent grads aren’t the only ones grappling with the weight of rising education costs and loan payments. A 2020 JPMorgan Chase & Co. Institute report that analyzed the student loan debt of more than 300,000 Chase Bank customers found that “almost 40% of individuals involved in student loan repayment are helping someone else pay off their student loan debt.” The majority of these helpers don’t have their own student loan debt, but close to a third (31%) appear to be making student loan payments for themselves as well.
...
NerdWallet’s survey asked parent PLUS student loan borrowers about the impact of this debt on their lives. We found that around a third (34%) aren’t confident they’ll be able to make payments beginning in October 2021 [3] — when federal student loan payments were expected to restart before the Biden administration extended forbearance through Jan. 31, 2022. Nearly 3 in 10 borrowers (28%) say they’re counting on student loan forgiveness to help wipe out a large sum of their loan debt.
”

“”

“Today, tuition for one year of Master's Study at the University of Chicago is $62,640. The cost of living, supplies, and additional quarterly fees during that year force most students to borrow an additional $30,000, if not more. For this story, I spoke to more than two dozen students who’d either attended or declined offers from MAPH or its “sister” program for social science grad prospects, MAPSS. A handful of scholarships (covering no more than half of tuition) are available, but significant loans are the norm. According to the most current data available, the median debt taken out by an MAPH graduate, not including undergraduate debt, is $65,471. The median graduate salary of those who took out loans, two years after graduation: $37,928. ”

“In early July, the U.S. Education Department under President Joe Biden canceled nearly $56 million in student loan debt for some 1,800 borrowers, bringing the administration’s total to about $1.5 billion erased.

While a win for many borrowers, it isn’t a sign that broad-based student loan debt forgiveness will necessarily come anytime soon, experts say.

That’s because the latest round of canceled debt was specifically done through the “borrower defense to repayment” program. Borrower defense was created to protect people from being defrauded by schools engaging in misconduct or violating certain laws, such as falsely claiming guaranteed employment or incorrectly telling students that credits would transfer to other colleges.
...
Updated rules for the program were set to go into effect under former President Donald Trump but were delayed. Then, the former administration released its own regulations in July 2020, months before Trump left office.

“They made it almost impossible for anyone to get relief and put on hold or stalled any applications in the pipeline,” said Mayotte.

That changed when Biden came into office in 2021. He revived the program and extended relief to nearly 92,000 borrowers in just a few months, according to the Education Department.
...
In the meantime, borrowers should be aware that loan repayments are scheduled to resume on Oct. 1 after being paused for more than a year. That means that people need to get ready to make monthly payments again, and if they’ve had a significant change in income, consider applying for an income-driven repayment plan, said Sealy.
”

“The Biden administration is still debating when to end the pandemic pause on collecting payments on federal student loans, but it’s also looking ahead at broader changes to how Americans repay those loans.

President Biden’s campaign proposal was to cap loan payments at 5 percent of incomes instead of 10 percent, and he may try to do so by creating a new income-based payment plan through the regulatory process. (He has not expressed interest in canceling all or most student debt.)

Unlike traditional payment plans in which payments are the same every month (usually for 10 years), income-based plans have borrowers pay a set percentage of their income over a specified threshold.”

“Seth Frotman, executive director of the Student Borrower Protection Center, said that as payment processing is ramped back up, all borrowers, regardless of their servicer, need to take steps to protect themselves. “Requesting a copy of their payment history, downloading whatever they can from their account, and making sure that their contact information is up to date,” Frotman said.
FedLoan’s current contract will expire December 14. The pause on student loan payments and interest could expire as soon as September 30.
”

“This latest bankruptcy legislation is part of an ongoing effort to provide more student loan relief, particularly as as result of Covid-19. For example, Student Debt Crisis, a leading student loan advocacy not-profit, recently sent Sen. Elizabeth Warren (D-MA) a petition for student loan forgiveness with 1.2 million signatures. Warren, who proposed student loan forgiveness for 95% of Americans, has been a proponent of student loan forgiveness and student loan debt cancellation. Scanlon’s legislation would make it easier by amending Chapter 11 of the U.S. Bankruptcy Code, although the requirements to qualify may be challenging for some. Student loan forgiveness has been a hot topic in Congress, particularly in the wake of the Covid-19 pandemic. For example, former Vice President Joe Biden reiterated his support for student loan forgiveness and his support to discharge student loans in bankruptcy. Other members of Congress have proposed legislation to forgive student loans, although none have become law.

Will student loans be included in the new stimulus?
Maybe. It’s unlikely that this bill or a similar bill to discharge student loans in bankruptcy will be included in the new stimulus. The new stimulus package may be introduced next week. Currently, the focus includes second stimulus checks, state and local aid, unemployment benefits or a return-to-work bonus and liability protection due to Covid-19 for businesses. However, don’t expect student loan forgiveness to be included. However, Congress may extend student loan relief under the Cares Act, or Congress could allow the student loan relief to expire as planned on September 30, 2020. That said, student loans have not been the focus among Republicans (who control the Senate) among other high priority issues. There is bipartisan support to make student loans dischargeable in bankruptcy, but there may not be consensus to act until after the election in the next Congress.

”