President Donald Trump signed An executive order on Thursday aimed to handle the US Ministry of Education. While Republicans cheer on the move, what many observers call legally doubtfulIt has almost 45 million student loan loans to do with another thing: What happens to their monthly payments?
The Federal Ministry of Education does a student loan sports folio worth around 1.7 trillion dollars and monitors the repayment and reimbursement plans. Trump said that the FSA did not do the challenge and said that the financial department or another larger agency was better equipped for the treatment of portfolio.
Although the order has been signed, it is not immediately clear what will happen to the student loan sports folio.
It is also not clear whether the education department will continue to give money in the future or how much, although the Minister of Education Linda McMahon said on Thursday that the department will continue to “support” the borrower. It is a goal of the 2025 project of the conservative Heritage Foundation, which has so far been a roadmap for a large All loans to privatized.
“Closing the department does not mean cutting off means of those that rely on them,” said McMahon in a statement. “We will continue to support K-12 students, students with special needs, borrowers of students and others who rely on essential programs.”
The transfer of the student loan sports folio to a new department would “initially have significant upheavals and the problems for years”, Kevin Ladd, Chief Operating Officer and Co-creator from Stipendien.com, which has been working in the field of financing of universities for 25 years. previously told Assets. The new department would need more personnel and new computer systems, and there would have to be new supervision and other protection processes, says LADD. In the meantime, the Trump government aggressively reduces the federal government’s staff.
Programs such as Public Service Loan forgiveness (PSLF) and income -driven repayments that help the students to release their loans faster are also at risk of “going away,” said LADD.
“While the Federal Leacon for Students would probably continue to be an option for current and future college students, the conditions would probably be much more strict and the students should take this into account before they register for anything,” he said.
Student loan system in upheavals
Trump card signed an executive order At the beginning of this month, borrowers who work for non -profit groups cannot be considered for the forgiveness of the student loan if the administration is of the opinion that they deal with “improper” activities. It is unclear what exactly would get into this category, but this will be worrying news for some borrowers who have worked in careers for years who were justified for the forgiveness of loans.
In addition, a Federal Supreme Court recently confirmed an injunction in connection with the former President Joe Biden for a valuable educational plan (SAVE), an income -based repayment plan that significantly reduces the monthly payments of some borrowers. That has Bill’s sky rocking sent for some borrowers. Others have taken Main hits to your credit values.
And McMahon explained that she is Cut off the department of the department By almost 50%, it reduces from 4,133 workers to around 2,183.
Critics of the President’s measures say that more people have to take out private loans to attend school, which has a negative impact on their long -term financial health. Private loans have less consumer protection than federal loans and possibly higher interest rates.
“Without the department, fewer students would be able to go to college, student loan loans would be in delusion, and fraudulent universities would be in favor of the students with an impunity stroll,” said Sameer Gadkaree, President and CEO of the Institute for Access and Success for University, an independent, non -profit professional Uses access to universities.
Also a concern: The companies that manage student loans on behalf of the government are already being suspended about the misunderstanding of the repayment conditions – especially if there is a change in which the company processes the payments. Increasing the disorder could increase the headache for borrowers.
For example, those who are enrolled for the public service program, for example, must, for example, carefully check whether their payment counts are updated. As soon as these borrowers do 120 punctual payments in certified professionsThe rest of your loans should be legally awarded. But there was numerous problems with This process in recent yearsAnd that was Operated during the educational department as intended.
This story was originally on Fortune.com
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