Latest news with #MarkKantrowitz
CNET
8 hours ago
- Business
- CNET
460,000 Student Loan Borrowers Seeking Lower Payments Will Be Denied. What to Do If You're One of Them
The Department of Education will deny nearly half a million student loan borrowers who applied for the lowest repayment plan based on their income. Getty Image/ Zooey Liao/ CNET Nearly half a million federal student loan borrowers who applied for lower monthly payments will be denied by the Department of Education. Based on internal documents obtained by Politico, the department is rejecting 460,000 student loan borrowers who selected the lowest payment option based on their income. For most applicants, that was the Saving for a Valuable Education repayment plan. SAVE was struck down by a federal court in February, so how were people still applying for the plan? It's likely the Education Department is still processing applications submitted before the Trump administration removed the SAVE plan as an option on Feb. 21, 2025, said student loan expert Mark Kantrowitz. As of June 30, the department reported 1.5 million pending applications for borrowers who are seeking Income-Driven Repayment plans. It processed 186,731 applications in June. The Department of Education did not immediately respond to a request for comment. Processing delays are the latest hurdle for student loan borrowers trying to navigate student loan repayment. Millions of SAVE borrowers' loans are currently in a general forbearance, with payments expected to remain on hold until mid-2026. However, the Department of Education announced this month that those loans will start accruing interest again on Aug. 1, so borrowers may be feeling pressured to choose another repayment program. If you've applied for a repayment plan, here's what you need to know about the status of your application and when you could start repayments. Read more: SAVE Student Loan Borrowers Have Less Than 2 Weeks Before Interest Restarts. Here's What to Do How can you find out the status of your loan and repayment plan request? If you applied for a new repayment plan and are denied, your loan processor should notify you when your application has been processed. You can also check the status of your plan request by logging into your account and going to the "My Activity" page. Your application should be listed as In Review, Action Required, Completed or Closed. Although the Federal Student Aid site says processing typically takes about 30 days, it notes you should expect delays due to the high volume of requests. What happens if I'm rejected for a repayment plan? If you applied for an income-driven repayment plan and were rejected, you may be placed in a standard 10-year repayment plan if you don't choose another repayment plan, Kantrowitz said. "That's typically what happens when a borrower is no longer eligible for an income-driven repayment plan." However, you can apply for another repayment plan at this time. The other repayment plans are also in a bit of transition since the passage of the Republican-led Big Beautiful Bill. Existing borrowers can still sign up for the Income-Based Repayment plan. Two other income-driven repayment plans, income-contingent and PAYE, are still options on the federal student loan site, but will be phased out. Existing borrowers will also have the option to enroll in the Repayment Assistance Plan, a new plan that was passed in the bill, but this option won't be available until next year. "The best option for most borrowers who were in the SAVE repayment plan is IBR, since IBR still qualifies for forgiveness, while ICR and PAYE do not," Kantrowitz said. "[Previous] payments made under SAVE, ICR, PAYE, REPAYE and IBR count toward IBR forgiveness." If you're a SAVE borrower who applies for a new repayment plan and it's held up by processing delays, your loans should remain in good standing while you're waiting. However, interest will start accruing next month, so you may consider making interest-only payments while waiting for your application to process.
New York Times
15-07-2025
- Business
- New York Times
Student Loan Repayments Are About to Look Very Different
The safety net for federal student loan borrowers is about to be sharply overhauled. The domestic policy bill that was signed into law recently makes radical changes to the way Americans will pay for college, and could make access to higher education more difficult. It will also fundamentally alter the way borrowers repay their debts, which can easily spiral into tens of thousands of dollars, sometimes more. Starting next summer, borrowers taking out fresh loans will have two new repayment plans to choose from, while at least a half-dozen existing programs will be extinguished, including the most affordable option, the Biden-era plan known as SAVE. The nearly eight million people in that plan will soon need to figure out their next-best option. The system is being restructured at a crucial moment in the ongoing student loan saga. Only 44 percent of the nearly 35 million borrowers who should be making payments actually are, according to calculations by Mark Kantrowitz, an expert on student loans. And nearly six million borrowers were reported to the credit bureaus as being late at the end of April, according to TransUnion, sending their credit scores plunging. The new repayment plans are unlikely to resolve those issues on their own, but they will, at the very least, give borrowers a sense of what their options are — an assurance they've gone without for more than a year. The loan system has been in a state of flux for the past six years, and borrowers have been swept up in the confusion. At the end of a 42-month pandemic-related pause on payments, the Biden administration opened the SAVE plan in August 2023. But less than a year later, Republican-led legal challenges halted the plan, and borrowers' payments were frozen. This year, a related court ruling questioned the legality of other longstanding income-driven plans, temporarily halting all applications. Now, the current repayment plan menu is being dismantled and replaced. Further complicating the situation, the overhaul will begin not long after the Education Department's staff has been cut in half as part of the Trump administration's slashing of the federal bureaucracy. Want all of The Times? Subscribe.
Yahoo
20-06-2025
- Business
- Yahoo
How Trump's budget bill will impact student loans: What to know
US President Trump's "big, beautiful bill," which is currently being considered by the Senate after passing the House, will change the rules for current students relying on federal loans and grants as well as borrowers working to pay down their debt. Author and student loan expert Mark Kantrowitz joins Wealth to outline these changes and what student loan borrowers need to know. To watch more expert insights and analysis on the latest market action, check out more Wealth here. All week, we're giving you everything that you need to know about paying back your student loans. Today, we're breaking down all the latest policy changes under the Trump administration. Joining us now for that, we've got Mark Kantrowitz, author and student loan expert. Mark, let's start with some of the proposals in the Republican budget bill. What changes could come for borrowers if it is passed as is? Well, first of all, it repeals the subsidized Stafford Loan for undergraduate students and the Grad Plus loans for graduate students. It sets the House version of the bill sets new aggregate loan limits of $50,000 for undergraduate students, $100,000 for graduate students, and $150,000 for professional school students. The Senate version of the bill, which just dropped this morning, uh has $200,000 limit for professional school students. And it has an annual limit for the undergraduate students of for the Grad Stafford Loan of $20,500 and $50,000 for professional school students. Uh, it gets rid of uh the economic hardship deferment and unemployment deferment, and changes forbearance to nine months out of every 24 months. Uh, and it's replaces the dozen or so, uh student loan repayment plans with just two. A standard repayment plan which is more like an extended repayment plan, the repayment term depends on the amount you owe. Uh, and an income-based repayment assistance plan, which is an income-driven repayment plan that uh has monthly payments that are slightly less than the current income based repayment, but much higher than under the save repayment plan which has been blocked by the courts. And so as we're trying to think about some of the largest changes for, for what this means long, what this means longer term, are students going to end up having a more difficult time getting student loans, not just applied for, but also getting those disbursements as well. What, what's the net effect? Well, the net effect is that uh, students at higher cost colleges that need to borrow more are going to have to borrow from the private student loan programs, uh, not just from the federal student loan programs. So, about 7% of undergraduate students, up to a little bit more than half of medical school students will have to borrow private loans because federal loan limits will not be enough. Um, the grants are also going down, which may shift uh, some students from getting grants into borrowing or not going to college at all. The House bill uh, eliminates Pell Grant eligibility for students who are enrolled less than halftime. Um, and that's going to disproportionately affect students at community colleges. It also changes the definition of full-time from 12 credits a semester to 15 credits a semester, which is the equivalent of about a 20% cut in the Pell grants that the students who were previously enrolled in 12 credits will receive. That means they're going to have to borrow, or not go to college at all. 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
17-06-2025
- Business
- Yahoo
Brace yourself: This is exactly how much you should have saved for your kid's college by the time they're 5, 13 and 18
American families face ongoing college-affordability and student-debt crises as new technologies like artificial intelligence transform the workplace, casting doubt on the value of higher education in the future. Despite these challenges, financial planners say it remains wise for parents to prepare for the rising costs of education by saving — a lot — for college, and talking to their children about their options. Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. These defense stocks offer the best growth prospects, as the Israel-Iran conflict fuels new interest in the sector 'I prepaid our mom's rent for a year': My sister is a millionaire and never helps our mother. How do I cut her out of her will? 'He failed in his fiduciary duty': My brother liquidated our mother's 401(k) for her nursing home. He claimed the rest. My friend is getting divorced. Her husband offered to sign over their house. What's he hiding? If your newborn today plans to attend college, you should plan to save roughly $105,000 in a college fund by the time they turn 18, which would cover nearly 50% of their total college expenses — tuition, fees, housing and food — at a four-year, public in-state university. That's the latest advice for parents from T. Rowe Price TROW, an investment firm that offers college-savings plans. In order to achieve this staggering figure, parents today could invest $280 each month per child from the time they are born into a 529 college-savings account that earns 6% annually, which could grow to more than $19,000 by age 5, almost $45,000 by age 10, about $64,000 by age 13, and nearly $105,000 by the time they turn 18. That six-figure total is approximately 1.75 times the $59,972 estimated annual cost of college by that time. To fully cover 50%, parents would continue saving through the four years their child is enrolled in school. The analysis assumes the other half would be covered by student loans, scholarships and grants. Almost 30% of undergraduates receive federal student loans. Setting aside $280 per month for two children would add up to $6,720 per year. For a family of four making the average gross income of about $146,000, according to the Bureau of Labor Statistics, that would translate to 4.6% of gross income. 'That's achievable. They just have to control their spending,' Mark Kantrowitz, author of 'How to Appeal for More College Financial Aid,' told MarketWatch. Reaching this savings goal might require sacrificing wants, like vacations, but 'vacation is a luxury, not a necessity, so that should be the lowest priority,' he said. T. Rowe Price's guidelines suggest that by the time a child is 18, parents should have saved 1.75 times the current cost of one year of college. Over time, this means having 0.6 times the annual cost by age 5, when many children start elementary school; 1.1 times by age 10, as they prepare to enter middle school; and 1.35 times by age 13, before they begin high school. Average annual expenses at four-year, in-state public universities totaled $24,920 this year, and at private universities the average was $58,600. These benchmarks factor in average 5% annual college inflation, which would push up the mean annual cost of attending an in-state school to $59,972 in 18 years. Young said parents can monitor their progress each year using actual sticker prices at the time, as the $59,972 figure is just an estimate. For most parents, these are daunting figures. The median retirement savings, a more common savings goal, for a couple with children is just over $95,000, according to 2022 data from the Federal Reserve. But it is in parents' interest to come up with a plan for dealing with college costs, Larry Pon, a financial planner and accountant in California, told MarketWatch. Too many parents, determined to send their kids to their 'dream school,' say they will 'figure it out,' he said — and 'usually what 'figure it out' means is taking on student loans.' Related: Is going to college worth it? Ask these 5 questions to make sure it's a good investment for you. As they begin planning to save for college, parents must first establish where college expenses fit into family financial goals. In terms of priorities, an emergency fund comes first, Roger Young, a financial planner at T. Rowe Price, told MarketWatch. The next biggest priorities should be paying off high-interest debt and saving for retirement — which at the very least means maximizing an employer match, but preferably means saving at least 15% of income, which Young describes as 'adequate' for retirement. The planners MarketWatch spoke with all agreed that retirement savings were a higher priority than college savings. Unlike education, there is no loan product for retirement, they noted. After those more urgent goals are accounted for, parents can start saving for their children's education, and also should talk to their children about the plan. Parents who are not able to save $280 per month per child, as T. Rowe Price suggests, can establish different goals. Another framework is to aim to fund one-third of college costs from savings (rather than 50%), one-third from parent income while attending, and one-third from student loans or scholarships, said Kevin Brady, a financial planner at Wealthspire in New York. 'Those ratios can be adjusted as needed depending on total cost, age, income, number of kids and so on,' he said. Eventually, when children are old enough to work, they can also contribute to this $280 monthly target. 'I help clients reframe college savings as a shared responsibility: The family may cover part, and the student contributes through work, scholarships or modest loans,' said Nathan Sebesta, a financial planner at Access Wealth Strategies in New Mexico. Being realistic about a college budget might also mean thinking through the financial impacts of different options. Dave Ragen, who has three children and is a financial planner at Grunden Financial Advisory in Texas, said he was putting away about $350 total per month for college, which at times felt like 'a stretch.' He had originally aimed to save $20,000 to $30,000 for each of his children to attend community college and then a local university. When his son said he wanted to attend a school out of state, however, 'we started crunching the numbers, and there was a big difference from what the college cost actually was compared to what we had been talking about and planning with him.' Ragen tried to bump up the savings rate into their 529 college-savings account, but ultimately sat down with his son and 'ruled it out' based on the amount of debt he would likely have to take on to go out of state. The rule of thumb is not to borrow more than you think your annual starting salary will be. His son ultimately stayed in-state, got scholarships and contributed money from his summer jobs. For the typical American family, however, setting aside money for education is a stretch, especially with prices expected to rise due to changing U.S. tariff policy. 'For many families, fully funding college just isn't realistic,' said Liz Gillette, a financial planner at Curio Wealth in Maryland, who says the topic comes up often with clients in their 30s and 40s. 'I suggest having honest, age-appropriate conversations with your child early — about what types of programs make sense and how much the family can realistically contribute.' As it is, American parents are already less likely to have enough emergency savings to cover three months of expenses (49%) than adults in the U.S. overall (57%), according to 2024 data from the Federal Reserve. They are also more likely to have credit-card debt and higher credit-card balances than average, according to a 2023 PYMNTS survey. Read more: Parents are 'hunkering down financially' to brace for Trump tariff impact 'I've seen people who are very successful savers, saving at high percentages even though they don't have a ton of income,' Young said. Still, 'we need to give ourselves some grace.' To incentivize parents to save for college, Congress created 529 plans in the 1990s, offering tax-free earnings on investments used for higher education. (Many states also offer tax deductions on 529 contributions.) Sen. Mitch McConnell of Kentucky, the former Republican majority leader, and former Sen. Bob Graham, a Florida Democrat, led the effort to secure federal tax advantages. Starting in 2024, up to $35,000 left in 529 accounts also became eligible to be rolled over into Roth IRAs, giving parents more flexibility — and incentive — to save. For the 61% of high-school grads who go to college, 'the tax benefits are meaningful,' Young said of 529s. Earnings in regular savings accounts are taxed as ordinary income, and growth in taxable brokerage accounts are taxed as capital gains. Yet only 17.2 million families in the U.S., or roughly 15% of family households, use 529s, according to data from the research firm ISS Market Intelligence that was shared with MarketWatch. (One contributing factor is that about half of U.S. adults do not know what 529s are, a separate survey by Edward Jones found.) While high-income Americans have the greatest ability to take advantage of 529 benefits, ISS Market Intelligence data show others are also trying. The majority of households that have 529s — about 74% — earn less than $150,000 per year, roughly the threshold for the highest 20% of income earners in the U.S. The estimated median 529 account balance is $9,500, according to ISS, and among families that auto-deposit, the average contribution is about $200 per month. 'The most important point for anyone thinking about saving for college is to start now,' said David Mendels, principal of DBM Planning in New York. 'Time will either be your friend or your enemy, so make it your friend.' The earlier parents start saving, the more time can help their investments compound — meaning the amount they would have to contribute to meet that $105,000 target is hopefully lower than if they start later and have less time to let their investments grow. Parents who aren't able to start early — for example, if child-care costs consumed too much of the monthly budget — would have to save at a higher rate in order to meet the $105,000 benchmark, according to T. Rowe Price. Pon, the accountant in California, said his two children graduated college in 2021 and 2023. He deposited gifts from when his two children were born, as well as any monetary gifts for their birthdays, into their college savings. He regularly contributed to their 529s, and also took advantage when the markets were down by contributing more during those dips. When he looked at the tax form after withdrawing from his child's 529, the amount he had actually contributed on $10,000 was just $4,000; the other $6,000 'was tax-free growth,' he said. 'The most important message from a personal-finance perspective for families is that a dollar saved is more than a dollar earned,' said Paul Curley, a financial analyst and executive director of 529 & ABLE Solutions at ISS Market Intelligence. 'Saving automatically adds up, and 529s increasingly make sense for almost all families once an emergency fund is in place.' You may not reach your college-savings goal, but you and your children will benefit from doing what you can. The truth is that 'you can fund all your goals, but you may not be able to fund it to the degree that you want,' financial planner Marguerita Cheng, chief executive of Blue Ocean Global Wealth in Maryland, told MarketWatch. This may not be ideal, but parents should not be discouraged, she said: 'It's not all or none.' 'The reality is, college is inflating at a much faster rate than other goods and services,' said Cheng. 'If people can't do 100% of that goal, they can do a portion of that goal and start when their kids are little, with $50 or $100 [monthly]. … What's important here is the habit.' The amount that parents contribute can always increase as their income increases, she added. Cheng's children are ages 28, 26 and 20. When she was saving for their education, she was also caring for her father, who has Parkinson's disease. 'I, at that time, was worried about three things: the kids' college, my retirement, and making sure that I'm helping my parents,' she said. Cheng started with $50 contributions and gradually increased the amount over time. The most she was ever able to put away for the three of them was $1,000 per month total. She was able to use 529s to pay for about 50% of college expenses, with the rest funded by cash flow and federal student loans. Her son paid back his student loans by living at home while doing a fellowship that paid about $48,000 per year. Cheng said she made it clear to him that he couldn't just spend his salary on wants; he needed to set aside money for an emergency fund and a Roth IRA, and to pay off his student loans. Whatever your situation, 'do something,' Pon said. Even if you are only contributing a small amount each month, 'something is better than nothing,' he added. What personal-finance issues would you like to see covered in MarketWatch? We would like to hear from readers about their financial decisions and money-related questions. You can fill out or write to us at . A reporter may be in touch to learn more. MarketWatch will not attribute your answers to you by name without your permission. My husband is in hospice care. Friends say his children are lining up for his money. What can I do? My mother-in-law thought the world's richest man needed Apple gift cards. How on Earth could she fall for this scam? 'I'm not wildly wealthy, but I've done well': I'm 79 and have $3 million in assets. 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Yahoo
15-06-2025
- Business
- Yahoo
How Trump's budget bill will impact student loans: What to know
US President Trump's "big, beautiful bill," which is currently being considered by the Senate after passing the House, will change the rules for current students relying on federal loans and grants as well as borrowers working to pay down their debt. Author and student loan expert Mark Kantrowitz joins Wealth to outline these changes and what student loan borrowers need to know. To watch more expert insights and analysis on the latest market action, check out more Wealth here. Sign in to access your portfolio
