Latest news with #Keast
Business Insider
23-07-2025
- Business
- Business Insider
Trump paused student-loan forgiveness for nearly 2 million borrowers on income-based repayment plans
President Donald Trump's Department of Education quietly updated its guidance on student-loan forgiveness for borrowers on income-based repayment plans, which give enrolled borrowers monthly payments based on their income and family size with the promise of forgiveness after 20 or 25 years. According to Federal Student Aid data, just under 2 million borrowers were enrolled in IBR as of the second quarter of 2025. A notice posted on FSA's website said that ongoing litigation with former President Joe Biden's SAVE plan is preventing the administration from processing IBR forgiveness. "Currently, IBR forgiveness is paused while our systems are updated to accurately count months not affected by the court's injunction. IBR forgiveness will resume once those updates are completed," the notice said. The SAVE plan, which allowed for cheaper monthly payments and a shorter timeline to debt relief, has been blocked since July 2024. Forgiveness through other repayment plans, including income-contingent repayment, was also blocked due to the court order. However, the court order did not include IBR, which falls under a different congressional statute. The department's deputy press secretary Ellen Keast told BI that the IBR relief pause is to "comply with ongoing court injunctions." "Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count," Keast said. "For any borrower that makes a payment after they became eligible for forgiveness, the Department will refund overpayments when the discharges resume." Keast referred to a SAVE provision that allowed certain forbearance periods to count toward loan forgiveness. She said that while the court does not prevent relief through IBR, it impacts the types of forbearances that can be counted toward IBR relief, requiring the department to pause the discharges until it can adjust payment counts. The department did not comment on when the pause will be lifted. It comes at a precarious time for millions of borrowers — the department is restarting interest on SAVE borrowers' accounts beginning August 1, meaning their balances will once again start growing after a year on pause. To prevent balance growth, the department recommended that enrolled SAVE borrowers switch over to an IBR plan to begin making payments again. Trump's spending bill, which he signed into law on July 4, eliminated existing income-driven repayment plans and replaced them with two options: a standard repayment plan and a new Repayment Assistance Plan that allows for forgiveness after 30 years. Those plans aren't set to go into effect until July 2026. Since the bill also eliminates the SAVE plan, the department said borrowers should enroll in IBR in the meantime.
Business Insider
23-07-2025
- Business
- Business Insider
Trump paused student-loan forgiveness for nearly 2 million borrowers on income-based repayment plans
Student-loan forgiveness just got more complicated. President Donald Trump's Department of Education quietly updated its guidance on student-loan forgiveness for borrowers on income-based repayment plans, which give enrolled borrowers monthly payments based on their income and family size with the promise of forgiveness after 20 or 25 years. According to Federal Student Aid data, just under 2 million borrowers were enrolled in IBR as of the second quarter of 2025. A notice posted on FSA's website said that ongoing litigation with former President Joe Biden's SAVE plan is preventing the administration from processing IBR forgiveness. "Currently, IBR forgiveness is paused while our systems are updated to accurately count months not affected by the court's injunction. IBR forgiveness will resume once those updates are completed," the notice said. The SAVE plan, which allowed for cheaper monthly payments and a shorter timeline to debt relief, has been blocked since July 2024. Forgiveness through other repayment plans, including income-contingent repayment, was also blocked due to the court order. However, the court order did not include IBR, which falls under a different congressional statute. The department's deputy press secretary Ellen Keast told BI that the IBR relief pause is to "comply with ongoing court injunctions." "Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count," Keast said. "For any borrower that makes a payment after they became eligible for forgiveness, the Department will refund overpayments when the discharges resume." Keast referred to a SAVE provision that allowed certain forbearance periods to count toward loan forgiveness. She said that while the court does not prevent relief through IBR, it impacts the types of forbearances that can be counted toward IBR relief, requiring the department to pause the discharges until it can adjust payment counts. The department did not comment on when the pause will be lifted. It comes at a precarious time for millions of borrowers — the department is restarting interest on SAVE borrowers' accounts beginning August 1, meaning their balances will once again start growing after a year on pause. To prevent balance growth, the department recommended that enrolled SAVE borrowers switch over to an IBR plan to begin making payments again. Trump's spending bill, which he signed into law on July 4, eliminated existing income-driven repayment plans and replaced them with two options: a standard repayment plan and a new Repayment Assistance Plan that allows for forgiveness after 30 years. Those plans aren't set to go into effect until July 2026. Since the bill also eliminates the SAVE plan, the department said borrowers should enroll in IBR in the meantime. Collections on defaulted student loans also restarted in May after a five-year pause, and the department said that wage garnishment will begin later this summer.
Boston Globe
03-06-2025
- Business
- Boston Globe
Education Department says it will not garnish Social Security of student loan borrowers in default
'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. Advertisement '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 loans, 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. Associated Press writer Collin Binkley contributed to this report. Advertisement
USA Today
03-06-2025
- Business
- USA Today
Social Security garnishment paused for student loan defaulters
Social Security garnishment paused for student loan defaulters Show Caption Hide Caption Collection of defaulted student loans to resume May 5: What to know Since the pandemic, federal student loan borrowers have been mostly protected from the harshest consequences of defaulting. That's about to change on May 5. The Department of Education paused its plan to garnish Social Security benefits for defaulted student-loan borrowers, a process that was initially set to take effect when the administration restarted student debt collections on May 5. Spokesperson Ellen Keast told USA TODAY in a statement on Tuesday, June 3, that the Department of Education has not offset any Social Security benefits since collections restarted last month. 'The Trump Administration is committed to protecting social security recipients who oftentimes rely on a fixed income,' Keast said in the statement to USA TODAY. 'In the coming weeks, the Department will begin proactive outreach to recipients about affordable loan repayment options and help them back into good standing.' We explain: As millions miss student loan payments, here's how it could hurt the economy The announcement is a reversal for the administration after announcing April 21 that the Education Department's Office of Federal Student Aid would resume collections of its defaulted federal student loan portfolio on May 5, ending a more than five-year pause instituted in March 2020 as part of COVID-era policies. The Department of Education says in a note on its debt resolution page that it is "delaying offsets' of monthly federal benefits, including Social Security, for 'a couple of months and plans to resume sometime this summer." The Department did not provide a more concrete timeline of when collections could resume on Social Security payments in a request sent by USA TODAY. Over 400,000 defaulted borrowers likely receive Social Security: Report As of late April, there were 42.7 million borrowers owing more than $1.6 trillion in student debt, according to the department, with more than 5 million borrowers in default. When borrowers default on their federal student loans, the government can collect the outstanding balance through forced collections, including the offset of tax refunds, as well as the garnishment of wages and Social Security benefits. There are an estimated 452,000 student loan borrowers age 62 and older with defaulted loans who are likely receiving Social Security benefits, the Consumer Financial Protection Bureau said in January. More than one in three Social Security recipients with student loans are reliant on Social Security payments, according to a January report from the bureau, meaning forced collections, if implemented, could 'significantly imperil their financial well-being.' What does it mean to default on student loan payments? Federal student loan borrowers enter default after 270 days of missed payments and are then transferred to the Department of Education's default collections program after 360 days of non-payment. Defaults negatively impact borrowers' credit scores and leave them vulnerable to forced collections. Trump administration tightened student loan debt policies About 195,000 borrowers who haven't paid their student loan bills for at least nine months received a 30-day official notice the week of May 5 from the U.S. Department of Treasury notifying them that their federal benefits checks will be cut in early June. "There's no such thing as forgiveness, just shifting the payment burden from one party to another. We will not force American taxpayers to take on the debts that are not theirs," Department of Education Secretary Linda McMahon said in an X post in late April. "Borrowers should pay back the debts they take on." Kathryn Palmer is a national trending news reporter for USA TODAY. You can reach her at kapalmer@ and on X @KathrynPlmr.
CNBC
03-06-2025
- Business
- CNBC
Social Security benefits get reprieve from student loan collections, but paychecks are still at risk
The Trump administration paused its plan to garnish Social Security benefits for those who have defaulted on their student loans — but says borrowers' paychecks are still at risk. "Wage garnishment will begin later this summer," Ellen Keast, a U.S. Department of Education spokesperson, told CNBC. Since the Covid pandemic began in March 2020, collection activity on federal student loans had mostly been on hold. The Biden administration focused on extending relief measures to struggling borrowers in the wake of the public health crisis and helping them to get current. The Trump administration's move to resume collection efforts and garnish wages of those behind on their student loans is a sharp turn away from that strategy. Officials have said that taxpayers shouldn't be on the hook when people don't repay their education debt. "Borrowers should pay back the debts they take on," said U.S. Secretary of Education Linda McMahon in a video posted on X on April 22. Here's what borrowers need to know about the Education Department's current collection plans. Keast said on Monday that the administration was delaying its plan to offset Social Security benefits for borrowers with a defaulted student loan. Some older borrowers who were bracing for a reduced benefit check as early as Tuesday. The Education Department previously said Social Security benefits could be garnished starting in June. Depending on details like their birth date and when they began receiving benefits, a recipient's monthly Social Security check may arrive June 3, 11, 18 or 25 this year, according to the Social Security Administration. More than 450,000 federal student loan borrowers age 62 and older are in default on their federal student loans and likely to be receiving Social Security benefits, according to the Consumer Financial Protection Bureau. More from Personal Finance:What the House GOP budget bill means for your money'Maycember' is over — here's how to recover financiallyCourt order challenges Trump's plan to move student loans to SBA The administration's announcement gives borrowers more time to try to get current, and to avoid a reduced benefit check down the line. "The Trump Administration is committed to protecting Social Security recipients who oftentimes rely on a fixed income," said Keast. The Education Dept. says defaulted student loan borrowers could see their wages garnished later this summer. The agency can garnish up to 15% of your disposable, or after-tax, pay, said higher education expert Mark Kantrowitz. By law, you must be left with at least 30 times the federal minimum hourly wage ($7.25) a week, which is $217.50, Kantrowitz said. Borrowers in default will receive a 30-day notice before their wages are garnished, a spokesperson for the Education Department previously told CNBC. During that period, you should have the option to have a hearing before an administrative law judge, Kantrowitz said. The Education Department notice is supposed to include information on how you request that, he said. Your wages may be protected if you've recently been unemployed, or if you've recently filed for bankruptcy, Kantrowitz said. Borrowers can also challenge the wage garnishment if it will result in financial hardship, he added.
