Tag: borrowers

  • How many graduate borrowers will be impacted by the looming lending limits?

    How many graduate borrowers will be impacted by the looming lending limits?

    Dive Brief:

    • About 28% of graduate borrowers in recent years have borrowed above new federal student loan limits set to go into effect in July, according to a recent analysis by the Federal Reserve Bank of Philadelphia’s Consumer Finance Institute. 
    • Of those graduate students, nearly 40% would potentially fail to secure private loans without a cosigner under existing underwriting standards because of their credit profiles, the study found. 
    • The forthcoming limits were created by Republicans’ big tax and spending bill enacted this past summer. Starting in July, that legislation will also sunset the Grad PLUS loan program that has allowed graduate students to borrow up to the cost of their attendance.

    Dive Insight:

    Researchers with the Consumer Finance Institute set out to provide answers to one of the biggest questions hanging over one of the biggest changes to the federal student aid system of the past two decades: To what extent will private lending fill the gap after Grad PLUS ends and new borrowing limits kick in?

    Specifically, the limits cap total student borrowing at $100,000 for graduate students and $200,000 for professional students — a term that regulators are still defining to carry out the statute. Annually, federal lending will max out at $20,500 for graduate students and $50,000 for professional students.

    “All else equal, the effects of these new caps depend importantly on the extent to which the private sector is willing and able to fill in the gap left by the withdrawal of the U.S. Department of Education as the main financier of graduate education,” the Consumer Finance Institute authors — Tomas Monarrez, Jordan Matsudaira and Dubravka Ritter — said in their analysis. 

    To address the question of private lending, the researchers used a blind match of National Student Clearinghouse program enrollment records with data from credit-tracking firms. They focused on a subset of about 66,000 graduate students who first enrolled in graduate programs between 2015 and 2024. 

    Nearly one in three borrowers surpassed the cap, though researchers found a lot of variance among institutions and program types. For instance, 53% of doctoral students at private nonprofit institutions borrowed above the caps, compared to 13% of master’s students at for-profit colleges. 

    Many graduate and professional students could struggle under new loan caps

    % of borrowers entering graduate programs from 2015 to 2024 who would exceed looming federal student borrowing caps by institution and program

    The field matters as well. Across all programs, doctoral students in the health professions had the highest rate of borrowing over the loan caps, at 61%. 

    Some health profession programs — including nursing, occupational therapy and physician associate programs — could be excluded from the larger “professional” degree caps based on regulatory language the Education Department plans to propose. 

    Overall, of the 28% of borrowers who surpassed the coming caps, 38% had either subprime credit scores or no score at all, meaning they would struggle to borrow in the private sector without a co-signer — which they wouldn’t necessarily need for Grad PLUS loans. 

    As other researchers have noted, the Grad PLUS program has largely replaced a portion of private sector student lending for graduate school — which could explain why Grad PLUS loans had no significant effect on enrollment over its lifetime, according to a 2023 working paper published by the National Bureau of Economic Research. 

    But, as that paper’s authors pointed out, much has changed in the private student lending market since Grad PLUS launched in 2006, including the financial crisis of the late aughts that led to tightened lending standards in many sectors. 

    Private lenders today play a “minimal” role in financing grad school, the Consumer Finance Institute authors noted, also writing that, “It is unclear the extent to which they will be willing to extend credit to graduate students affected by the loan caps.” 

    Moreover, students with lower credit scores could see higher interest rates and less generous terms compared to federal student loans, which also come with protections for financially challenged borrowers, the authors noted.

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  • What Student Loan Borrowers in the SAVE Plan Should Know for 2026

    What Student Loan Borrowers in the SAVE Plan Should Know for 2026

    Lender and Bonus disclosure

    THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

    Earnest: $1,000 for $100K or more, $200 for $50K to $99.999.99. For Earnest, if you refinance $100,000 or more through this site, $500 of the $1,000 cash bonus is provided directly by Student Loan Planner. Rate range above includes optional 0.25% Auto Pay discount.

    Earnest Bonus Offer Disclosure:

    Terms and conditions apply. To qualify for this Earnest Bonus offer: 1) you must not currently be an Earnest client, or have received the bonus in the past, 2) you must submit a completed student loan refinancing application through the designated Student Loan Planner® link; 3) you must provide a valid email address and a valid checking account number during the application process; and 4) your loan must be fully disbursed.

    You will receive a $1,000 bonus if you refinance $100,000 or more, or a $200 bonus if you refinance an amount from $50,000 to $99,999.99. For the $1,000 Welcome Bonus offer, $500 will be paid directly by Student Loan Planner® via Giftly. Earnest will automatically transmit $500 to your checking account after the final disbursement. For the $200 Welcome Bonus offer, Earnest will automatically transmit the $200 bonus to your checking account after the final disbursement. There is a limit of one bonus per borrower. This offer is not valid for current Earnest clients who refinance their existing Earnest loans, clients who have previously received a bonus, or with any other bonus offers received from Earnest via this or any other channel. Bonus cannot be issued to residents in KY, MA, or MI.

    Student Loan Refinance Interest Rate Disclosure 

    Actual rate will vary based on your financial profile. Fixed annual percentage rates (APR) range from 3.97% APR to 10.24% APR (3.72% – 9.99% with .25% auto pay discount). Variable annual percentage rates (APR) range from 6.13% APR to 10.24% APR (5.88% – 9.99% with .25% auto pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once a month, but there is no limit on the amount that the rate could increase at one time. Please note, we are not able to offer variable rate loans in AK, IL, MN, MS, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and requires selection of our shortest term offered and enrollment in our .25% auto pay discount from a checking or savings account. Enrolling in autopay is not required as a condition for approval.

    Auto Pay Discount Disclosure

    You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

    Skip a Payment Disclosure

    Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

    Student Loan Refinancing Loan Cost Examples

    These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

    Student Loan Origination Loan Cost Examples

    These examples provide estimates based on the Deferred Repayment option, meaning you make no payments while enrolled in school and during the separation period of 9 billing periods thereafter. Variable APR: A $10,000 loan with a 15-year term (180 monthly payments of $157.12) and an 11.69% APR would result in a total estimated payment amount of $21,290.40. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 15-year term (180 monthly payments of $173.51) and an 13.03% APR would result in a total estimated payment amount of $22,827.79. Your actual repayment terms may vary.

    Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.

    One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support from Higher Education Loan Authority of the State of Missouri (MOHELA) (NMLS# 1442770). One American Bank, FinWise Bank, and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

    © 2025 Earnest LLC. All rights reserved.

    Student Loan Planner® Bonus Disclosure:

    Upon disbursement of a qualifying loan, the borrower must notify Student Loan Planner® that a qualifying loan was refinanced through the site, as the lender does not share the names or contact information of borrowers. Borrowers must complete the Refinance Bonus Request form to claim a bonus offer. Student Loan Planner® will confirm loan eligibility and, upon confirmation of a qualifying refinance, will send via email a $500 e-gift card within 14 business days following the last day of the month in which the qualifying loan was confirmed eligible by Student Loan Planner®. If a borrower does not claim the Student Loan Planner® bonus within six months of the loan disbursement, the borrower forfeits their right to claim said bonus. The bonus amount will depend on the total loan amount disbursed. This offer is not valid for borrowers who have previously received a bonus from Student Loan Planner®.

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  • BORROWERS AGAINST APOLLO EVENT, FRIDAY NOVEMBER 7TH, NEW YORK CITY (HELU, AAUP, AFT)

    BORROWERS AGAINST APOLLO EVENT, FRIDAY NOVEMBER 7TH, NEW YORK CITY (HELU, AAUP, AFT)

    Higher Ed Unions, Student Unions, and For-Profit College Borrowers Unite Against Trump’s “Higher Education Compact”

    Several higher education unions, student unions, and former students of for-profit colleges are organizing in opposition to the Trump administration’s proposed “higher education compact”—a plan heavily shaped and promoted by private-equity billionaire Marc Rowan.

    Rowan, the CEO of Apollo Global Management, has played a central role in advancing this proposal. Apollo owns several predatory for-profit institutions, including the University of Phoenix, one of the most notorious offenders in the industry.

    In a recent New York Times op-ed, Rowan took public credit for the compact, writing:

    “The evidence is overwhelming: outrageous costs and prolonged indebtedness for students; poor outcomes, with too many students left unable to find meaningful work after graduating…”

    Yet, under Rowan’s leadership, the University of Phoenix has become the largest source of Borrower Defense claims of any for-profit school, with more than 100,000 pending applications as of July 2025. Borrower Defense is a federal protection that allows students to seek loan forgiveness if their school misled them or violated state or federal law.

    The University of Phoenix has faced multiple law enforcement investigations for deceptive recruiting tactics that targeted veterans, service members, and working adults nationwide. The school’s misconduct led to a $191 million settlement with the Federal Trade Commission for falsely claiming partnerships with major employers. More recently, the university attempted to portray itself as a public institution while seeking to sell to two states—both of which ultimately rejected the deal after public backlash.

    While Rowan’s personal fortune exceeds $7 billion, borrowers continue to shoulder crushing debt from degrees that delivered little to no value. His leadership has fueled a system that profits from student harm—and now, through this compact, he is setting his sights on reshaping major public universities.

    We refuse to stay silent. Borrowers, students, and educators are standing together to demand accountability and defend higher education from predatory perpetrators.

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  • Interest charges will restart for borrowers in SAVE forbearance (Student Borrower Protection Center)

    Interest charges will restart for borrowers in SAVE forbearance (Student Borrower Protection Center)

    Dahn,

    The Biden Administration’s Saving on a Valuable Education (SAVE) repayment plan promised to lower monthly student loan payments for millions of Americans. But legal attacks by the same conservative state attorneys general who exploited the courts to block President Biden’s original student debt relief plan resulted in a court injunction that has blocked borrowers from enrolling. Thus, borrowers have been trapped in a year-long, interest-free forbearance while their unprocessed Income-Driven Repayment (IDR) applications wait in limbo.

    But now, Trump and Education Secretary McMahon are saddling these borrowers with interest. Last week, the U.S. Department of Education (ED) announced that it will begin restarting student loan interest charges on August 1, 2025, for the nearly 8 MILLION borrowers stuck in this forbearance.

    McMahon voluntarily chose to do this—there was no state or federal court order forcing her hand. Read our Executive Director Mike Pierce’s statement on this below:

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  • Still Turning Borrowers into Political Pawns (Student Borrower Protection Center)

    Still Turning Borrowers into Political Pawns (Student Borrower Protection Center)

    Day 2 of the U.S. Department of Education (ED)’s Neg Reg aimed at weaponizing Public Service Loan Forgiveness (PSLF) was… just as damning as Day 1. Here’s the recap:

    Session Summary:

    The session got SPICY right off the bat. ED began the day by presenting their newly revised language. Here are some key moments:

    • Abby Shafroth, legal aid negotiator, stated CLEARLY for the record that this Neg Reg is not about protecting PSLF; it’s about the Department of Education (ED) using it as a tool to coerce nonprofits and universities to further the Trump Administration’s own goals. The government’s response was not convincing. Watch her remarks here.
    • Betsy Mayotte, the negotiator representing consumers, brought more fire: “When reading the statute of PSLF, I don’t see where the Education Secretary has the authority to remove employer eligibility definition from a 501(c)(3) or government organization…but my understanding of the regulations and executive order is that they cannot be contrary to the statute. There are no ifs, ands, or buts under government or 501(c)(3).” Watch the exchange here.
    • In a heated discussion on ED’s proposal to exclude public service workers who provide gender-affirming care to transgender minors, Abby further flagged that no one in the room had any medical expertise, so no one had qualifications to weigh in on medical definitions like “chemical and surgical castration.”
    • The non-federal negotiators held a caucus to talk about large employers that fall under a single federal Employer Identification Number. They are CONCERNED that the extreme breadth of this rule could potentially cut out thousands of workers only because a subset of people work on issues disfavored by this Administration—all without any right to appeal. Negotiators plan to submit language that would allow employers to appeal a decision to revoke PSLF eligibility by ED.
    • Borrowers and other experts and advocates came in HOT with public comment today—calling out ED for using this rulemaking to unlawfully engage in viewpoint discrimination and leave borrowers drowning in debt, unable to keep food on their tables, or provide for their families.

    Missing From the Table:

    Today, our legal director, Winston Berkman-Breen, who was excluded from the committee (but still gave powerful public comment yesterday!) has some thoughts on what was missing from the conversation:

    For two days now, negotiators have raised legitimate questions and important concerns about the Secretary of Education’s authority to disqualify certain government and 501(c)(3) employers from PSLF. And for two days now, ED’s neg reg staff—inlcuding the moderator!—have engaged in bad faith negotiations.

    Jacob, ED’s attorney, asserted that the Secretary has broad authority in its administration of the PSLF program—true, but only to an extent. The Secretary cannot narrow the program beyond the basic requirements set by Congress. When pushed for specific authority, Tamy—the federal negotiator—simply declined.

    It doesn’t stop there—ED representatives sidestepped, dismissed, or outright ignored negotiators’ questions and concerns. That’s because this isn’t a negotiation—it’s an exercise in gaslighting. ED is proposing action that exceeds the Secretary’s statutory authority and likely violates the U.S. Constitution—all the while telling negotiators to fall in line.

    The kicker? By pushing this proposal, ED itself is engaged in an activity with “substantial illegal purpose.” Let that sink in.

    Public Comment Mic  Drops:

    And Satra D. Taylor, a student loan borrower, Black woman, and SBPC fellow, who was also not selected by ED to negotiate, shared more thoughts during public comment:

    “I am disheartened and frustrated by what I have witnessed over the last few days… It has become clear that this Administration is intent on… making college once again exclusive to white, male, and wealthy individuals. These political attacks, disguised as rulemaking, are inequitable and target communities from historically marginalized backgrounds. The PSLF program has provided a vital incentive for Americans interested in serving our country and local communities, regardless of their political affiliation. The Department’s efforts to engage in rulemaking and to change PSLF eligibility are directly related to the goal of Trump’s Executive Order and exceed the Administration’s authority…”

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  • Most Student Borrowers Face Other Money Challenges

    Most Student Borrowers Face Other Money Challenges

    Just over half of student loan borrowers consider themselves financially insecure, while about three-quarters said they had experienced an adverse financial event, like skipping a bill, in the past year, according to a survey from the Pew Charitable Trusts exploring the attitudes of student loan borrowers after federal student loan repayments restarted in October 2023 following a three-year pause. The survey was conducted in the summer of 2024.

    Existing financial challenges are closely associated with struggles to repay student loans, the survey found. About 23 percent of respondents indicated they had missed some or all of their student loan payments since October 2023, but that number was higher among those who are financially insecure (34 percent) and those who had experienced a negative financial event (30 percent).

    But paying off student loans isn’t just challenging for those facing other financial difficulties. Among all borrowers, 57 percent said they found it difficult to afford their loans, including 41 percent of those who said they do not consider themselves financially insecure. Over a third of borrowers also said they found repaying their student loans more stressful than paying their other bills.

    The Education Department estimates that nearly 25 percent of borrowers have either defaulted on their loans or will default in the next several months. In May, the agency restarted collections on unpaid loans.

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  • What borrowers need to know

    What borrowers need to know

    After a five-year pause, the Trump administration is bringing back financial penalties for the many millions of borrowers who are too far behind on their student loan payments. It’s led to confusion and financial uncertainty. 

    At least 5 million people are in default, meaning they have failed to make payments on their loans for at least nine months — and millions more are projected to join them in the coming months.

    The Hechinger Report spoke to student loan experts about what to expect and how to prepare, as well as about a separate effort in Congress to adjust how student loans work.

    The Biden administration restarted loan repayments in October 2023. That came without any consequences, however, for about a year. But interest, which had also been frozen since the start of the pandemic, has been piling up for some borrowers since the fall of 2023.

    All told, about 43 million federal student loan borrowers owe a total of $1.6 trillion in debt. Starting May 5, those in default face having tax refunds withheld and wages garnished if they don’t start making regular payments.

    A college degree can be a path to long-term financial security, but the process of repaying loans can lead to financial hardship for many borrowers. About half of all students with a bachelor’s degree graduate with debt, which averages more than $29,000. And although average debt tends to be lower for graduates of public universities (about $20,000), close to half of people who attend those schools still leave with debt.

    Related: Interested in more news about colleges and universities? Subscribe to our free biweekly higher education newsletter.

    The student loan landscape is likely to change in some way over in the coming months: The Trump administration is expected to push the limits on aggressive collection practices, while Republicans in Congress are determined to adjust repayment options. Here’s what we know about what the Trump administration’s actions mean for student borrowers.

    If you have questions we haven’t answered here, tell us: [email protected]. Or reach us securely and privately using options on this page.

    What happens if I don’t start repaying my loan?

    Once you’ve failed to make a loan payment in 270 days, you will probably enter into default. That means, as of May 5, the government can take your federal tax refund and apply it to your debt. Starting in June, the government can also withhold up to 15 percent of any money you receive from Social Security, including disability payments. And later this summer, officials said, they will start the process of taking a cut of your paycheck, although borrowers have the right to appeal. Going into default can also harm your credit score, which can make it harder to rent an apartment or borrow money for other reasons, like buying a car.

    Can I go back to school to avoid repaying my loans?

    Some influencers on social media have recommended enrolling in school as a way to delay making payments. It’s true that most loans are deferred while you’re in school, meaning you wouldn’t have to pay while you’re taking classes, but you may also add to what you already owe if you spend more time in college. Unless you’re confident a new certificate or degree will boost your income, delaying repayment and increasing what you owe could make paying off your loans even more difficult. 

    I can’t afford to repay my loan. What should I do?

    There are other options. One type links your monthly payments to what you earn. These income-based repayment plans can shrink your monthly loan bill. There is also a graduated repayment plan that can lower your payments initially, after which they increase every two years. A third option is an extended repayment plan, which lowers your monthly payments but adds months or years to the time it will take to pay off your loans. The government’s Loan Simulator is one way to find options available to you. 

    Where can I go if I need help?

    The Education Department’s Default Resolution Group can help provide advice for borrowers who are already in default. The Federal Student Aid call center is set up to answer questions. Borrowers can also reach out to their loan servicers for guidance.

    Related: The Hechinger Report’s Tuition Tracker helps reveal the real cost of college

    What’s the difference between loan deferment, loan forbearance and default?

    • Loan deferment: The Education Department may grant a loan deferment for several reasons, including when a borrower is experiencing an extreme economic hardship or is unemployed. That means the borrower can temporarily stop paying off the loan without any financial penalties; in the case of subsidized undergraduate loans, interest doesn’t keep accruing during that time. 
    • Forbearance: A loan forbearance also allows a borrower to stop payments, or make smaller ones, without any penalties. However, interest usually keeps building on all loans during that time. 
    • Default: If a borrower is in default, it means they have failed to make payments for at least 270 days without permission. That’s when the government can begin to garnish tax refunds, Social Security benefits and wages, and a borrower’s credit score will drop.

    I’ve heard income-driven repayment plans are in trouble. Is that true?

    There are several types of income-driven repayment plans, which are meant to keep payments affordable. The Biden administration’s Saving for a Valuable Education (SAVE) plan is on hold because of legal challenges from Republican-led states. That plan previously offered eligible borrowers a repayment plan with lower monthly payments and a quicker path to loan forgiveness than other previously available options. But borrowers can still enroll in the Pay As You Earn (PAYE) plan and other income-based repayment options, in which payments are capped at 10 percent of a borrower’s income, or the Income-Contingent Repayment Plan, which requires payments of up to 20 percent of income and allows full repayment more quickly. Congressional Republicans hope to eliminate several of these plans in favor of just one income-based repayment plan, but it’s unclear if that bill will pass the Senate.

    Related: College Uncovered: The Borrowers’ Lament 

    What’s happening with the court cases challenging the SAVE program? 

    Courts have effectively paused the SAVE plan. The 8 million borrowers who are enrolled don’t have to make payments, and interest will not be added while the court decides the case. With those payments paused, borrowers in this group who are intending to seek loan forgiveness for working in public service are also not making progress toward that goal. If Congress eliminates the SAVE program or the courts officially kill it, those borrowers would need to enroll in a different repayment plan.

    Does Public Service Loan Forgiveness (PSLF) still exist?

    Yes, the Public Service Loan Forgiveness program is still available. Borrowers should still be eligible if they are in an income-driven repayment plan and make regular payments for 10 years. They must work for the federal, state or local government — teachers and firefighters are eligible, for example — or for qualifying nonprofit organizations, such as some health care clinics or foster care agencies. The goal of PSLF is to encourage graduates to pursue careers that may pay less than jobs with private companies but which benefit their communities or the country as a whole. 

    The Trump administration issued an executive order in March aimed at limiting which organizations’ jobs could qualify for PSLF — for instance, a nonprofit could be excluded if the government decides it is “supporting terrorism,” engaging in civil disobedience or aiding undocumented immigrants in violation of federal law. So far, it’s unclear what the effect will be.

    Related: Student loan borrowers misled by colleges were about to get relief. Trump fired people poised to help

    What other changes might be in store for student loans?

    As part of the federal budget process, congressional Republicans have proposed a slew of changes to student loans that some policymakers worry will make borrowing more expensive for students — especially those in graduate programs. 

    The proposals include changes to: 

    • Subsidized loans: Congressional Republicans want to get rid of subsidized loans for undergraduates, which would mean interest would accrue while a student was in college. They also want to cap total undergraduate borrowing at $50,000. 
    • Grad Plus: They also want to end the Grad Plus program, which allows students to borrow money to cover the cost of graduate school. Student advocates worry that this would push more students into the private student loan market, which has fewer protections for borrowers. 
    • Income-driven repayment: One proposal would simplify income-driven repayment into one option and prevent interest from causing student debt to balloon for students in income-driven repayment plans. 

    The proposed changes are included in the federal budget bill and may undergo many revisions as Congress figures out its spending priorities for the year.

    Contact senior investigative reporter Meredith Kolodner at 212-870-1063 or [email protected] or on Signal at merkolodner.04

    This story about student loan repayment was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.

    The Hechinger Report provides in-depth, fact-based, unbiased reporting on education that is free to all readers. But that doesn’t mean it’s free to produce. Our work keeps educators and the public informed about pressing issues at schools and on campuses throughout the country. We tell the whole story, even when the details are inconvenient. Help us keep doing that.

    Join us today.

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  • AFT sues Dept. of Education for denying borrowers’ rights (Student Borrower Protection Center)

    AFT sues Dept. of Education for denying borrowers’ rights (Student Borrower Protection Center)

    Yesterday, President Trump signed an executive order ordering the shutdown of the U.S. Department of Education (ED). The order claims to ensure the “uninterrupted delivery of services, programs, and benefits on which Americans rely,” yet Trump and Secretary Linda McMahon have gutted the arms of ED that make those functions possible. Read our statement on yesterday’s executive order here. Last week, Trump announced a 50 percent reduction in the workforce at the Department. Now he plans to move student loans to the Small Business Administration?!?!

    The Trump Administration is intentionally breaking the student loan system and attacking borrowers and working families with student debt. But we’ve been fighting back.

    On Tuesday night, the 1.8 million-member AFT sued ED for denying borrowers’ access to affordable loan payments and blocking progress towards Public Service Loan Forgiveness (PSLF)—in violation of federal law.

    Three weeks ago, federal education officials eliminated access to Income-Driven Repayment (IDR) plans by removing the application from ED’s website and secretly ordering student loan servicers to halt processing all applications. These IDR plans provide millions of borrowers the right to tie their monthly payment to their income and family size, giving them the option to make loan payments they can afford.

    IDR plans are also the only way for public service workers to benefit from PSLF—a critical lifeline for teachers, nurses, first responders, and millions of other public service workers across the country.

    SBPC Executive Director Mike Pierce’s statement:

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  • States are stepping up to protect and deliver for borrowers. (Student Borrower Protection Center)

    States are stepping up to protect and deliver for borrowers. (Student Borrower Protection Center)

    Attacks at the federal level on working families make state and local work like this all the more necessary. States can and must step up to create more protections for borrowers!

    Keep calm and TAKE ACTION, 

    Amy Czulada

    Outreach & Advocacy Manager

    Student Borrower Protection Center

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  • Second-generation student borrowers | SRHE Blog

    Second-generation student borrowers | SRHE Blog

    by Ariane de Gayardon

    Since the 1980s, massification, policy shifts, and changing ideas about who benefits from higher education have led to the expansion of national student loan schemes globally. For instance, student loans were introduced in England in 1990 and generalized in 1998. Australia introduced income-contingent student loans in the late 1980s. While federal student loans were introduced in the US in 1958, their number and the amount of individual student loan debt ramped up in the 1990s.

    A lot of academic research has analysed this trend, evaluating the effect of student loans on access, retention, success, the student experience, and even graduate outcomes. Yet, this research is based on the choices and experiences of first-generation student borrowers and might not apply to current and future students.

    First-generation borrowers enter higher education with parents who have either not been to higher education, or who have a tertiary degree that pre-dates the expansion of student loans. The parents of first-generation borrowers therefore did not take up loans to pay for their higher education and had no associated repayment burden in adulthood. Any cost associated with these parents’ studies will likely have been shouldered by their families or through grants.

    Second-generation borrowers are the offspring of first-generation borrowers. Their parents took out student loans to pay for their own higher education. The choices made by second-generation borrowers when it comes to higher education and its funding could significantly differ from first-generation borrowers, because they are impacted by their parents’ own experience with student loans.

    Parents and parental experience indeed play an important role in children’s higher education choices and financial decisions. On the one hand, parents can provide financial or in-kind support for higher education. This is most evident in the design of student funding policies which often integrate parental income and financial contributions. In many countries, eligibility for financial aid is means-tested and based on family income (Williams & Usher, 2022). Examples include the US where an Expected Family Contribution is calculated upon assessment of financial need, or Germany where the financial aid system is based on a legal obligation for parents to contribute to their children’s study costs. Indeed, evidence shows that parents do contribute to students’ income. In Europe, family contributions make up nearly half of students’ income (Hauschildt et al, 2018). But the role of parents also extends to decisions about student loans: parents tend to try and shield their children from student debt, helping them financially when possible or encouraging cost-saving behaviour (West et al, 2015).

    On the other hand, parents transmit financial values to their children, which might play a role in their higher education decisions. Family financial socialization theory states that children learn their financial attitudes and behaviour from their parents, through direct teaching and via family interactions and relationships (Gudmunson & Danes, 2011). Studies indeed show the intergenerational transmission of social norms and economic preferences (Maccoby, 1992), including attitudes towards general debt (Almenberg et al, 2021). Continuity of financial values over generations has been observed in the specific case of higher education. Parents who received parental financial support for their own studies are more likely to contribute toward their children’s studies (Steelman & Powell, 1991). For some students, negative parental experiences with general debt can lead to extreme student debt aversion (Zerquera et al,2016).

    As countries globally rely increasingly on student loans to fund higher education, many more students will become second-generation borrowers. Because their parents had to repay their own student debt, the family’s financial assets may be depleted, potentially leading to reduced levels of parental financial support for higher education. This is likely to be even worse for students whose parents are still repaying their loans. In addition, parental experiences of student debt could influence the advice they give their children with regard to higher education financial decisions. As a result, this new generation of student borrowers will face challenges that their predecessors did not, fuelled by the transmitted experience of student loans from their parents (Figure 1).

    Figure 1 – Parental influence on second-generation borrowers

    As the share of second-generation borrowers in the student body increases, the need to understand the decision-making process of these students when it comes to (financial) higher education choices is essential. Although the challenges faced by borrowers will emerge at different times and with varying intensity across countries — depending in part on loan repayment formats — we have an opportunity now to be ahead of the curve. By researching this new generation of student borrowers and their parents, we can better assess their financial dilemmas and the support they need, providing further evidence to design future-proof equitable student funding policies.

    Ariane de Gayardon is Assistant Professor of Higher Education at the Center for Higher Education Policy Studies (CHEPS) based at the University of Twente in the Netherlands.

    Author: SRHE News Blog

    An international learned society, concerned with supporting research and researchers into Higher Education

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