Latest news with #MarkKantrowitz
CNET
3 days ago
- Business
- CNET
SAVE Borrowers Encouraged to Move to IBR Even Though Forgiveness Options Are Paused. Here's What's Going On
Zooey Liao/CNET/Getty Images Millions of SAVE borrowers seeking forgiveness have been encouraged to move their loans to an Income-Based Repayment plan -- especially since their loans will start accruing interest in about a week. But now forgiveness through IBR is paused, at least for the time being. The Federal Student Aid website says student loan forgiveness through IBR is on hold while the Education Department updates its system to recalculate eligible payments. "IBR forgiveness will resume once those updates are completed," said an FAQ section updated July 9. The key question is how the Education Department counts payments made under the Saving on a Valuable Education repayment plan, which was struck down by the courts earlier this year. Borrowers on the IBR can have the payments they made on other income-driven repayment plans (including SAVE, PAYE and ICR) count toward their IBR forgiveness. But one of SAVE's features allowed borrowers to count months in certain types of forbearance when they didn't make payments, according to student loan expert Mark Kantrowitz. "The decision of the 8th Circuit Court of Appeals blocks these additional deferments and forbearances from counting toward forgiveness," he said in an email. "So the US Department of Education will need to make changes to the qualifying payment counts." Student loan forgiveness options have dwindled considerably during President Donald Trump's second administration. IBR is currently the only repayment plan available that offers a path to forgiveness to existing borrowers. Eligible student loan borrowers can receive forgiveness after 20 or 25 years' worth of payments on the income-driven student loan repayment plan, depending on when they took out their loan. We'll explain what could happen with IBR, and what you should do if you're waiting for student loan forgiveness. Read more: SAVE Student Loan Borrowers: You Don't Have to Move to IBR by Aug. 1, but You May Want to: Here's How to Decide Is student loan forgiveness going away? Multiple paths to student loan forgiveness have disappeared in the past year. ICR, PAYE and SAVE plans are no longer eligible for forgiveness directly, following the court ruling in February that Congress exceeded its authority by approving them. Since IBR was created under a different rule, it wasn't affected by the court's ruling. Forgiveness through IBR should be safe for now. But it's understandable that borrowers -- deciphering confusing and misleading information as they wait for forgiveness -- may be skeptical of the Education Department's reassurances that IBR forgiveness is coming back. After February's court decision, the application for income-driven repayment plans was removed from the federal student loan site, causing concern among borrowers. But it was made available again a month later with revisions. This could, in theory, be a similar scenario, where the IBR forgiveness will resume at a later date. When will IBR forgiveness come back? Though the Education Department calls it "temporary," there's no indication how long the IBR pause will last. With a backlog of 1.5 million applications for repayment plans and huge swaths of the Department of Education staff wiped out, it's unclear how long it could take to resolve the payment recalculation. The Washington Post reported that several student loan servicers have said the Education Department hasn't asked them to process loan forgiveness for any borrowers since mid-January. "This not only affects the loan servicers, but also the US Department of Education, since final approval of loan forgiveness is handled in-house," Kantrowitz said. The Department of Education didn't immediately respond to a request for comment. Are there other options for forgiveness besides IBR? Besides IBR, existing borrowers will have another option next year under the new Republican-backed law passed earlier this month: the Repayment Assistance Plan. The new Repayment Assistance Plan could offer slightly lower monthly payments for some borrowers, but the plan calls for 30 years of qualifying payments before loans are forgiven, compared with the 20 to 25 years under the current IBR. So you'll end up paying more in interest over time. Anyone who takes out student loans after July 2026 will have just two repayment options: RAP and the standard repayment plan. Should I still apply for IBR if I'm a SAVE borrower? Millions of borrowers enrolled in SAVE will start accruing interest on their loans again starting Aug. 1. However, payments remain on hold while your loans are in a general forbearance, which could last until mid-2026. You aren't required to switch plans until then, although interest will pile up during that time. However, if you decide to switch, you can compare other income-driven repayment plan options using the Federal Student Aid loan simulator. You can apply to switch to an IDR on the FSA website to restart payments that count toward forgiveness. If you do apply for a new plan, expect the application to take several months to process due to the backlog, Kantrowitz said. The Department has been encouraging SAVE borrowers to switch to IBR, which could mean an even higher volume of applicants as the Aug. 1 deadline approaches. What should I do if I'm enrolled in an IBR? If you're enrolled in an IBR and near or past the payment threshold to be eligible for loan forgiveness, Kantrowitz advises you to continue making payments until you receive notification that your loans have been forgiven, which should happen automatically. "Any excess payments will be refunded," he said. "They could switch into a general forbearance, but there's a risk that they've counted their qualifying payments incorrectly. It is better to just continue making payments."
Yahoo
3 days ago
- Business
- Yahoo
Student loan 'SAVE plan' interest to resume: What to know
Student-loan borrowers who are on the Saving on a Valuable Education (SAVE) plan will begin seeing interest accruing on their loans again, starting on August 1. Mark Kantrowitz, student loan expert and author of "How to Appeal for More College Financial Aid," joins Mind Your Money with Allie Canal to break down the details. To watch more expert insights and analysis on the latest market action, check out more Mind Your Money here. So Mark, if you're in the SAVE plan right now, what is going to happen to your loans? Well, starting August 1st, they will start accruing interest and that interest will be added to your loan balance. Uh, it won't be capitalized just yet, but, uh, you'll be in a general forbearance for at least another month, but you should consider switching into the income-based repayment plan so that those monthly payments count towards eventual forgiveness. So you you said you should expect to be in the forbearance period for at least another month. When should borrowers expect to start making payments again? Well, the Trump administration has not yet said when that forbearance will end. Based on previous announcements from the Biden administration, it suggests that they'll restart in September, but we haven't had any information one way or another from the US Department of Education. Is there anything borrowers with loans outside of the SAVE plan need to be doing right now? Well, uh, there's several different income driven repayment plans that are ending. It's not just the SAVE repayment plan, but any uh, repayment plan that was based on income contingent repayment such as the PAYE, the pay plan, and the repay plan, those will be ending. Uh, the income contingent repayment plan, they're going to start phasing that out because of the budget reconciliation bill. Um, and in general those don't count towards forgiveness of their own, the payments you make will count towards forgiveness under income-based repayment. So if you want to eventually receive forgiveness after 20 or 25 years, you need to switch into one of those repayment plans. You mentioned No, no, continue. Okay. There's a new income driven repayment plan called the RAP plan that was introduced by this new legislation. Uh, we expect that it will become available sometime, uh, this fall. So how does RAP stand up against some of the existing plans like SAVE and I know you mentioned IBR, that's the uh, interest um, or income-based repayment plan as well. Right. So comparing RAP with IBR, the monthly payments under RAP are a little bit lower than under IBR if your income is lower than about $80,000. So if you're lower modern income, uh, you'll have lower payments, but the number of payments you have to make until the remaining debt is forgiven is 30 years whereas IBR is 20 or 25 years depending on whether you have loans from uh, before July 1, 2014 or just afterwards. And let's talk policy too. How does President Trump's bill change the student loan repayment system at this point? Right. So for new borrowers as of July 1, 2026, they will have only two repayment plans available. A standard repayment plan, which is more like an extended repayment plan. The higher your debt, the longer the repayment term that's available to you. If your debt's under $25,000, you'll have a 10-year repayment term, and it goes all the way up to a 25-year repayment term. The other repayment plan is the RAP plan which bases the payments on a percentage of your adjusted gross income ranging from 1% to 10% uh, as your income grows. If your income is over $100,000, you'll pay 10% of income, uh, towards payments on that debt, and the remaining debt will be forgiven after 30 years in repayment. And when do these go into effect these new plans under the Trump administration? Um, for new borrowers as of July 1, 2026, uh, they will be in those repayment plans. Uh, they will also be phasing out the income contingent repayment plan uh, through July 1 of 2028. And then when you're talking to borrowers, what are some general tips when it comes to them paying back their student loans and and other resources that people can turn to to try and make this an easier process because it can be very complicated. Well, they can talk to the college financial aid administrator at their college, uh, who can provide them with some insights into these plans. Um, it is going to be simpler in a way because currently there are a dozen different repayment plans, including as many as four different income driven repayment plans, two extended repayment, two graduated repayment and one standard repayment. Uh, so it is going to get simpler. Um, but the only way to tell whether you're better off with the standard repayment plan or the RAP plan is to model it out for your own particular circumstances. There are very few rules of thumb that say which is better for you when. Related Videos 4 tips to save money on back-to-school shopping US Core Capital Goods Orders Slide Amid Tariff Uncertainty India's Goyal Sees UK Trade Deal as Win-Win German Exporters Can Live With 15% Tariff, Ifo Says 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
Yahoo
4 days ago
- Business
- Yahoo
Thousands of retirees may see Social Security checks docked by 15% if Trump admin resumes collections
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. For millions of older Americans relying on Social Security to cover their bills, another financial gut punch may be on the way — and it's coming from their own student debt. The Trump administration has threatened, then revoked threats, to resume collections on federal student loans. A higher education expert, Mark Kantrowitz, told CNBC that if the administration proceeded with their initial plans, borrowers in default could see their Social Security benefits docked by as much as 15%. Don't miss Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) You don't have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here's how There are approximately 452,000 borrowers aged 62 or older with defaulted loans, some of whom are likely receiving Social Security benefits, according to a report from the Consumer Financial Protection Bureau. Why your benefits could be garnished The government has long had the power to garnish, or claw back, a portion of Social Security benefits to repay defaulted federal student loans. But those collections were paused during the COVID-19 pandemic, and remained paused under the Biden administration. Now, the Trump administration has threatened to resume collections. In May, the Department of Education announced it would soon resume involuntary collections, only to walk back the decision in June, when department spokeswoman Ellen Keast told CBS News it had 'put a pause on any future Social Security offsets.' It remains to be seen whether that pause will be indefinite. What you need to know about the Social Security offset If you're in default on loans, the federal government could theoretically withhold up to 15% of your monthly Social Security benefit without your permission. But that would be the worst case scenario, and at least part of your benefits would remain. Federal law protects the first $750 per month of Social Security income from garnishment. But for seniors already scraping by, even a small deduction can have a devastating impact. Of the 1.3 million Social Security beneficiaries with student loans, about 37% rely on an average monthly benefit payment of $1,523 for 90% of their income, according to the same Consumer Financial Protection Bureau report. Regardless of whether the administration ultimately goes ahead with its collections, the threat should serve as a crucial wake-up call for anyone struggling with debt repayment. Read more: Rich, young Americans are ditching the stormy stock market — How else to fight back, or at least prepare If you're in default or nearing default, there are steps you can take now to reduce the risk of garnishment. First, you may be able to ask for a hearing or file a request to stop or reduce the offset. If you're facing medical issues, supporting dependents or already living below the poverty line, you can submit documentation proving financial hardship to the Treasury Department or its debt collection agency. Second, you may be able to reenter good standing through loan rehabilitation or consolidation. Loan rehabilitation typically requires nine monthly payments, and the process can take several months. Both processes can stop wage or benefit garnishments. Credible can help with loan consolidation by letting you shop around for lower interest rates with just a few clicks of your mouse. In just two minutes you can compare and contrast lenders willing to consolidate your loans into one easy-to-manage payment. Even if you're just curious about your options, checking rates on Credible could be a good idea. It won't hurt your credit score, it's totally free and it could save you a bundle. Other options for retirement If you're still working and planning to retire soon, retiring while in student loan default might now be riskier than it once was. If your retirement income plan was built around a full Social Security check, you may need to take a two-pronged approach and rethink your savings and spending strategies. With Wealthfront's automated investing platform, the power of compound interest works for you. Their sophisticated "set it and forget it" approach means your money is professionally managed and automatically rebalanced, allowing your wealth to grow steadily over time. Start investing for the long term with globally diversified portfolios or go for a higher yield than a traditional savings account with an automated bond portfolio. Open your account today and receive a $50 bonus to jumpstart your investment journey. Whether you're saving for retirement, a home, or building generational wealth, Wealthfront's low-cost, automated investment strategy can help you achieve your financial goals. As for spending, it can pay to cut monthly expenses where you can. One of the biggest line-items over time is insurance. Like with loans, shopping around for home and auto insurance rates can also help you cut costs. With it takes just two minutes to comb through over 200 insurers for free and find the best deal for you in your area. The process can also be done entirely online. The best part? users can save an average of $482 per year. Similarly, can help you switch to a more affordable auto insurance option within minutes. After answering a few questions about yourself, your vehicle and driving history, you can compare quotes from trusted brands like Progressive, Allstate and GEICO. Depending on factors like the make and model of your car, you can find rates as low as $29 per month. What to read next Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Accredited investors can now buy into this $22 trillion asset class once reserved for elites – and become the landlord of Walmart, Whole Foods or Kroger without lifting a finger. Here's how Car insurance in America now costs a stunning $2,329/year on average — but here's how 2 minutes can save you more than $600 in 2025 Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Thousands of retirees may see Social Security checks docked by 15% if Trump admin resumes collections
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. For millions of older Americans relying on Social Security to cover their bills, another financial gut punch may be on the way — and it's coming from their own student debt. The Trump administration has threatened, then revoked threats, to resume collections on federal student loans. A higher education expert, Mark Kantrowitz, told CNBC that if the administration proceeded with their initial plans, borrowers in default could see their Social Security benefits docked by as much as 15%. Don't miss Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) You don't have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here's how There are approximately 452,000 borrowers aged 62 or older with defaulted loans, some of whom are likely receiving Social Security benefits, according to a report from the Consumer Financial Protection Bureau. Why your benefits could be garnished The government has long had the power to garnish, or claw back, a portion of Social Security benefits to repay defaulted federal student loans. But those collections were paused during the COVID-19 pandemic, and remained paused under the Biden administration. Now, the Trump administration has threatened to resume collections. In May, the Department of Education announced it would soon resume involuntary collections, only to walk back the decision in June, when department spokeswoman Ellen Keast told CBS News it had 'put a pause on any future Social Security offsets.' It remains to be seen whether that pause will be indefinite. What you need to know about the Social Security offset If you're in default on loans, the federal government could theoretically withhold up to 15% of your monthly Social Security benefit without your permission. But that would be the worst case scenario, and at least part of your benefits would remain. Federal law protects the first $750 per month of Social Security income from garnishment. But for seniors already scraping by, even a small deduction can have a devastating impact. Of the 1.3 million Social Security beneficiaries with student loans, about 37% rely on an average monthly benefit payment of $1,523 for 90% of their income, according to the same Consumer Financial Protection Bureau report. Regardless of whether the administration ultimately goes ahead with its collections, the threat should serve as a crucial wake-up call for anyone struggling with debt repayment. Read more: Rich, young Americans are ditching the stormy stock market — How else to fight back, or at least prepare If you're in default or nearing default, there are steps you can take now to reduce the risk of garnishment. First, you may be able to ask for a hearing or file a request to stop or reduce the offset. If you're facing medical issues, supporting dependents or already living below the poverty line, you can submit documentation proving financial hardship to the Treasury Department or its debt collection agency. Second, you may be able to reenter good standing through loan rehabilitation or consolidation. Loan rehabilitation typically requires nine monthly payments, and the process can take several months. Both processes can stop wage or benefit garnishments. Credible can help with loan consolidation by letting you shop around for lower interest rates with just a few clicks of your mouse. In just two minutes you can compare and contrast lenders willing to consolidate your loans into one easy-to-manage payment. Even if you're just curious about your options, checking rates on Credible could be a good idea. It won't hurt your credit score, it's totally free and it could save you a bundle. Other options for retirement If you're still working and planning to retire soon, retiring while in student loan default might now be riskier than it once was. If your retirement income plan was built around a full Social Security check, you may need to take a two-pronged approach and rethink your savings and spending strategies. With Wealthfront's automated investing platform, the power of compound interest works for you. Their sophisticated "set it and forget it" approach means your money is professionally managed and automatically rebalanced, allowing your wealth to grow steadily over time. Start investing for the long term with globally diversified portfolios or go for a higher yield than a traditional savings account with an automated bond portfolio. Open your account today and receive a $50 bonus to jumpstart your investment journey. Whether you're saving for retirement, a home, or building generational wealth, Wealthfront's low-cost, automated investment strategy can help you achieve your financial goals. As for spending, it can pay to cut monthly expenses where you can. One of the biggest line-items over time is insurance. Like with loans, shopping around for home and auto insurance rates can also help you cut costs. With it takes just two minutes to comb through over 200 insurers for free and find the best deal for you in your area. The process can also be done entirely online. The best part? users can save an average of $482 per year. Similarly, can help you switch to a more affordable auto insurance option within minutes. After answering a few questions about yourself, your vehicle and driving history, you can compare quotes from trusted brands like Progressive, Allstate and GEICO. Depending on factors like the make and model of your car, you can find rates as low as $29 per month. What to read next Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Accredited investors can now buy into this $22 trillion asset class once reserved for elites – and become the landlord of Walmart, Whole Foods or Kroger without lifting a finger. Here's how Car insurance in America now costs a stunning $2,329/year on average — but here's how 2 minutes can save you more than $600 in 2025 Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
CNET
5 days ago
- Business
- CNET
Yes, You Can Still Get Student Loan Forgiveness With IBR. What You Need to Know
Zooey Liao/CNET/Getty Images Student loan forgiveness options have dwindled considerably during President Donald Trump's second administration, but the Department of Education says forgiveness through Income-Based Repayment isn't going away. However, it is on pause. The Federal Student Aid website says IBR forgiveness is on hold while the Education Department retools its system to recalculate eligible payments. "IBR forgiveness will resume once those updates are completed," said an FAQ section updated July 9. The key question is how the Education Department counts payments made under the Saving on a Valuable Education repayment plan, which was struck down by the courts earlier this year. Borrowers on the IBR can have the payments they made on other income-driven repayment plans (including SAVE, PAYE and ICR) count toward their IBR forgiveness. But one of SAVE's features allowed borrowers to count months in certain types of forbearance when they didn't make payments, according to student loan expert Mark Kantrowitz. "The decision of the 8th Circuit Court of Appeals blocks these additional deferments and forbearances from counting toward forgiveness," he said in an email. "So the US Department of Education will need to make changes to the qualifying payment counts." IBR is an income-driven student loan repayment plan that adjusts monthly payments based on borrowers' income. Eligible student loan borrowers can receive forgiveness after 20 or 25 years' worth of payments, depending on when they took out their loan. It's currently the only repayment plan available that offers a path to forgiveness to existing borrowers. We'll explain what could happen with IBR, and what you should do if you're waiting for student loan forgiveness. Read more: SAVE Student Loan Borrowers: You Don't Have to Move to IBR by Aug. 1, but You May Want to: Here's How to Decide Is student loan forgiveness going away? Multiple paths to student loan forgiveness have disappeared in the past year. ICR, PAYE and SAVE plans are no longer eligible for forgiveness directly, following the court ruling in February that Congress exceeded its authority by approving them. Since IBR was created under a different rule, it wasn't affected by the court's ruling. Forgiveness through IBR should be safe for now. But it's understandable that borrowers -- deciphering confusing and misleading information as they wait for forgiveness -- may be skeptical of the Education Department's reassurances that IBR forgiveness is coming back. After February's court decision, the application for income-driven repayment plans was removed from the federal student loan site, causing concern among borrowers. But it was made available again a month later with revisions. This could, in theory, be a similar scenario, where the IBR forgiveness will resume at a later date. When will IBR forgiveness come back? Though the Education Department calls it "temporary," there's no indication how long the IBR pause will last. With a backlog of 1.5 million applications for repayment plans and huge swaths of the Department of Education staff wiped out, it's unclear how long it could take to resolve the payment recalculation. The Washington Post reported that several student loan servicers have said the Education Department hasn't asked them to process loan forgiveness for any borrowers since mid-January. "This not only affects the loan servicers, but also the US Department of Education, since final approval of loan forgiveness is handled in-house," Kantrowitz said. The Department of Education didn't immediately respond to a request for comment. Are there other options for forgiveness besides IBR? Besides IBR, existing borrowers will have another option next year under the new Republican-backed law passed earlier this month: the Repayment Assistance Plan. The new Repayment Assistance Plan could offer slightly lower monthly payments for some borrowers, but the plan calls for 30 years of qualifying payments before loans are forgiven, compared with the 20 to 25 years under the current IBR. So you'll end up paying more in interest over time. Anyone who takes out student loans after July 2026 will have just two repayment options: RAP and the standard repayment plan. Should I still apply for IBR if I'm a SAVE borrower? Millions of borrowers enrolled in SAVE will start accruing interest on their loans again starting Aug. 1. However, payments remain on hold while your loans are in a general forbearance, which could last until mid-2026. You aren't required to switch plans until then, although interest will pile up during that time. However, if you decide to switch, you can compare other income-driven repayment plan options using the Federal Student Aid loan simulator. You can apply to switch to an IDR on the FSA website to restart payments that count toward forgiveness. If you do apply for a new plan, expect the application to take several months to process due to the backlog, Kantrowitz said. The Department has been encouraging SAVE borrowers to switch to IBR, which could mean an even higher volume of applicants as the Aug. 1 deadline approaches. What should I do if I'm enrolled in an IBR? If you're enrolled in an IBR and near or past the payment threshold to be eligible for loan forgiveness, Kantrowitz advises you to continue making payments until you receive notification that your loans have been forgiven, which should happen automatically. "Any excess payments will be refunded," he said. "They could switch into a general forbearance, but there's a risk that they've counted their qualifying payments incorrectly. It is better to just continue making payments."
