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1 week ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYSThe Department of Education is tightening protections on its Free Application for Federal Student Aid (FAFSA) applications after finding nearly $90 million in fraudulent and erroneous payments. The department said it found more than $30 million disbursed to deceased individuals and $56 million in improper Direct Student Loan and Pell Grant aid earlier in the year.
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1 week ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYSA proposed federal budget bill would expand exceptions for Americans who receive student loan forgiveness in some cases but close the door on the same treatment in others. The House of Representatives passed its proposed budget bill Thursday, advancing it to the Senate. The bill intends to reduce federal spending to make room for an expansion of President Donald Trump's tax cuts. The bill would increase taxes for many student loan borrowers.
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2 weeks ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYS The Department of the Treasury is off to a strong start after resuming collection efforts of defaulted federal student loans at the beginning of May. Secretary of the Department of Education Linda McMahon said in a budget hearing with the House Appropriations Committee on Wednesday that since collection efforts resumed, they have collected almost $100 million in loans.
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2 weeks ago | 
investopedia.com | Elizabeth Guevara
Key TakeawaysLoan servicers face a backlog of more than 2 million income-driven repayment (IDR) applications and 50,000 loan forgiveness applications as policies change and court battles play out. The Department of Education (DOE) reported that in April, loan servicers either approved or denied nearly 80,000 applications for income-driven repayment (IDR) plans, which provide borrowers with cheaper monthly payments.
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2 weeks ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYSA recent proposal for part of the federal government's budget would change the landscape for student loan borrowers and college students. Late Sunday, the House Budget Committee advanced a budget bill that will reduce federal spending to make room for President Donald Trump's requested tax cuts. The House Education and Workforce Committee said its portion of the bill will save $330 billion by reforming programs like student loan repayment plans and Pell Grants.
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2 weeks ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYSA spate of modifications to the federal student loan system since 2020 have made it difficult for borrowers to keep up, making it challenging for some to resume repayments. Over the past five years, borrowers have contended with upheaval in the federal student loan system. Payments were paused for all borrowers during the pandemic. Some had their loans forgiven.
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3 weeks ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYS The average delinquent student loan borrower is getting older. In the first quarter, 23.7% of student loan borrowers were behind on their loans, according to a recent report by the Federal Reserve Bank of New York. Those over 40 are more likely to be delinquent than their younger counterparts. The average age of delinquent borrowers increased to 40.4 from 38.6 pre-pandemic.
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3 weeks ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYSAs the Department of Education resumes collecting defaulted federal student loans, its first step is garnishing borrowers' incoming tax refunds. After almost five years of paused federal student loan payments, the DOE and the Department of the Treasury are beginning to garnish earnings from an estimated five million defaulted borrowers. Education Department Secretary Linda McMahon said this week that the Treasury is in the process of withholding tax refunds from defaulted borrowers.
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4 weeks ago | 
investopedia.com | Elizabeth Guevara
Key TakeawaysAs tariffs trigger recession alarms, some of the most populous states are the least prepared for an economic downturn, according to a recent report. Tariff uncertainty has taken financial markets on a wild ride, squashed consumer and business confidence, and fueled fears about the possibility of a coming recession. They also spurred a surge of imports as people rushed to beat the tariffs, which resulted in negative economic growth for the first time since 2022.
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1 month ago | 
investopedia.com | Elizabeth Guevara
KEY TAKEAWAYSThe millions of student loan borrowers struggling to make payments could soon face a predicament as collection efforts resume. The Department of Education said 5 million borrowers have defaulted on their federal student loans, and expects 4 million more to default in the next few months. Starting May 5, the department plans to resume the collection of defaulted loans, eventually leading to involuntary wage garnishment for some borrowers.
