Politics Aside, Student Loan Payments Are Still Due
As the president pushes to close down the U.S. Department of Education, it’s creating a lot of confusion about the status of the federal student loan system. Some borrowers have even questioned whether they have to keep making their payments.
In short, if you have federal student loans, stay the course. Keep up with your payments and don’t make any assumptions while the government is in flux.
Yes, President Donald Trump has said he hopes Linda McMahon, his nominee for Education Secretary, will “put herself out of a job.“ But even if the Education Department is abolished — and that’s a pretty big if — another federal agency would likely absorb the department’s Federal Student Aid office, some experts say.
The Treasury Department or the Internal Revenue Service (which is part of the Treasury,) are among the most logical homes for the FSA, which oversees more than $1.6 trillion in outstanding student loans.
“There might be disruptions, but borrowers still have to pay their student loans regardless of what happens to the Department of Education,” student loan attorney Adam Minsky told CNN.
The potential for disruptions makes it all the more important to keep your own records of anything related to your loans. Government websites are undergoing drastic changes, so make sure to keep track of all the payments you’ve made, including any that count toward forgiveness through the Public Service Loan Forgiveness (PSLF) program or an income-driven repayment plan.
As for the status of student loan relief added under the Biden administration, it’s unclear what will happen.
Last week a U.S. appeals court sided with seven Republican-led states trying to block the implementation of SAVE, a Biden-era repayment plan that sought to lighten monthly payments and cancel balances after as little as 10 years.
“I would sort of rewind to when you took out the loan and what you anticipated repaying at that time. And that’s probably where we’re going back to,” Beth Akers, a senior fellow at the American Enterprise Institute, told Nerdwallet.
Trump hasn’t detailed his plans for student loans or the department overall, but has condemned its spending as wasteful, citing the nation’s cost per pupil relative to other countries.
(It’s worth noting that McMahon pledged in her confirmation hearings to preserve certain existing programs, including PSLF and Pell grants for low-income college students.)
That’s not to say the Trump administration can revoke the forgiveness granted under the Biden administration — $189 billion in loans for over 5 million borrowers, according to Mark Kantrowitz, a nationally recognized expert on student loans and financial aid.
Legally, there’s no precedent for clawing back any loans that have already been forgiven, Kantrowitz wrote for The College Investor. Court challenges would be time-consuming and probably insurmountable.
So what? Don’t let the uncertainty surrounding the future of the federal student loan system throw you off course if you have outstanding loans. While the situation is very fluid, the best thing you can do for yourself is keep making your scheduled payments, keep careful records, and keep abreast of the latest developments.
Related Reading
• What Will Dismantling the Education Department Mean for Your Student Loans? (ABC News)
• Should You Refinance Your Student Loans? It Could Be a Smart Decision—’The Landscape Is Shifting’ (CNBC)
• Is Student Loan Forgiveness Possible Under Trump? Experts Aren’t Sure (Bankrate)
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