Genevieve Smith spent her summer compiling an application to study at a university in the Netherlands – a vague goal now solidified, she says, due to rising costs and political turmoil in the U.S. The California-based student spent two years studying at Santa Rosa Junior College after graduating high school, all the while plotting her next steps to complete her higher education.
At the top of her list was affordability. The 19-year-old said she had initially considered attending UC Santa Cruz, but after reviewing the costs and not exactly knowing what she wanted to do, she decided to live at home, study and save money. After the 2024 election, she said, she began to worry about her safety and that of her friends in the U.S.
She decided to leap. Smith searched for four-year colleges abroadand then, after narrowing her career focus to international law, she decided to study in Europe. She said she’s preparing applications for programs in Leiden University at The Hague and Utrecht University in Utrecht.
“I feel as though going overseas, I can make a bigger difference,” she said, adding that she wants to use an international perspective as a lawyer to combat future potential harms.
Political landscape shifts interest in colleges abroad
Smith joins a growing number of American students applying to colleges in Europe, the United Kingdom, Asia and beyond amid rising costs and political turmoil at U.S. universities.
Data collected by the International Institute of Education show a steady rise in U.S. students studying abroad over the past five years – from about 50,000 students in 2019 to more than 90,000 in 2024, the last year their numbers were available.
The rise can be attributed mostly to costs, experts say, but also to the political landscape. Campuses across the country have been rocked by protests. Thousands of international student visas have been canceled, and universities and the Trump administration have been embroiled in litigation.
James Edge, owner of Beyond the States, a consultancy and online resource helping students who want to study abroad, whose company worked with Smith, said interest has skyrocketed since the election.
“The shift is striking both in volume and in the kinds of families reaching out,” Edge wrote to CBS News.
He said from November 2024 through July 2025, website visits went from 600,990 to 1,534,929 and strategy calls went from 2,215 to 29,373 in the same period.
American student applications to the United Kingdom rose 14% this year, according to UCAS, the UK’s shared admissions service for higher education. This was the largest increase since UCAS started collecting the data in 2006.
Mounting costs and student debt shift focus
Other students were focused on costs — one in six Americans has federal student debt, which now exceeds $1.6 trillion, according to Congress. The median tuition rate in Europe and the U.K. costs roughly $9,000 per year, while in the U.S., tuition for a four-year public university averages $11,000 – $30,000.
Jyslodet Davis told CBS News her main motivation for studying abroad was that she didn’t want to pay “exorbitant fees for a degree.”
“I feel like education should be free and accessible,” Davis, 21, said, when she latched onto the idea after viewing a video on TikTok.
She didn’t know anyone in her high school interested in studying abroad, but since she grew up in a military family and moved around a lot, the leap didn’t feel insurmountable. She said she found Beyond the States after viewing a TikTok video and doing some research and used their database to search for schools.
She applied to and chose the Anglo-American University in Prague to study business, arriving in August 2023. Davis said she paid for her studies via a grant for military families, savings and some scholarships.
Davis said since she began university, she has experienced other cultures, and her best friends are from Brazil, Japan and all around the world.
“I’ve traveled to 21 countries total,” she said since moving to Prague.
She also spent a semester abroad at Sophia University in Tokyo, which she said, “ruined Europe for me, once I saw what school was like in Japan.”
Now in her senior year, Davis cautioned others on some of the downsides of studying abroad. She detailed the hassles of visas, international bureaucracy, and being far from family.
But her biggest concern was not feeling prepared to enter the U.S. job market without an American education, internships and networking opportunities – which so many of her friends who attended school in the U.S. had.
Davis said she felt her education in business marketing and communication was not “on par” with American schools, and she might have had more opportunities if she had studied international relations. She said she wasn’t sure if she was going to return to the U.S. or stay abroad for some time.
Regardless, Davis said she had “no regrets” about attending school in Prague and Japan and she would encourage other prospective students to explore a similar path.
“Definitely go for it a billion percent – you can always go further when you are younger,” she said.
Cara Tabachnick is a news editor at CBSNews.com. Cara began her career on the crime beat at Newsday. She has written for Marie Claire, The Washington Post and The Wall Street Journal. She reports on justice and human rights issues. Contact her at cara.tabachnick@cbsinteractive.com
The millions of Americans with student loans, who have already experienced whiplash in federal policy since the pandemic, must again brace for change.
The “big, beautiful bill” that President Trump signed into law on July 4 overhauls the federal student loan system by reducing the number of repayment plan options down to two from seven and capping the amount individuals can borrow for higher education.
Here’s how the new budget law will affect people with federal student loans.
Repayment plan options
The One Big Beautiful Bill Act phases out a number of existing federal student loan repayment plans, including the SAVE, PAYE, IBR and ICR.
Current borrowers enrolled in programs to be eliminated will have until July 1, 2028, to switch to a new plan. For the 7.7 million Americans enrolled in the Biden-era SAVE plan, interest collection will resume on Aug. 1, the Department of Education announced Wednesday.
Beginning on July 1, 2026, new student loan borrowers will choose between one of two plans: a standard repayment plan or an income-driven repayment (IDR) plan called the Repayment Assistance Plan. The standard repayment plan will allow student loan borrowers to make fixed payments over the course of 10 to 25 years.
That approach “condenses a maze of loan options into two,” simplifying the repayment process, according to the White House.
The Repayment Assistance Plan will allow borrowers to pay 1% to 10% of their income on a monthly basis, for up to 30 years, Aissa Canchola Bañez, policy director at advocacy group Student Borrower Protection Center, told CBS MoneyWatch. That’s a longer timeline than current IDR plans, which are currently either 20 or 25 years.
After the 30-year mark, the borrower’s remaining loan balance will be canceled, as is currently the case after an individual’s repayment window ends.
The five-year payment extension on income-based payments concerns Bañez, who said “borrowers are going to be forced to be in repayment for even longer,” she said.
However, Sarah Reber, a senior fellow at the Brookings Institution, a Washington, D.C.-based think tank, thinks the binary repayment options a “huge improvement” from a policy design perspective. The current system is confusing for borrowers given all the options from which they have to choose, she told CBS MoneyWatch.
“The One Big Beautiful Bill gives families the freedom to choose the best education for their children while reforming a broken federal loan system to promote responsibility, affordability and opportunity,” the White House said in a statement to CBS MoneyWatch.
Pell Grants
The new law tightens eligibility rules for the Pell Grant program, the largest source of federal aid for low-income students. From 2021-2022, an estimated 92% of Pell Grant recipients had a total family income at or below $60,000, according to Congress.gov.
Under the law, students who receive a full scholarship from a college or university will no longer be eligible for additional funding through the Pell Grant program.
By contrast, the law expands Pell Grant eligibility for students in workforce training programs. Previously, Pell Grants could only be used to pay for workforce training courses of less than 600 hours and 15 weeks, shutting out many short-term programs.
That will enable “Pell Grants to be used for short-term, high-quality workforce training programs to support Americans who choose a career or technical education path for career advancement,” the White House said.
The budget law also increases scrutiny of the Student Aid Index, which is used to determine the size of an individual’s federal aid eligibility. As a result, higher-income families will have a harder time getting Pell Grant funding, according to the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP).
Borrowing caps
The new law sets borrowing caps on certain loans beginning July 1, 2026.
Parent PLUS loans — federal loans available for parents of dependent undergraduate students — will now be restricted to $20,000 a year and a total cap of $65,000. That’s a change from the current limit, which amounts to the total cost of attendance minus any student aid an individual receives.
The new law also does away with Grad PLUS loans, which help people finance higher education degrees. Starting July 1, 2026, new students will no longer be able to apply for the loans. However, current borrowers will be grandfathered and still allowed to access the loans, according to EdSource.
With the elimination of Grad PLUS loans, graduate students in need of federal tuition assistance will have to take out Direct Unsubsidized Loans. Those seeking unsubsidized federal loans for professional degrees, such as law or medicine, will be restricted to $50,000 per year and a $200,000 lifetime cap. Those seeking advanced degrees in nonprofessional areas, such as history or philosophy, will be subject to an annual borrowing cap of $20,500 and a lifetime limit of $100,000.
Economic hardship, unemployment deferment
Currently, student loan borrowers can apply for up to three years of deferment based on economic hardship or unemployment, according to the Federal Student Aid website.
Starting July 1, 2026, the new law eliminates deferment provisions for borrowers facing economic hardship. For example, someone who falls behind on the bills because of job loss would no longer qualify to defer student loan payments, Bañez said.
According to the White House, the changes to the deferment rules will streamline the process while also better protecting students and taxpayers.
Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
Washington — The Education Department will soon begin collecting payments for student loans that are in default, including through wage garnishment for potentially millions of borrowers, the department announced Monday.
Beginning May 5, the Education Department will begin involuntary collections through the Treasury Department’s offset program, which claws back delinquent debts by withholding payments such as tax refunds, federal salaries and Social Security benefits.
More than 5 million borrowers are in default and 4 million more could be in the same position in a few months, which would put nearly a quarter of the federal student loan portfolio in default, according to the Education Department. Less than 40% of borrowers are current on their student loan payments.
In the next two weeks, those in default will receive emails informing them of the next steps and urging them to look into repayment options. Wage garnishment notices will be sent out later this summer.
No federal student loan has been referred to collections since March 2020 when President Trump paused payments and interest accrual during the COVID-19 pandemic. The Biden administration extended that pause, which ended in October 2024.
Former President Joe Biden sought to wipe out student loan debt for tens of millions of people during his four years in the White House, but the effort was repeatedly rejected by courts, including a 2023 ruling by the Supreme Court. Still, the Biden administration erased student loan debt for more than 5 million borrowers through other forgiveness programs.
Education Secretary Linda McMahon said the Biden administration “misled” borrowers about its authority to waive debt.
“Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook,” she said in a statement Monday.
The announcement from the department added, “There will not be any mass loan forgiveness.”
Caitlin Yilek is a politics reporter at CBSNews.com, based in Washington, D.C. She previously worked for the Washington Examiner and The Hill, and was a member of the 2022 Paul Miller Washington Reporting Fellowship with the National Press Foundation.
Back in 2019, Freddie Williams Jr. had a lot on his mind at his college graduation: “That’s when, you know, it started really kicking in – hey, this is how much you owe, you’re gonna have to start paying this back,” he said.
Growing up on the south side of Chicago, he had dreamed of going to Morehouse, the historically Black college in Atlanta that counts Martin Luther King Jr. among its distinguished alumni. “Once I got accepted and saw that, hey, the money is being offered, [I] didn’t have an idea of what I was really getting myself into,” he said.
And then at commencement, Williams got the surprise of a lifetime, when billionaire businessman Robert F. Smith pledged to pay the student loans for the entire class, clearing some $34 million in student and parent debt. “We’re gonna put a little fuel on your bus,” Smith said.
Williams said, “It was crazy, you know? To look back and see my parents in the stands crying and celebrating. That’s when I knew like, okay, this is big.”
He said his total debt – around $125,000 – was a “tremendous” weight to be lifted.
Total student loan debt in the U.S. is now nearly $1.8 trillion, and experts say many young people are delaying buying homes and starting families because of it. But the Morehouse Class of 2019 is something of an experiment: What could lives look like when students graduate debt-free?
Filmmakers Joshua Reed and Emani Rashad Saucier, who were also part of the class of 2019, are making a documentary about how their classmates are faring thanks to that generous gift.
“I think only now, as we get five years out, people realize the implication of what having no loans is,” said Reed. “You can buy a house right after graduation, which people we’ve interviewed did. Someone started a nonprofit to get Black and Brown students into tech. Someone became a family man.”
Saucier said, “This is what happened at Morehouse: They got the debt cleared and they were able to have this exponential effect. What happens when we clear the debt for millions of Americans?”
Josh Mitchell, author of “The Debt Trap: How Student Loans Became a National Catastrophe,” said, “They’re sort of doing these piecemeal fixes, but they’re not doing anything to stop the underlying problem.”
Simon & Schuster
Mitchell said Congress created the federal student loan program to expand college access. But by allowing students and their parents to borrow virtually any amount to study virtually anything, the government has enabled colleges to raise tuition without consequence. “There’s a cycle of: students take out loans, schools raise their tuition, students take out more loans,” said Mitchell. “That’s essentially what’s happened over the past 40 years. That’s why tuition (up until recent years) has grown at sometimes triple the rate of inflation.”
Mitchell says those levels of student debt are negatively affecting the economy: “The U.S. economy is the world’s biggest, most dynamic, in large part because of higher education,” he said. “But you also have a lot of students who are – not in default in their loans, but are devoting more and more of their paychecks to paying off debt. That’s money that they could have been using to save for retirement, or buy a house, or to even start a business. For the average student, there is a payoff for going to college. But I think that the problem is they’re overpaying,”
Asked why the cost of tuition has increased at a rate greater than inflation, Nicole Hurd, president of Lafayette College, a private four-year school in Easton, Pennsylvania, said, “Colleges and universities obviously have to be good stewards, and we have to constantly look at our business model. But I will say this: We’re in the business of human capital, and human capital is expensive. So, when you think about investing in teaching, research, scholarship, those things are investments we have to make.”
Hurd worries that fear of student debt is discouraging the lower- and middle-income students who benefit most from attending college: “We’re so fixed on the price, and we’re thinking about the sticker shock of the price. We’re not thinking about the long-term investment as individuals, as families, and as a country. If somebody goes to college, their children will go to college, their grandchildren will go to college. It changes everything.”
Tuition and room and board at Lafayette is more than $87,000 a year, though in recent years, the school has made efforts to offer more grants and fewer loans as part of its financial aid packages.
Hurd said, “Some debt is okay. A little skin in the game is not the end of the world. What we can’t have is people [having] tens of thousands, hundreds of thousands of dollars of student debt. That’s not okay. But the non-profit sector in higher education is getting much better about being transparent about what debt is, and then making sure students and families make good choices.”
It’s why filmmaker Joshua Reed believes the story of the Morehouse Class of 2019 needs to be told. “People are being crushed by the immense weight of this debt,” he said. “But once it’s relieved, they can go on to do all sorts of things.”
Freddie Williams Jr. said he thinks about not having to pay back student loans almost every day. He was back on campus last month for the five-year reunion of that lucky class. Now a 26-year-old software engineer, he said that, instead of paying back a mountain of debt, he gets to pay the gift forward: “It was, you know, bigger than just having my debt paid off. Because of that gift, you know, I was able to buy a house, and with me buying a house, that allowed for my brother to move in while he’s finishing his degree. And I know it, you know, in my soul that I have to continue to give back and pass it forward.”
For more info:
Story produced by Mark Hudspeth. Editor: Emanuele Secci.
Lilia Luciano is an award-winning journalist and CBS News 24/7 anchor and correspondent based in New York City. Luciano is the recipient of multiple journalism awards, including a Walter Cronkite Award, a regional Edward R. Murrow Award and five regional Emmys.
Soaring tuition costs in the U.S. aren’t the only obstacle to attending college these days. Many Americans struggle with a more basic task — simply figuring out how much a bachelor’s degree would cost them,
A new study from Gallup and the higher-education foundation Lumina shows that a large majority of people remain convinced of the merits of going going to college. But the costs dissuade many from enrolling, while less than a quarter of respondents were able to estimate the cost of getting a bachelor’s degree within $5,000 of its actual price, the analysis found.
Tuition fog
Such confusion is especially problematic as colleges push up the sticker price of attendance to nearly six digits, often as a marketing ploy to signal their exclusivity. Because few students and their families actually pay that price, thanks to financial aid and other supports, focusing on that number can be misleading, experts note.
“People hear that $100,000 and then they just make these assumptions that that’s what college costs,” Courtney Brown, Lumina vice president of impact and planning, told CBS MoneyWatch. “That one story becomes the myth of what it costs.”
Yet it’s also hard for people to predict what college will cost from year to year, given that students must reapply each year for financial aid, while colleges often change their tuition and fees, she noted. That can throw students for a loop, especially when they don’t have a lot of wiggle room in their budgets.
“Colleges are doing a disservice to their students because there’s not full disclosure on how much it costs,” Brown said. “The No. 1 recommendation is that institutions need to be more transparent in exactly what it’s going to cost” to earn a degree.
That may partly explain why a majority of those polled were unable to accurately estimate the cost of college. The actual cost of attending an in-state public college is about $15,000 annually, Gallup and Lumina said. But about half of those polled said they believed the price was below $10,000 per year, while a third pegged it at more than $20,000 annually.
Both misperceptions can lead to poor outcomes. For instance, people who think college is more expensive than it actually is might be less likely to enroll, missing out on critical educational opportunities.
Meanwhile, “Those that underestimate the cost may be more concerning because those are the people that are then having to take out more loans,” Brown noted. “They’re thinking it’s not going cost as much, and then they realize, ‘Oh, wait, I have to pay for room and board and food and all these other things,’ and they’re the ones that are having to take out more loans.”
“It impacts everything”
The study, which surveyed almost 14,000 people ranging from enrolled students to Americans who never attended college, also highlights the adverse impact student debt can have on people’s lives.
About 7 in 10 people with student loans said they had delayed at least one important milestone because of the debt, ranging from buying a home to getting married. About 1 in 7 said they had pushed back either getting married or having children due to their college loans, the research showed.
“This is really important to pay attention to because if we want to have thriving communities, then we can’t have people who are being crippled by student loan debt,” Brown said. “If you can’t pursue normal life activities because of this, then that’s a problem for our communities, and it impacts everything — it impacts our health, it impacts our democracy, it impacts our community life.”
Brown noted that tackling student debt through new repayment plans or forgiveness, as the Biden administration is doing, is important, but she added there also needs to be a focus on reining in college costs and providing more transparency to students.
“College degrees are important to our current workforce and our future workforce — we know people that have more education are healthier, contribute more to our communities are more satisfied in their jobs,” Brown said.
She added, “But it’s not accessible, and we have to address the root cause of this and try to figure out ways to make it affordable and stop the that large accumulation of student debt that’s crippling so many people.”
Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.
More than 43 million Americans — one in five adults — collectively owe more than $1.7 trillion in federal and private student loans. In recent years, the idea of the government forgiving federal student debt went from fringe to mainstream with both Donald Trump and Joe Biden using emergency powers during the pandemic and after to ease the financial burden on college graduates, whether in their 20s or 70s. But sorting through the tangle of options, acronyms, requirements, and deadlines for lowering a crippling balance or potentially wiping it clean has become increasingly painful. Successfully navigating through yet another round of new steps in the loan-forgiveness labyrinth, starting this month, means the difference between two starkly different outcomes.
Do it right and you can wind up with manageable, if not zeroed out, monthly payments that free up cash and make your daily financial life far more pleasant. Mess it up and you face the financial equivalent of an ineradicable pantry moth that gnaws away at your long-term savings and a longer-term credit-score blemish that will, among other things, raise the costs of home-buying. Forgiveness generally applies only to loans funded by the federal government, not to private ones made by banks, state agencies, and schools. Still, nearly 93 percent of all student debt, or $1.6 trillion, is federal, so even if you’re exhausted by the options, locking down on the government’s once-in-a-lifetime opportunity now unfolding, if you can, is essential.
For the fourth consecutive year, borrowers ranging from recent college graduates in the workforce to late-career professionals to even retirees have endured whiplash over whether their often crippling debt will be a lifelong ball and chain. In March 2020, President Trump paused loan repayments and interest as the pandemic shuttered the economy. After several extensions under the Biden administration, interest restarted last September and payments resumed for all but the most recent graduates one month later. Borrowers who haven’t been making payments since last October are protected through a September 30 “on-ramp” from having their delinquency reported to credit agencies.
Still, the resumption hasn’t gone well. The Consumer Financial Protection Bureau said in January that borrowers faced long hold times when calling their loan servicer, “significant delays” in processing their applications for income-driven repayment plans, and “inaccurate billing statements.” A survey of 17,000 borrowers by the nonprofit Student Debt Crisis Center released on March 5 found that three in four borrowers were not confident that the information provided by their servicer was complete and accurate.
The setback from the nation’s highest court prompted Biden to shift to what’s called his plan B.
On April 8, Biden announced a sweeping new student-loan-forgiveness plan that aims to help roughly 30 million Americans. This time around, the plan relies on a different law — the Higher Education Act — than the plan that was struck down by the Supreme Court.
The plan, if successful, would offer various forms of relief to five groups of Americans:
Borrowers whose loan balance, because of interest, has exceeded the amount that they were initially loaned The new plan would cancel up to $20,000 in interest for 25 million borrowers who have consistently made their student-loan payments but now owe more than what they originally borrowed because of interest. This would affect individual borrowers who make up to $120,000 or families earning $240,000 or less.
Borrowers who have been in repayment for more than 20 years Biden’s new plan aims to automatically cancel the undergraduate debt of anyone who has been repaying their loans for 20 years (since July 1, 2005) and forgive the graduate-school debt of anyone who has been in repayment for 25 years (since July 1, 2000).
Borrowers experiencing hardship The plan would wipe out the student-loan debt of people experiencing hardship that is affecting their ability to pay off their loans.
Borrowers who attended “low-financial-value programs” like those offered by shady for-profit universities The new plan would also automatically cancel the debt of Americans who took out student loans to attend colleges that have since been stripped of their certification or barred from taking part in the Federal Student Aid program — making degrees earned at those institutions unmarketable.
Borrowers who already qualify for forgiveness but haven’t yet applied The plan would automatically cancel the student-loan debt of 2 million low- and middle-income Americans who are already due forgiveness but have yet to apply for it.
Per the Associated Press, most of the loan cancellation should happen automatically without requiring borrowers to apply for it. However, those seeking a hardship exemption will likely have to apply individually.
The administration’s plan will not go into effect immediately. The New York Times reports that the new regulations will be subject to a public-comment period for several months and could potentially face legal challenges. This newly proposed loan-forgiveness plan stands alone from the SAVE plan, the new repayment program recently introduced by the administration.
In the summer of 2023, Biden launched his Saving on a Valuable Education (SAVE) plan, an income-driven repayment (IDR) program that can halve or zero out monthly payments. The plan calculates payments based on a borrower’s income and family size — not on their loan balance — and forgives remaining balances after a certain number of years. Borrowers have to sign up for SAVE unless they were already in the government’s Revised Pay As You Earn (REPAYE) program, in which case they’re automatically enrolled.
Under SAVE, single people earning no more than $32,800 and with no discretionary income see their monthly payment plunge to $0 and get credit for a payment they otherwise would have made — forgiveness in disguise. The same is true for a family of four with an annual income of $67,500. SAVE also forgives any unpaid interest that accrued since your last timely payment. For borrowers earning discretionary income above 225 percent of the federal poverty level (this year, $33,885 for a single person and $70,200 for a family of four), monthly payments are lowered based on that discretionary income, meaning higher earners can also qualify, though the more you make, the less relief you get.
The White House says the typical borrower will see about $12,000 of interest payments waived and upwards of 95 percent of their principal forgiven under the program — a boost that it says creates “sizable potential lifetime wealth benefits.” The typical graduate of a four-year public university will save nearly $2,000 a year.
Last February, SAVE made it possible for people who borrowed no more than $12,000 to see total loan forgiveness in as few as ten years rather than 20 to 25 years. Borrowers with debt above that level see one additional year to forgiveness for each $1,000 borrowed with the maximum time 20 years for undergraduate loans plus another five years for graduate loans. Come July, undergraduate-loan payments under the program drop to 5 percent of discretionary income from 10 percent with payoff within 20 years. Graduate loans fall to 10 percent with payoff in 25 years. Borrowers with both types of loan will pay between 5 to 10 percent of their free income.
It’s also worth noting that, once again, Republicans are attempting to stymie Biden in court. Two groups of Republican attorneys general have filed lawsuits to block the SAVE plan, arguing that the plan is illegal and will harm their states in a variety of ways.
People who work full time for a nonprofit (excluding labor unions and political organizations) or a federal, state, local, or tribal government have additional options under the Public Service Loan Forgiveness (PSLF) program, which erases a borrower’s federal student debt after 120 monthly payments over ten years. The program also covers some teachers, doctors, nurses, firefighters, social workers, U.S. Armed Forces members, and lawyers working for the government, among other low-paying not-for-profit jobs.
The PSLF program has been around since 2007, but was in an administrative quagmire until the Biden administration implemented reforms. Borrowers rejected in earlier years, generally due to the type of repayment plan they are enrolled in, are getting a second look under an Education Department review expected to be completed in July.
As of March 21, 871,000 borrowers have been granted $62.5 billion in relief under PSLF since October 2021. Prior to that, only 7,000 borrowers had ever received forgiveness.
To enroll in PSLF, tell your current loan servicers — either through a phone call or through the government’s PSLF Help Tool — that you plan to apply for PSLF. When using the tool to complete your application, you either choose an IDR or let MOHELA — a Missouri-based company that is the government’s official servicer for PSLF applicants — choose one for you. Loan servicers will transfer your loans to MOHELA.
Even with the Biden administration’s improvements, however, that hasn’t always gone smoothly. The Student Debt Crisis Center has first-person horror stories but also a wealth of helpful links to the various federal programs, along with free web-based workshops, definitions of terms, and helpful Q&A sections. The Education Department, which sanctioned MOHELA last October for sending borrowers delayed or faulty statements, is continuing to monitor the situation.
Under a separate Education Department program, borrowers with federal loans, including privately held FFEL (Federal Family Education), Parent PLUS, Perkins, and HEAL (Health Education Assistance) loans, have until April 30 to apply for a onetime payment adjustment, which could allow them to have their entire debt canceled or receive credits that lower their balances. The process for that involves consolidating your student loans (borrowers typically have multiple loans) into one bunch, then enrolling in a government-run income-driven repayment plan, such as SAVE.
If you are already in an income-driven repayment program but haven’t yet consolidated, or are seeking PSLF, you have until April 30 to consolidate your loans and have any IDR or PSLF payments you previously made count toward forgiveness. That’s known as a “payment count adjustment” — and it will allow more than 3.6 million people who borrowed through the popular William D. Ford Federal Direct Loan Program to receive at least three years of credit toward loan forgiveness. Many borrowers will see their loans forgiven automatically. But if you miss the April 30 deadline, your payment count towards forgiveness resets to zero once you get a new consolidated loan, meaning you’ll be paying off a higher amount, likely over a longer period of time.
The first step, if you haven’t already, is to gather your loan details — type, servicer, loan amount, and interest amount — and set up a Federal Student Aid account. You’ll need that account to complete your application. And if you don’t know who your loan servicer is, logging into the account will tell you those details.
Here’s what will happen if you consolidate your student loans: Your monthly payment may decrease, but you may have to pay over a longer period of time, which could mean an increase in the total loan-lifetime interest you pay overall. If you have unpaid interest, your consolidated principal balance will include that interest and go up. And the new consolidation loan will typically carry a new interest rate. Studentaid.gov has put together a helpful guide to the various implications. By the way, the consolidation itself is free — there are no annoying fees to worry about.
To get started, go over to the government’s student loan consolidation website and click “Log in to Apply” on the upper right of the screen. The government says, mercifully, that the entire application process for a consolidation loan typically takes less than 30 minutes and doesn’t have to be done in one go — you can save your draft application and come back to it later.
During the process, a prompt on the website will ask you to choose an income-driven repayment plan for your Direct Consolidation loan. Here’s where things get a bit more complicated. Which plan to choose depends on a host of factors, including projected income, family size, and whether you’re including a spouse’s student loans in the consolidation. A helpful and easy-to-use loan simulator lets you plug in your broader financial data, including employment status, health insurance premiums, and tax-deferred retirement savings — if you have a 401(k) or traditional individual retirement account — and compare the options. The government recognizes that life takes twists and turns and thus lets you change repayment plans at any time at no cost.
Sorting all this out can feel overwhelming, but there’s really only one downside. Borrowers who come out free and clear of student debt can find their creditworthiness dented: Somewhat perversely, a closed installment loan, like a student loan, is no longer a line of credit by which on-time payments can boost your score. But at least you’d be free and clear of student debt.
Biden administration officials on Monday unveiled the details of a new plan to forgive student loan debt, suggesting that millions of Americans could start seeing debt relief as soon as this fall.The new set of proposals, which CNN reported on Friday, have yet to be finalized. It’s President Joe Biden’s second attempt to implement broad student loan forgiveness. His first plan was struck down by the Supreme Court last summer.The new policies, when combined with the more narrow actions already taken by the Biden administration to cancel student debt, would benefit more than 30 million Americans, according to a fact sheet provided by the White House.That means that nearly 70% of all federal student loan borrowers would see their debt reduced or fully canceled due to Biden’s policies.But first, the plans must be finalized – a process that could take months – and must withstand any potential legal challenges.Biden’s new student loan forgiveness proposals could set up another fight with Republicans. Several conservative-led states and groups sued the Biden administration over the first student forgiveness program, arguing that the executive branch had overstepped its authority.”President Biden will use every tool available to cancel student loan debt for as many borrowers as possible, no matter how many times Republican elected officials try to stand in his way,” White House press secretary Karine Jean-Pierre said Sunday on a call with reporters.After the Supreme Court rejected Biden’s first plan last year, the president vowed to pursue another pathway to delivering student loan debt relief. Since then, the Department of Education has been conducting a formal and lengthy process, known as negotiated rulemaking, to develop a new student loan forgiveness program.It’s a different process from what the Biden administration used in its first attempt to provide sweeping loan forgiveness, which would have canceled up to $20,000 in student loan debt for borrowers earning $125,000 or less a year.The new plans target specific groups of borrowers. If implemented as proposed, borrowers could see relief if they fall into any of the following categories:Those who have balances bigger than what they originally borrowed due to interest. Those who already qualify for student loan forgiveness under existing programs but have not applied. Those who entered repayment at least 20 years ago.Those who enrolled in “low financial value” programs, which left students in debt but without good job prospects. Those experiencing financial hardship.The new proposals unveiled Monday must still go through a public comment period. Then, after reviewing those comments, the Department of Education will publish a final version of the rule.Typically, if a final rule is published after going through negotiated rulemaking by November 1, it can take effect on July 1, 2025.But some exceptions are allowed, and parts of the rule could be implemented early. For example, the Biden administration implemented parts of the SAVE Plan – an income-driven student loan repayment plan – last year while other parts of the plan won’t take effect until July.In the case of the new student loan forgiveness proposals, the Department of Education could start canceling accrued interest for qualifying borrowers this fall, according to the White House.Even though Biden’s sweeping student loan forgiveness got knocked down by the Supreme Court, his administration has still canceled more student loan debt than under any other president – mostly by using existing programs. His administration has made it easier for certain groups of borrowers – such as public-sector workers, including teachers; disabled borrowers; and people who were defrauded by for-profit colleges – to qualify for student loan debt forgiveness.So far, 4 million people have seen their federal student debt canceled under Biden, totaling $146 billion.
Biden administration officials on Monday unveiled the details of a new plan to forgive student loan debt, suggesting that millions of Americans could start seeing debt relief as soon as this fall.
The new policies, when combined with the more narrow actions already taken by the Biden administration to cancel student debt, would benefit more than 30 million Americans, according to a fact sheet provided by the White House.
That means that nearly 70% of all federal student loan borrowers would see their debt reduced or fully canceled due to Biden’s policies.
But first, the plans must be finalized – a process that could take months – and must withstand any potential legal challenges.
Biden’s new student loan forgiveness proposals could set up another fight with Republicans. Several conservative-led states and groups sued the Biden administration over the first student forgiveness program, arguing that the executive branch had overstepped its authority.
“President Biden will use every tool available to cancel student loan debt for as many borrowers as possible, no matter how many times Republican elected officials try to stand in his way,” White House press secretary Karine Jean-Pierre said Sunday on a call with reporters.
After the Supreme Court rejected Biden’s first plan last year, the president vowed to pursue another pathway to delivering student loan debt relief. Since then, the Department of Education has been conducting a formal and lengthy process, known as negotiated rulemaking, to develop a new student loan forgiveness program.
It’s a different process from what the Biden administration used in its first attempt to provide sweeping loan forgiveness, which would have canceled up to $20,000 in student loan debt for borrowers earning $125,000 or less a year.
The new plans target specific groups of borrowers. If implemented as proposed, borrowers could see relief if they fall into any of the following categories:
Those who have balances bigger than what they originally borrowed due to interest.
Those who already qualify for student loan forgiveness under existing programs but have not applied.
Those who entered repayment at least 20 years ago.
Those who enrolled in “low financial value” programs, which left students in debt but without good job prospects.
Those experiencing financial hardship.
The new proposals unveiled Monday must still go through a public comment period. Then, after reviewing those comments, the Department of Education will publish a final version of the rule.
Typically, if a final rule is published after going through negotiated rulemaking by November 1, it can take effect on July 1, 2025.
But some exceptions are allowed, and parts of the rule could be implemented early. For example, the Biden administration implemented parts of the SAVE Plan – an income-driven student loan repayment plan – last year while other parts of the plan won’t take effect until July.
In the case of the new student loan forgiveness proposals, the Department of Education could start canceling accrued interest for qualifying borrowers this fall, according to the White House.
Even though Biden’s sweeping student loan forgiveness got knocked down by the Supreme Court, his administration has still canceled more student loan debt than under any other president – mostly by using existing programs. His administration has made it easier for certain groups of borrowers – such as public-sector workers, including teachers; disabled borrowers; and people who were defrauded by for-profit colleges – to qualify for student loan debt forgiveness.
So far, 4 million people have seen their federal student debt canceled under Biden, totaling $146 billion.
Marianne Williamson, the former Detroit-area spiritual guru and best-selling author, announced Wednesday that she is “unsuspending” her longshot campaign for president.
In a video posted on X, Williamson said she was back in the race for the White House, saying American voters are “watching a car crash in slow motion.”
Williamson, a progressive Democrat who supports universal health care, tuition-free college, and a ceasefire in Israel-Palestine, announced she was suspending her campaign three weeks ago.
She said she dropped out because she was “losing the horse race.”
“But something so much more important than the horse race is at stake here, and we must respond,” Williamson said.
The votes against the standard-bearers of both political parties suggests the leaders are having a tough time forming a winning coalition.
Williamson suggested the current candidates, including President Biden, are incapable of improving the economy for a vast majority of Americans.
Williamson also called Trump a “fascist” and “juggernaut of dark, dark vision.”
Voters deserve a candidate who prioritizes people over corporations and supports student loan debt relief, subsidized health care, reparations, and end to the war on drugs, and guaranteed housing, sick pay, and a living wage, she said.
“We can do different,” Williamson said. “We can do better. That’s what it is to make this country great again – to return it to a time when we actually had a thriving middle class. And you don’t do that with Donald Trump’s policies.”
Williamson said the current candidates lack a vision for helping the lower and middle classes.
“We need to have policies that actually expand opportunities and thus expand the economy and expand the possibilities for the future, for our children, and for our children’s children,” Williamson said.
“We need to take this country in a direction of hope and possibility and regeneration. That is the vision that will defeat Donald Trump.”
As more Americans struggle and the gap between the rich and middle class continues to grow, Williamson said voters can no longer wait around for a better candidate.
“This is serious,” Williamson said. “We need to say to the American people, ‘We see your pain,’ and we need to say to Donald Trump, ‘We see your BS.”
Washington — President Biden announced Friday that his administration is forgiving $5 billion in student debt for another 74,000 borrowers, marking the latest round of debt cancellation since the Supreme Court voided the president’s student loan forgiveness program.
The debt relief is the result of fixes to income-driven repayment forgiveness and the Public Service Loan Forgiveness program, according to the Education Department. Mr. Biden said that of the borrowers who can receive relief, nearly 44,000 are teachers, nurses, firefighters and others who are eligible for forgiveness after working 10 years of public service. Almost 30,000 Americans who will have their debt wiped clean have been repaying their loans for at least 20 years, but did not get the relief they earned through income-based plans, the president said.
With the latest round of student loan forgiveness, more than 3.7 million Americans have had their debt erased under the Biden administration, Mr. Biden said.
“From day one of my administration, I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity — not unmanageable burdens of student loan debt,” he said in a statement. “I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams.”
Education Secretary Miguel Cardona said the loan forgiveness comes while the Biden administration is working to provide greater debt relief to borrowers.
“The Biden-Harris administration has worked relentlessly to fix our country’s broken student loan system and address the needless hurdles and administrative inaccuracies that, in the past, kept borrowers from getting the student debt forgiveness they deserved,” he said.
Since the start of his presidency, Mr. Biden has undertaken several efforts to tackle student debt, including rolling out a new income-driven repayment plan last year and forgiving debt for certain types of borrowers, including those who worked in public service and are disabled. The president announced this month that those who took out less than $12,000 in loans and have been in repayment for 10 years will also have their remaining debt canceled, beginning in February.
Mr. Biden’s most sweeping effort was a program that would’ve provided relief to 40 million Americans who stood to have up to $20,000 in student debt wiped clean, but the plan was blocked by the Supreme Court in June. The high court determined that federal law did not authorize the loan forgiveness plan.
Melissa Quinn is a politics reporter for CBSNews.com. She has written for outlets including the Washington Examiner, Daily Signal and Alexandria Times. Melissa covers U.S. politics, with a focus on the Supreme Court and federal courts.
The Biden administration plans to create a shorter timeframe for student borrowers to achieve education debt forgiveness, a plan it said would benefit community college students in particular.
Starting in February, those who are on the Saving on a Valuable Education (SAVE) plan, a program that reduces monthly student debt payments by linking the reimbursements to an individual’s income and size of their family, and borrowed $12,000 or less for college, will see their debt canceled after 10 years of payments, according to the Department of Education.
The government said it hopes the accelerated timeline for debt forgiveness will help students who attended community colleges as they tend to typically borrow smaller amounts. The Education Department also anticipates that those who are struggling with their loans tend to also owe about $12,000 or less, so the lesser time for relief would be particularly beneficial to that group, as well.
“The Biden-Harris Administration designed the SAVE Plan to put community college students and other low-balance borrowers on a faster track to debt forgiveness than ever before,” Secretary of Education Miguel Cardona said in a statement.
Activists hold cancel student debt signs as they rally in front of the White House in Washington, D.C., on August 25, 2022. The Biden administration said this week that it plans to introduce a new program to help some borrowers get their student loans forgiven faster. STEFANI REYNOLDS/AFP via Getty Images
A borrower may receive debt forgiveness after another year of payment for every $1,000 they owe above the $12,000 initial debt, part of a plan to reduce the time it would take to clear the debt.
“As the Administration was writing the SAVE plan, it didn’t seem fair to make someone who attended college for only a semester or two to repay their loans for 20 or 25 years, like other borrowers on the SAVE plan do,” Under Secretary of Education James Kvaal said. “For every $1,000 above $12,000 you can get forgiveness after an additional year. So if you borrowed $13,000 you can get forgiveness after 11 years.”
The timeline of the new approach is based on the original loan, not what a borrower owes now, the Education Department said in its statement.
There are nearly 7 million borrowers who have signed up for the SAVE plan, according to the department.
SAVE emerged after a plan by the Biden administration to cancel up to $20,000 of student debt was struck down by the U.S. Supreme Court last summer. After a pause during the COVID-19 pandemic, interest on the debt resumed in September, and repayments on the principal loan kicked in the following month. Analysts said the average payment toward student loan for households is $200 to $300 per month, about 5 percent of the U.S. median salary.
The government’s student debt forgiveness effort through various plans has canceled $132 billion of loans for more than 3.6 million borrowers, according to the Education Department.
There are more than 40 million Americans who are in student debt, and federal student loans that are outstanding are close to $1.65 trillion, according to the Education Data Initiative.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Nearly $5 billion in additional student loan debt forgiveness for over 80,000 student borrowers has been approved, the White House announced Wednesday. The relief is made possible by fixes to the Public Service Loan Forgiveness program.
This latest $4.8 billion in relief brings the grand total of approved debt cancellation by the administration to $132 billion for over 3.6 million Americans, according to the White House.
Borrowers are eligible for relief through the Public Service Loan Forgiveness program, which allows certain public-sector employees to have their remaining debt forgiven after they have made 10 years’ worth or payments, or if they “have been in repayment for at least 20 years – but didn’t accurately get credit for student loan payment,” the White House said.
“From Day One of my Administration, I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity — not unmanageable burdens of student loan debt,” said Biden.
U.S. President Joe Biden speaks as Education Secretary Miguel Cardona listens.
Bonnie Cash/UPI/Bloomberg via Getty Images
“I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams.”
In October, the Biden administration announced that it would be forgiving $9 billion in student debt for 125,000 borrowers, a move that coincided with the resuming of student loan repayments after a more than three-year hiatus.
This most recent debt cancellation is the latest push by the Biden administration to erase some student loan debt following a June ruling by the Supreme Court that invalidated the administration’s plan for broad-based student loan forgiveness. The plan would have helped more than 40 million borrowers erase up to $20,000 each in debt.
“In the wake of the Supreme Court’s decision on our student debt relief plan, we are continuing to pursue an alternative path to deliver student debt relief to as many borrowers as possible as quickly as possible,” said Biden.
Borrowers can visit studentaid.gov to apply for this latest round of forgiveness.
Since launching in 2010, GoFundMe has become a widely used crowdfunding platform where people can solicit donations for a variety of causes, from help paying for cancer treatment to recovering from natural disasters. CEO Tim Cadogan also describes the company as a barometer of need that simultaneously functions as a sign of the times.
“You do tend to see shifts — some cultural moments, responses to economic changes, policy changes in terms of how people are using the platform,” he told CBS MoneyWatch in an exclusive interview.
As GoFundMe’s year-end report shows, the 30 million fundraising appeals on the platform this year reflect a range of everyday financial struggles that the usual yardsticks of how the U.S. economy is performing typically fail to capture.
Student loans and small businesses
In 2023, for example, GoFundMe campaigns to help people with student loans surged roughly 40% as payment requirements resumed after a three-year pandemic-era pause. More schools also sought help to fund lunch programs after government aid lapsed, while more families asked for assistance paying for senior care.
“If there’s a source of support or income people have been using or relying upon and that goes away, it creates a gap in people’s means. And we are one of the ways they turn to their family and friends and community to try to make up that difference,” Cadogan said.
Small business owners also flocked to GoFundMe this year. Smaller employers launched nearly 100,000 fundraising campaigns as they grappled with the fiercest inflation in decades, sharply higher interest rates and tighter lending standards, not to mention the many financial emergencies that can befall small businesses.
When Yu and Me Books, located in New York City’s Chinatown neighborhood, was damaged by a fire, for example, 7,000 donors contributed to a recovery fund, raising nearly $370,000. Where the money went: covering the cost of opening a temporary store, buying new furniture, paying for insurance deductibles, and replacing damaged inventory and equipment, among the many financial challenges that overnight can tip even a flourishing enterprise over the edge.
“It reflects that small business is an integral part of community,” Cadogan said. It is important for people to have a place to go, whether it be a restaurant or bookshop where they know the owners and people who run it and they want to support that.”
When fires spread in Maui, meanwhile, fundraisers solicited donations from people in more than 100 countries, according to GoFundMe.
GoFundMe, a for-profit company, makes money by charging transaction fees on donations. Creating a campaign is free, while the company collects 2.9% plus 30 cents for every donation.
Taylor Swift’s impact
Another sign of the cultural moment: The Taylor Swift effect. Donations from fans of the pop star swelled this year, with contributors often giving in amounts of $13 — the pop star’s favorite number — to campaigns they had heard about through her tight-knit community of devotees.
“We thought, what’s going on here? We realized the reason for that was Swifties,” Cadogan said, alluding to the name bestowed on her most ardent fans. “It was a way of expressing the two things.”
Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News streaming to discuss her reporting.
The Biden administration is proposing student loan relief for several more categories of borrowers in an effort to chip away at the nation’s enormous student debt problem after the Supreme Court squashed a broad plan to do so this summer.
The Department of Education released the proposal Monday. It would provide debt relief for four groups: people who “currently have outstanding federal student loan balances that exceed what they originally borrowed,” people who have loans that are more than 25 years past the start of their repayment date, people who “took out loans to attend career-training programs that created unreasonable debt loads or provided insufficient earnings for graduates,” and people who are eligible for forgiveness but have not proactively applied for it.
A fifth group of people who are experiencing financial hardship is also under consideration.
The proposal would build on other debt relief initiatives that have helped nearly 3.6 million borrowers wipe away a total of $127 billion so far, according to the Department of Education.
Instead of resting on the HEROES Act like Biden’s first plan, which tied debt relief to the pandemic, the new proposal leans on the Higher Education Act.
A committee of negotiators will discuss the proposal at hearings scheduled Nov. 6 and 7 and Dec. 11 and 12.
“President Biden and I are committed to helping borrowers who’ve been failed by our country’s broken and unaffordable student loan system,” Education Secretary Miguel Cardona said in a statement.
While President Joe Biden attempted to offer up to $20,000 of student debt relief to a broad swath of borrowers last year, lawsuits brought by conservative groups put an end to that plan.
More than 300,000 people were given incorrect information about their student loan repayments as resumption of debt payments began this month, the Education Department said on Thursday.
The agency has directed servicers to alert affected borrowers and place them into administrative forbearance until their correct payment amount is calculated in order to minimize the impact on them, the Education Department told CBS MoneyWatch.
The issue is affecting some borrowers in the new income-driven repayment plan from the Biden administration, called the SAVE plan, including some that should have had $0 owed under the new structure, the agency said. The mistake adds to some of the problems facing borrowers this month as their payments are due for the first time in more than three years, including customer service issues with their loan servicers.
“We’ve seen a lot of confusion and a lot of huge gaps from the servicers and the Department of Education,” said Braxton Brewington of the Debt Collective, an advocacy group for people with student debt. “People are getting billed the wrong amounts, so when they have the problems they aren’t able to reach their servicer.”
The wrong information was provided to fewer than 1% of the 28 million borrowers who are reentering repayment this month, the Education Department said.
“Because of the Department’s stringent oversight efforts and ability to quickly catch these errors, servicers are being held accountable and borrowers will not have payments due until these mistakes are fixed,” the agency added.
Earlier this month, 19 state attorneys general wrote to the Education Department that they were alarmed by “serious and widespread loan servicing problems” with the resumption of repayments this month. Long wait times and dropped calls are making it difficult for borrowers to get answers to questions they have for their servicers, the Student Borrower Protection Center said earlier this month.
SAVE repayment plan
The new SAVE repayment plan has about 5 million people enrolled it, the Biden administration has said. Income-driven repayment plans like SAVE, or IDRs, calculate a borrower’s monthly payment by pegging it to a percentage of their discretionary income.
People enrolled in the SAVE plan will have their monthly payments reduced from 10% to 5% of their discretionary income, although the 5% rate won’t go into effect until mid-2024.
The Biden administration has said payments for many borrowers enrolled in SAVE will be cut in half.
Meanwhile, borrowers also have the “on-ramp” that will help protect them in case they miss a payment, are late or send a partial payment. This is a one-year leniency program that began on Oct. 1, 2023 and ends on Sept. 30, 2024.
Borrowers who miss or are late in their payments won’t be considered in default, nor will they be reported to the credit reporting agencies or to collection agencies.
The Education Department “instituted its on-ramp program to provide borrowers a smooth transition into repayment where they will not be harmed if they miss a payment,” it said on Thursday.
The Biden administration said it is forgiving $9 billion in student debt for 125,000 borrowers, a move that comes as student loan repayments are starting up again this month after a hiatus of more than three years.
The debt cancellation is the latest push from the White House to erase some student loans in the wake of the Supreme Court’s June ruling. The 6-3 decision by the court’s conservative majority invalidated the administration’s plan for broad-based student loan forgiveness, which would have helped more than 40 million borrowers erase up to $20,000 each in debt.
With that debt forgiveness plan struck down, the Biden administration has focused on other methods for relieving student debt, including creating a new income-driven debt repayment (IDR) plan as well as outright forgiveness for some qualified borrowers. Meanwhile, with millions of student borrowers resuming payments this month, there are reports of problems with loan servicers, ranging from long wait times for callers to customer service reps who can’t answer questions.
Who is getting their student debt forgiven?
The Biden administration said it is forgiving debt for three types of borrowers:
Public servants: About 53,000 borrowers who are enrolled in Public Service Loan Forgiveness programs will get $5.2 billion in forgiveness, according to the Education Department. These programs are open to people who work for the government or nonprofit organizations, with forgiveness available after 120 qualifying monthly payments and while working full-time for an eligible employer. These types of workers include teachers, law enforcement professionals and social workers.
People in IDRs: About 51,000 borrowers enrolled in IDRS and who have $2.8 billion in debt will get relief. IDRs reduce student loan monthly payments by pegging a person’s payment amount to their income, but the Biden administration has said some of these programs hadn’t accurately tracked payments made under the plans. Because of this, the Education Department said it is reviewing the plans and discharging debt for some borrowers who have been in repayment for more than 20 years but “never got the relief they were entitled to.”
Disabledborrowers. Another 22,000 borrowers with $1.2 billion in debt who have a total or permanent disability will get their debt discharged. The Education Department is finding these borrowers through a data match with the Social Security Administration.
When will people hear if their debt is forgiven?
Notices have already been sent out to those people in IDRs who are receiving forgiveness, according to the Education Department.
The remainder will be sent within the next 30 days.
What is happening with broader student loan forgiveness?
The Biden administration is working on another plan for broad-based student loan relief through the Higher Education Act. But that process could take at least a year, and also could face legal challenges.
In the meantime, the Education Department has been forgiving debt for specific types of borrowers, such as those in IDRs, with U.S. Secretary of Education Miguel Cardona on Wednesday noting that the administration has approved $127 billion in debt relief for about 3.6 million borrowers, including the latest round of forgiveness.
The efforts are aimed at fixing a “broken student loan system,” Cardona said in a statement.
Thanks for reading CBS NEWS.
Create your free account or log in for more features.
Student loan payments resumed over the weekend following a pandemic-era pause that lasted more than three years. For millions, the payments will force them to make difficult cuts elsewhere as prices for gas and groceries remain high. Carter Evans reports.
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Student loan repayments are set to resume in October after being paused over three years ago at the start of the COVID-19 pandemic. Carter Evans takes a look at how the resumption will impact Americans.
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
This week, more than 800,000 student loan borrowers with billions of dollars in debt will start to have their loans discharged.
The one-time account adjustment comes after the Biden administration last month announced it would forgive student loans for 804,000 borrowers with a combined $39 billion in federal student loan debt. These borrowers have been in income-driven repayment (IDR) plans for more than 20 years and “never got the credit they earned” under IDR plans, the White House said in a statement Monday.
“Hundreds of thousands of borrowers weren’t accurately getting credit for student loan payments that should have delivered them forgiveness under income-driven repayment plans,” President Joe Biden said in the statement. They “will start to see their student debt canceled” this week.
Look for an email from your loan servicing company, which began alerting people about the debt forgiveness on Monday, according to ABC News.
The Biden administration has targeted borrowers enrolled in IDR plans for forgiveness because of “historical failures” of the system.
IDR plans work by calculating monthly repayment sums based on the borrower’s income. That payment can be as low as $0 a month, for borrowers who don’t earn an income.
Student loan borrowers enrolled in an IDR plan should technically be eligible for forgiveness after making either 240 or 300 monthly payments on an IDR plan or a standard repayment plan, according to Department of Education regulations. That includes borrowers with monthly payments as low as $0.
However, reviews by the Education Department of IDR payment-tracking procedures “revealed significant flaws” in the system that suggested borrowers were “missing out on progress toward IDR forgiveness,” according to a statement from the DOE last year. In addition, the department’s review of Federal Student Aid suggested that struggling borrowers were placed into forbearance by loan servicers, in violation of DOE rules.
On July 14, the Department of Education informed borrowers enrolled in income-driven repayment plans who have accumulated the equivalent of either 20 or 25 years of qualifying monthly payments that they would soon receive notices confirming their debt was canceled.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said in a statement at the time.
The federal relief will completely wipe out student loan debt for more than 614,000 people, according to the White House statement Monday.
The Education Department did not immediately reply to CBS MoneyWatch’s request for comment.
Who qualifies for the new student loan forgiveness?
While some borrowers in IDR plans are heaving a sigh of relief this week, millions of Americans will soon need to make payments on their student loans for the first time in more than three years.
For those facing repayments that they’re thinking of skipping, options exist.
One is the new Saving on a Valuable Education (SAVE) plan, an income-driven repayment program, which opened in July. The SAVE program was developed as an alternative for borrowers to avoid the pitfalls of traditional IDRs, such as interest that can snowball.
The program could cut monthly payments in half or even to $0 for borrowers. Many will save up to $1,000 a year on repayments, according to the Biden administration.
NEW ORLEANS (AP) — A federal appeals court on Monday halted a rule from President Joe Biden’s administration that could make it easier to obtain student loan debt relief for borrowers who say they were victims of misleading information about the quality of education they would receive.
At issue is a rule broadening existing policy ending the debt of students who borrowed money to attend colleges and universities that are determined to have misled them on matters such as whether their courses would actually prepare them for employment in their field or the likely salary they would earn upon obtaining a degree.
Career Colleges and Schools of Texas, an association of for-profit higher learning institutions, filed a lawsuit against the rule in February. Among its complaints was that the rules are so broad that they cover even unintentional actions by a college. They also said the rule unconstitutionally gives an executive branch agency, the Department of Education, what amounts to the power of a court in deciding whether to grant claims for debt relief.
Administration lawyers said relief granted by the department could be appealed in federal court.
The colleges asked a Texas-based federal judge to block the rule while the case plays out. The judge refused in a June ruling. But three 5th U.S. Circuit Court of Appeals judges on Monday issued a brief order granting an injunction. The order said the panel would hear arguments in November.
The three judges on the panel in New Orleans are Edith Jones, nominated to the court by former President Ronald Reagan; and two nominees of former President Donald Trump, Stuart Kyle Duncan and Cory Wilson.
President Joe Biden on Tuesday said he is forgiving $130 million in student debt for 7,400 borrowers who attended CollegeAmerica in Colorado, a defunct for-profit college that shut down in 2020 after misleading students about their career prospects and loans.
The debt will be forgiven automatically for students who were enrolled in the Colorado-based locations of CollegeAmerica between January 1, 2006 and July 1, 2020, the Education Department said in Tuesday statement. The college’s Colorado locations stopped enrolling new students in 2019 and closed by September 2020.
CollegeAmerica billed itself as helping working adults earn their degrees, but it drew criticism and censure from education experts and state officials. In 2018, the institution was put on probation by the Accrediting Commission of Career Schools and Colleges (ACCSC) because the program was “designed and implemented in a manner that is not designed for student success,” the ACCSC said.
On Tuesday, the Education Department said it found that CollegeAmerica’s parent company, the Center for Excellence in Higher Education, had misrepresented the salaries and employment rates of its graduates, as well as private loan terms. It based its findings on evidence provided by Colorado attorney general Phil Weiser, who in 2020 alleged the college had lured students into expensive but inferior programs by promising unattainable salaries and jobs.
CollegeAmerica borrowers “were lied to, ripped off and saddled with mountains of debt,” President Joe Biden said in a Tuesday statement.
The debt relief comes weeks after the Supreme Court invalidated the Biden administration’s plan for broad-based student loan forgiveness, which would have assisted 40 million borrowers each erase up to $20,000 in debt. Loan payments are slated to resume in October after a three-year pause.
With Tuesday’s announcement, the White House has approved $14.7 billion in debt relief for 1.1 million student loan borrowers “whose colleges took advantage of them or closed abruptly,” such as those who attended CollegeAmerica, Biden said in the statement.
Sanvi Bangalore is a business reporting intern for CBS MoneyWatch. She attends American University in Washington, D.C., and is studying business administration and journalism.
Thanks for reading CBS NEWS.
Create your free account or log in for more features.
