What are the borrowers for student loans to know about Trump’s move to dismantle the education department
President Donald Trump signed The executive command on Thursday aimed to reduce the US Ministry of Education. While Republicans cheer on the move, which many observers call legally suspiciousHe left nearly 45 million loans with a student loan with one more time to worry about: What happens to their monthly payments?
The Office of the Federal Student Assistance of the Department of Education (FSA) manages the student loan portfolio worth about $ 1.7 trillion and overseeing repayment and delay plans. Trump said FSA is not a challenge, saying that the Treasury Department or other larger agency is better equipped to manage the portfolio.
Although the command was signed, it is not immediately clear what will happen to the student loan portfolio.
It is also not clear whether the education department will continue to borrow the money forward or as much as, although on Thursday she said that Linda McMahon’s Secretary -based secretary was still “supported” by the department. This is the aim of the Conservative Heritage Project 2025 – which acted as a map of the road for most of the proves of Trump’s administration so far – for All loans to be privatized.
“Closing the department does not mean to reduce the means from those who depend on them,” McMahon said in a statement. “We will continue to support K-12 students, students with special needs, loans for students and others who rely on basic programs.”
The transfer of the student loan portfolio to the new department would cause “significant turnarounds at first and could last for years”, Kevin Ladd, Chief Operational Director and Supreater Scholarship.com, who worked for 25 years on the field of higher education, previously said Wealth. The new department will need more staff and new computer systems, and there should be new processes of supervision and other protective processes, Ladd says. Meanwhile, Trump’s administration aggressively reduces the staff of the Federal Government.
Programs such as public services (PSLF) loan and repayment plans aimed at income that help students to release their loans faster are also exposed to the risk of “departure,” Ladd said.
“Although federal student loans would probably continue to be an option for current and future students, the conditions should probably be much stricter and students should consider it before applying for anything,” he said.
A student loan system in a turnaround
Trump signed an executive command Earlier this month, stating that the loans working in non -profit groups will not be acceptable for the forgiveness of the student loan if the administration believes that they have dealt with “irregular” activities. Although it is not clear what exactly would fall into this category, this will come as a worrying news for some borrowers who have spent years working in their careers that have fulfilled the conditions for the forgiveness of the loan.
In addition, the Federal Court recently supported the ban on the savings of former President Joe Biden on the plan of valuable education (SASA), a repayment plan on the basis of revenues that greatly reduced the monthly payments of some loans. He has it Sent rocket accounts for some borns. Others took The main hits of their credit results.
And McMahon stated that it was Department’s labor reduction By almost 50%, reducing it with 4,133 workers to approximately 2,183.
Critics of presidential procedures say that more people will have to take private loans to attend school, which will be harmful to their long -term financial health. Private loans have less consumer protection than federal loans and potentially larger interest rates.
“No departments, fewer students could go to college, the loans for student loans would be missed in the chase, and fake colleges would be unpunished towards students,” says Sameer Gadkree, President and Executive Director of the Faculty and Success Institute, an independent non -profit organization that is advocating for a better access to higher education.
Also concern: companies operating student loans on behalf of the Government are already facing complaints on poor repayment conditions – especially when there is a change in which the company processes payments. Increasing clutter could increase headache for borrings.
Those who are enrolled in the Public Services Looping Program, for example, will need to be an additional careful check to be updated. Once these borrowers make 120 payments on time in certified professionsThe rest of their loans legally should be forgiven. But it was Numerous questions with This procedure in past yearsand that was While the education department operated as foreseen.
This story is originally shown on Fortune.com
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