U.S. Secretary of Education Betsy DeVos today implemented President Trump’s memorandum extending relief on federally held student loans to borrowers through the end of the year. Her actions also addresses collections on defaulted loans and whether non-payments during this time will qualify for forgiveness under an income-driven repayment plan or the Public Service Loan Forgiveness program. Here’s what we know.
Presidential Memorandum on Student Loan Relief
The CARES Act passed earlier this year suspends payments on federally held student loans until September 30, 2020. During this time, collections on defaulted loans were halted, and the non-payments counted toward the 120 payments required by the Public Service Loan Forgiveness (PSLF) program and as payments required for other forgiveness under an income-drive repayment plan.
Robert P., a student loan borrower from Queens, New York, was surprised to find out that this credit score had dropped by 100 points after his federal student loans serviced by Great Lakes Higher Education were automatically placed into a forbearance. This happened following passage of the CARES Act. Another borrower named Ashley Higgins experienced a credit score drop during the same time period and told a local news affiliate about what happened. Other borrowers (who wished to remain anonymous) have reported similar credit score hits, as well.
There’s so much happening right now with your student loans.
Here’s what you need to know – and what to do about it.
In case you missed it, there have been major changes regarding your student loans. President Donald Trump signed the CARES Act, which includes a $2 trillion stimulus package in response to the Coronavirus health emergency. Among other benefits, the CARES Act has major implications for the way you pay your student loans, think about student loan forgiveness, and manage your money during Coronavirus. Fortunately, let’s make it easy for you and put all the updates in one place so you’re up to speed. Here are the major changes:
One day in 2017, Lauren Neuwirth sank into a chair in her university’s financial aid office feeling out of options. She was finishing her second year at Purdue University in Indiana, a school she’d chosen for its top-ranked engineering program. Neuwirth, who grew up near Milwaukee, was working two jobs to cover her living expenses and quickly running through the money her mother had set aside for college. Federal student loans only covered some of Purdue’s pricey out-of-state tuition. She worried that to remain in school she’d have to take out expensive private loans or join the Army.
President Trump wants to end a popular student loan forgiveness program.
Here’s what you need to know.
End Student Loan Forgiveness
Trump’s new annual budget calls for several changes to student loans, which are part of a $5.6 billion cut in funding to the U.S. Education Department. As in previous years, Trump repeated his call to end public service loan forgiveness. Under Trump’s proposed budget, if passed by Congress, the Public Service Loan Forgiveness program would be eliminated.
Student loans aren’t just negatively impacting you financially; they’re also hurting your chances of starting a new business, research finds.
Entrepreneurship is significantly hampered in parts of the country where residents carry more student loan debt, according to a recently updated study by researchers at Pennsylvania State University and the Federal Reserve Bank of Philadelphia.
For the study, student loan debt across the United States was analyzed by county and compared with small business creation in those areas. Researchers discovered that between 2000 and 2010 a one standard deviation increase in student debt reduced small businesses in those counties by an average of 14 percent.