Latest news with #EllenKeast
CBS News
23-07-2025
- Business
- CBS News
Student loan forgiveness in the IBR plan is paused, Education Department says. Here's what to know.
Millions of people with student loans who are enrolled in a popular repayment plan are now in limbo, with the Department of Education saying it has temporarily paused forgiveness for borrowers in its income-based repayment plan, or IBR. Such plans offer a double benefit for borrowers by lowering a person's monthly loan repayment to reflect their income, while also promising to provide forgiveness after a number of years. Specifically, the government can cancel the balance of student loan after people have made payments for at least 20 years. About 40% of the roughly 33 million people repaying student loans were enrolled in one of the Education Department's four such repayment plans at the end of 2024, according to data from the National Student Loan Data System and the Government Accountability Office. But three of those programs had previously been halted by a court ruling, while forgiveness for the roughly 2 million people enrolled in the fourth — IBR — is now also paused. On Tuesday, Education Department deputy press secretary Ellen Keast told CBS MoneyWatch that the agency "has temporarily paused discharges for IBR borrowers in order to comply with ongoing court injunctions regarding the Biden Administration's illegal attempts at student loan forgiveness." The court injunctions stem from 2024 lawsuits related to the Biden administration's flagship student loan repayment plan, called the Saving on a Valuable Education, or SAVE, plan. That initiative, created to fix long-standing issues with the Education Department's previous income-based plans, proved popular with borrowers, with almost 8 million enrollees at the end of 2024, National Student Loan Data System data shows. Because the SAVE plan could count toward loan discharges in the IBR program, the Education Department is now temporarily halting forgiveness for enrollees in that plan. The Education Department said the loan discharges will resume at some point, but didn't provide a timeframe for when that might occur. Student loan forgiveness under three of the federal government's income-driven plans — SAVE; Income-Contingent Repayment (ICR); and Pay As You Earn (PAYE) — is currently paused after a court ruled last summer that Congress exceeded its authority in approving those plans. The legal action last year called into question whether student loan forgiveness was authorized under the federal statute that governs those plans. But the IBR plan was created under a different authority. The Education Department didn't specify a timeframe in its statement to CBS MoneyWatch. It noted that the SAVE plan allowed forbearances — when loan payments are temporarily halted or reduced — to be counted toward loan forgiveness, but that the rule was halted by the court ruling. Because of the injunction, the Education Department said it needs to recalculate how many payments made by borrowers should contribute toward repayment. "Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count," said Keast of the Education Department. Yes. Borrowers in the federal IBR plan are eligible to have their student loans canceled after making payments for at least 20 years. However, some people eligible for such forgiveness have yet to see their loans canceled. They should continue making those payments, and the Education Department will eventually refund them, according to the agency. "For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume," Keast said. Borrowers can also request forbearance from their loan servicer. In that case, interest would continue to accrue on any remaining Associated Press contributed to this report.
Axios
22-07-2025
- Business
- Axios
What to know about forgiveness pause in IBR student loan repayment plans
The Department of Education has temporarily suspended loan forgiveness under its popular Income-Based Repayment plan (IBR). Why it matters: IBR is the only current student loan forgiveness plan not subject to a legal challenge or court injunction, and Trump's signature " big, beautiful bill" significantly cut back on repayment options for borrowers. How it works: Income-Based Repayment is one of four federal plans that establish monthly payments based on earnings and family size over a 20 or 25 year period. Monthly payments are generally equal to 15% of a person's discretionary income (10% if you are a new borrower on or after July 1, 2014), divided by 12, per the DOE. After the 20 or 25 years, remaining loan balances are eligible for forgiveness. What's happening: The DOE said it was pausing forgiveness under the plan in an FAQ earlier this month. The reason for the pause, it says, has to do with required changes to forgiveness calculations caused by court actions impacting the related SAVE Plan. "Currently, IBR forgiveness is paused while our systems are updated," the department said. "IBR forgiveness will resume once those updates are completed." What they're saying: In a statement to Axios, Ellen Keast, Deputy Press Secretary repeated that the IBR pause was to "comply with ongoing court injunctions regarding the Biden Administration's illegal attempts at student loan forgiveness." "For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume." Here's what to know: How many people will be impacted by the IBR suspension? About 2 million borrowers are enrolled in the plan. What other repayment plans are suspended? After much court back-and-forth, the SAVE, ICR, and PAYE plans are all in legal limbo. IBR was created separately by Congress, which is why it was exempt from the freeze. What does the One Big Beautiful Bill Act change? The bill cuts the number of repayment plan choices that federal student loan borrowers have down to two. One is a standard repayment plan, which gives borrowers a fixed monthly payment to repay their loans in 10–25 years. The current standard plan has a loan period of 10 years, regardless of loan size. The other is the Repayment Assistance Plan, which will involve monthly payments between 1% and 10% of a borrower's discretionary income (current offerings set payments at 10%, 15% or 20% of income). Borrowers on any current repayment plan other than the Saving on a Valuable Education (SAVE) plan will be able to keep their current payment structure, however. What happened to the SAVE plan? The BBB changes will affect those who take on loans from July 1, 2026, onward and current SAVE plan borrowers, as an appeals court blocked the Biden administration plan in February. Under the Republicans' plan, SAVE borrowers will have between July 2026 and July 2028 to choose a new plan. After July 1, 2028, those borrowers, if they haven't chosen one, will automatically be enrolled in the income-based repayment plan. There are about 8 million
The Hill
22-07-2025
- Business
- The Hill
Education Department pauses student loan forgiveness under IBR plan
The Education Department has paused student loan forgiveness under the Income-Based Repayment (IBR) plan without a clear timeline of when it might resume. The department argues any IBR forbearances were impacted by ongoing court action. 'The Department has temporarily paused discharges for IBR borrowers in order to comply with ongoing court injunctions regarding the Biden Administration's illegal attempts at student loan forgiveness. The Department's SAVE rule provided the authority to count forbearances in IBR toward loan forgiveness, but that rule has been enjoined,' said Ellen Keast, deputy press secretary for the department. 'Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count. For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume,' she added. The Department of Education is working through a court's injunction after the Biden administration's Saving on Valuable Education (SAVE) plan was ruled illegal. The agency argues that while the case did not impact forgiveness under IBR, what type of forbearances would count for loan discharges were. IBR allows individuals to make payments based on income and family size, receiving forgiveness after 20 to 25 years of consecutive payments. The department has encouraged individuals to join this plan as it shuts down the SAVE option. Those on SAVE will see interest accrual restart at the beginning of August and be kicked off the plan entirely in the following year.
Politico
17-07-2025
- Business
- Politico
The Education Department is shrinking just as Congress upped its workload
'The Department is also following the law and complying with numerous court orders to realign and strengthen the student loan portfolio,' Ellen Keast, deputy press secretary for the Education Department, said in a statement. 'We will continue to deliver meaningful and on time results while implementing the President's OBBB to better serve students, families, and administrators.' Former Education Department workers and Democratic lawmakers are concerned more essential duties will slip through the cracks, most notably the department's new congressional mandate to launch two new student loan repayment plans. 'The Department is requiring many students with loans to change their student loan plan, but those students are unable to do so due to inadequate staff at the Department of Education, while, at the same time, more people are being fired,' Rep. Bobby Scott (D-Va.), the ranking member of the House Education and Workforce Committee, said at a hearing Tuesday. If the department doesn't get the plans off the ground in time, it will just create more confusion and chaos for borrowers, said Melanie Storey, president and CEO of the National Association of Student Financial Aid Administrators and a former FSA leader. 'Its really confusing for borrowers,' Storey said. 'It's another barrier of entry for them and disincentive to enroll [in a loan repayment plan] when you have no certainty or predictability about what financing options are going to be available to you.' Now that the mass cuts are solidified, it also renews concerns about the fast approaching launch of the 2026-27 Free Application for Federal Student Aid, which had significant delays and technical glitches in previous years. The form already had issues when the department was fully staffed, Gittleman said. Former department staff have said the FAFSA team will have less support now that other employees, such as those in tech support roles that indirectly work on FAFSA, are gone. 'Even though the FAFSA team was untouched by the RIFs, no team operates in silos in FSA,' she said, referencing the Trump administration's reduction-in-force directive. 'Everything is intertwined.' One day after the department fired nearly half its employees in March, students and parents across the country couldn't access FAFSA. Seventy-two employees spent hours on a Microsoft Teams call as part of an effort to fix the issue. The incident was quickly resolved, but many employees questioned whether the agency could handle future technical problems after so many of the other teams that indirectly support FAFSA experienced cuts.
Los Angeles Times
10-06-2025
- Business
- Los Angeles Times
Education Department says it will not garnish Social Security of student loan borrowers in default
Borrowers who have defaulted on their federal student loans will no longer be at risk of having their Social Security benefits garnished, an Education Department spokesperson said. The government last month restarted collections for the millions of people in default on their loans. An estimated 452,000 people age 62 and older had student loans in default, according to a January report from the Consumer Financial Protection Bureau. The department has not garnished any Social Security benefits since the post-pandemic resumption of collections and has paused 'any future Social Security offsets,' department spokesperson Ellen Keast said last week. 'The Trump administration is committed to protecting Social Security recipients who oftentimes rely on a fixed income,' Keast said. Advocates encouraged the Trump administration to go further to provide relief for the roughly 5.3 million borrowers in default. 'Simply pausing this collection tactic is woefully insufficient,' said Persis Yu, executive director of the Student Borrower Protection Center. 'Any continued effort to restart the government's debt collection machine is cruel, unnecessary and will further fan the flames of economic chaos for working families across this country.' Student loan debt among older people has grown at a staggering rate, in part due to rising tuition that has forced more people to borrow heavily. People 60 and older hold an estimated $125 billion in student loan debt, according to the National Consumer Law Center, a sixfold increase from 20 years ago. That led Social Security beneficiaries who have had their payments garnished to balloon from approximately 6,200 beneficiaries to 192,300 between 2001 and 2019, according to the CFPB. Mumphrey writes for the Associated Press.
