Experts predict that under Trump's leadership, the U.S. Department of Education may cease its efforts to provide widespread student loan relief.
According to CNBC, this raises questions about the fate of millions who have already benefited from debt forgiveness in the past four years. Mark Kantrowitz, a higher education expert, shared, "I've been getting a lot of emails from borrowers concerned that President Trump could claw back their forgiveness."
Since President Joe Biden assumed office, the Education Department has absolved nearly 5 million people of their federal student loans, amounting to a staggering $175 billion in relief. This has been achieved primarily through the enhancement of existing student loan relief programs, including the Public Service Loan Forgiveness initiative and income-driven repayment plans, which had previously been riddled with issues.
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Experts assure that these borrowers should remain unaffected. Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that assists borrowers in managing their debt repayment, clarified, "Any regulatory changes must be prospective only," indicating that any alterations to loan forgiveness programs would only affect new borrowers. She further added, "They aren't allowed to change regulations retroactively."
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This implies that even borrowers who are currently pursuing forgiveness under an income-driven repayment plan or a program like PSLF, but have not yet received that relief, may be safe. The terms of a loan, outlined in the master promissory note that federal student loan borrowers sign when they take out the debt, cannot be changed mid-repayment, experts assert.
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In a recent ruling, U.S. District Judge Daniel Crabtree in Wichita, Kansas, referred to student loan forgiveness as having an "irreversible impact," while blocking one of the Biden administration's relief measures.
Kantrowitz, in a recent article in The College Investor, noted that the retraction of student loan forgiveness is incredibly rare. He cited an instance in February when some borrowers saw their debts reinstated under the Public Service Loan Forgiveness program. However, this was due to an error, as the borrowers were not yet eligible for the relief.
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Kantrowitz reassured borrowers, stating, "Don't worry. The president does not have the legal authority to reinstate forgiven loans." He advised borrowers to keep a record of the notices they've received about their forgiven debt, and any loan documents showing a $0 balance.
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A new report from the Consumer Financial Protection Bureau highlighted "balance reinstatements," where a loan servicer adds a loan balance back onto one's account, among the errors reported by student loan borrowers. This serves as a reminder of the importance of maintaining accurate records and vigilance in navigating the complexities of student loan forgiveness.
