President Donald Trump signed The executive order on Thursday was aimed at the conclusion of the US Department of Education. While Republicans are welcome from movement that calls many observers legally dubiousIt left almost 45 million student loans still about what to worry: what is happening with their monthly payments?
The Federal Education Department (FSA) service manages a student loan portfolio worth about $ 1.7 trillion, and plans for payment and deferral. Trump said FSA did not cope with this, stating that the Treasury or other large agency is better equipped for the portfolio.
Although the order was signed, it was not immediately clear what would happen to the student loan portfolio.
It is also unclear whether the education Department will continue to borrow money in the future or how much, although Education Minister Linda McMahon said on Thursday that the department would still “support” the borrowers. This is the purpose of the Conservative Heritage Fund project 2025 – which acted as a roadmap for most of the Trump administration’s actions – for All loans that need to be privatized.
“The closure of the department does not mean reducing funds from those who depend on them,” McMahon said in a statement. “We will continue to support K-12 students, students with special needs, student borrowers and others who are counting on the necessary programs.”
The transfer of the student loans portfolio to the new department will lead to “significant upheavals initially, and the problems may be stored for years”, Kevin Ladd, Chief Operating Director and co -author of scholarships.com, who has worked in higher education financing for 25 years, for 25 years, Previously told Wealth. The new department will need more personnel and new computer systems, and in order to create new protection processes and other protection processes, Ladd says. Meanwhile, the Trump administration aggressively reduces the federal government.
Programs such as apology loan for public services (PSLF) and revenue repayment plans that help students pay their loans faster, are also at risk of “leave”, Ladd said.
“Although federal student loans are likely to remain an option for current and future college students, the conditions are likely to be much tougher, and students should consider it before signing anything,” he said.
System of Student Credits in Awesome
Trump signed the executive order Earlier this month, which stated that borrowers working in non -profit groups would not be eligible for a student loan if the administration believes that they are involved in “wrong” activity. Although it is unclear what it will fall into this category, it will be like anxious news for some borrowers who spent years working in a career that had the right to forgive the loan.
In addition, the Federal Court has recently supported the ban related to the savings of former President Joe Biden on the valuable education plan (SAVE), the revenue -based repayment plan, which significantly reduced the monthly borrowers’ payments. That is Sent accounts that take up the sky for some borrowers. Others took Main hits in their credit scores.
And McMuhon said she is Reduction of the workforce of the department By almost 50%, reducing it from 4133 workers to approximately 2183.
Critics of the President claim that more people will need to take private loans to attend the school that will be detrimental to their long -term financial health. Private loans have less consumer protection than federal loans, and potentially higher interest rates.
“Without the Department, less students will be able to enroll in the college, the debt borrowers will be in a state of security campaigns, and fraudulent colleges will hunt students impunity,” says Summer Gadokari, president and CEO of the Institute of Access and Success in College, Independent Non -profit.
Also concern: companies that run a student loan on behalf of the government are already faced with complaints about misconduct – especially when changes are being processed. Increasing outrage can increase headaches for borrowers.
For example, those who have enrolled in the public service loan should be further checking whether their payments are updated. Once these borrowers do 120 timely payments in certified professionsThe rest of their loans should be legally forgiven. But there were Many problems since This process is in the past yearsand it was While the education department worked by appointment.
Originally this story was presented on Fortune.com
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2025-03-21 14:56:00
Alicia Adamczyk
