Core Insights - A young woman from Pittsburgh, Claire, is facing a dispute with her mother regarding the repayment of $36,000 in Parent PLUS loans taken for her college education, as the original agreement is now in question [1] Group 1: Loan Dispute - Claire's mother expects the full $36,000 to be repaid, but Claire discovered that approximately $17,000 was refunded during her college years and not applied to the loan balance [2] - This indicates that nearly half of the borrowed amount may not have been used for tuition, leading to Claire's assertion that she should only repay the amount that was actually utilized [3] Group 2: Advice and Family Dynamics - Financial advisors on "The Ramsey Show" suggest that Claire should gather documentation to clarify the situation with her mother, emphasizing the importance of a calm and clear discussion [3][4] - The situation highlights a growing trend where verbal repayment agreements for Parent PLUS loans lead to misunderstandings and disputes as time passes [5]

NEW YORK (AP) — It's been a confusing time for people with student loans. Collections restarted, then were put on hold. At the same time, borrowers had to stay on top of changes to key forgiveness plans. Last year, the long-contested SAVE plan introduced by the Biden administration ended with a settlement agreement. President Donald Trump’s “Big Beautiful Bill” introduced new borrowing limits for graduates and raised challenges to the Public Service Loan Forgiveness program. While several changes for stud ...

KEY TAKEAWAYS There are about 3.1 million federal student loan borrowers ages 62 or older, and the average borrower in this age group holds about $44,161 in student loan debt. This age group, many of whom are entering or already in retirement, can face difficulties paying off their student debt with their fixed, and often lower, income. As of September 2025, about 3.1 million federal student loan borrowers were 62 years or older, according to the latest data available from the Federal Student Aid ...

Core Insights - The Department of Education has decided to pause wage garnishments for defaulted federal student loan borrowers, reversing its previous plan to start cutting wages in early February [1][7]. Group 1: Wage Garnishment Policy - The Department of Education announced that it will not implement wage garnishments for defaulted borrowers at this time, allowing borrowers more time to manage their payments [1][4]. - The delay in wage garnishments is intended to facilitate changes to repayment plans under the 'One Big Beautiful Bill,' including a new income-driven repayment plan set to launch on July 1, 2026 [2]. Group 2: Borrower Impact - Approximately 9 million borrowers are currently in default, having missed payments for over 270 days, and many have struggled to resume payments after the COVID-19 pandemic pause [6]. - The pause in wage garnishments is expected to alleviate financial pressure on borrowers who were anticipating income cuts, which could complicate their budgeting and repayment efforts [4]. Group 3: Future Plans - The Department of Education had previously indicated that it would begin sending notices to borrowers about wage cuts of up to 15% starting in early February, but the timeline for these garnishments is now uncertain [5][6]. - The Department began collections on defaulted loans in early 2025, reaching out to borrowers to inform them of repayment options [3].

Core Insights - The federal government has resumed garnishing wages and withholding benefits from student loan borrowers as of January 7, 2025, after a prolonged period of legal uncertainty [1][6]. Group 1: Government Actions - The Trump administration has taken steps to limit repayment options and enforce collections, particularly impacting the Biden administration's efforts to alleviate the $200 billion repayment burden on 5 million federal borrowers [2]. - More than 7 million borrowers under the SAVE plan have been in administrative forbearance since June 2024, with interest on their debt restarting in August 2025 [3]. Group 2: Consequences of Non-Payment - Missing one or two payments on federal student loans does not immediately result in bad standing, but loans become delinquent after the first missed payment, leading to late fees and potential credit score impacts [4]. - Prolonged non-payment can lead to loan default, allowing the government to initiate involuntary collections, which includes garnishing wages and withholding tax refunds or other federal benefits [5]. Group 3: Wage Garnishment Process - Wage garnishment is a legal process where money is withheld from an employee's paycheck to repay debts, typically following a court order or legal notice [7]. - Common reasons for wage garnishment include student loan debt, child support, credit card debt, bankruptcy, or unpaid taxes [8]. - The amount withheld from paychecks is determined by the type of debt and applicable state and federal laws, and garnishment ceases once the debt is repaid or the order is revoked [9].

Core Insights - The "One Big Beautiful Bill" will significantly change the student loan repayment system starting next year, impacting both current borrowers and those still in school [1] Group 1: Changes to Repayment Plans - The Department of Education will discontinue the Saving for a Valuable Education (SAVE) plan, expected to end in 2026, affecting millions of borrowers who have been in forbearance for over a year [2][4] - Starting July 1, 2026, new borrowers will have two repayment options: the Repayment Assistance Plan (RAP), which is income-driven, and a new tiered Standard Plan based on loan size [5][6] Group 2: Implications for Borrowers - Over 7.7 million borrowers currently on the SAVE plan will need to explore alternative repayment options by 2026 [4] - Borrowers should assess whether the RAP is more beneficial than their current plan, considering their loan balance and future income [7][10] - Online calculators will be provided by the Department of Education to help borrowers compare repayment plans based on their financial situation [8][10] Group 3: Recommendations for Existing Borrowers - Existing borrowers are encouraged to consider transferring to other income-driven repayment plans, such as Income-Based Repayment (IBR), as interest continues to accrue during forbearance [12][14] - It is advised that borrowers who can afford to make payments should transition to IBR sooner rather than later to avoid increasing loan sizes [14][15]

Core Insights - The Saving for a Valuable Education (SAVE) repayment plan for federal student loans is ending, requiring millions of borrowers to select a new, likely more expensive repayment plan [1][11] Group 1: Transition from SAVE Plan - 7.7 million borrowers will soon need to exit the SAVE plan, which was an income-driven repayment plan initiated by the Biden administration [3] - The Department of Education has not set a specific date for when borrowers must leave the SAVE plan but has advised them to transition to another repayment plan now [3][4] - The Income-Based Repayment (IBR) plan is currently recommended as the most stable option for borrowers transitioning from SAVE, as other income-driven plans will be eliminated after July 1, 2028 [4] Group 2: New Repayment Options - A new income-driven repayment plan, the Repayment Assistance Plan (RAP), will offer lower monthly payments than the IBR plan for some borrowers, but it will not be available until at least July 1, 2026 [5] - Payments for borrowers under the IBR and Pay as You Earn (PAYE) plans will be approximately $100 to $200 more per month compared to the SAVE plan, depending on their income and family size [7][8][11] Group 3: Financial Impact on Borrowers - The median yearly income for a worker with a bachelor's degree is $80,132, and a single borrower with this income would see payments increase by about $100 on IBR and PAYE compared to SAVE [7] - For a borrower with a spouse and two children, monthly payments could increase by $200 on IBR and PAYE compared to SAVE, with ICR payments exceeding $500 [8] - Lower-income borrowers, such as those in early childhood education, would face similar increases, with the RAP plan being a more affordable option, albeit not available until mid-2026 [12][13][14]

Core Insights - Student loan borrowers are reducing discretionary spending to manage loan repayments, with many successfully handling their loans, but an increasing number are facing difficulties [2][5]. Spending Impact - The typical student loan borrower has reduced their weekly spending by approximately $12.20 for every $10,000 of student debt, leading to an annual spending cut of about $1,590 for the median borrower with a $25,000 balance [3][4][8]. Borrower Status - Out of 18.8 million borrowers in repayment, nearly 13 million are in good standing, and about 25% expect to pay off their debt by 2026 [6]. - However, over 4 million borrowers are nearing default, which is more than eight times the number of seriously delinquent borrowers prior to the pandemic [7]. Economic Context - Borrowers are facing challenges due to rising prices from tariffs and a slowing labor market, compounded by confusion over changing student loan policies [8].

Core Viewpoint - The Trump administration's proposed settlement with Missouri aims to end the Saving on a Valuable Education (SAVE) plan, significantly impacting millions of student loan borrowers by accelerating the expiration of repayment plans [1][5]. Group 1: SAVE Plan Overview - The SAVE plan, introduced by the Biden administration in 2023, was designed to make student loan payments more manageable by reducing monthly payments based on income and family size, while also preventing excessive loan interest for lower-income borrowers [3]. - Currently, over 7 million borrowers are enrolled in the SAVE plan, with an additional 450,000 interested borrowers affected by the proposed settlement [4]. Group 2: Implications of Termination - The termination of the SAVE plan removes the most affordable repayment option for borrowers, leading to immediate financial impacts as borrowers face an accelerated transition to alternative repayment plans [5]. - The new repayment landscape under Trump's One Big Beautiful Bill will limit new federal loan borrowers to just two repayment options starting July 2026: the standard repayment plan and the new Repayment Assistance Plan [7]. Group 3: Future Considerations for Borrowers - The elimination of the SAVE plan may lead future borrowers to reconsider the suitability of federal student loans, as the changes reduce the attractiveness of federal loans compared to private options [6]. - Borrowers are advised to actively evaluate their repayment options and consider refinancing with private lenders for potentially better terms, although this would mean losing federal protections [11][13].

Core Insights - A new income-driven repayment plan, the Repayment Assistance Plan (RAP), is set to be implemented by July 1, 2026, replacing existing income-driven plans and potentially increasing costs for certain borrowers, particularly low-income individuals [3][4][19] Summary by Category New Repayment Plan - The RAP will open for enrollment by July 1, 2026, and will eliminate all existing income-driven repayment plans within three years [3] - Borrowers who take out loans before the implementation date can still enroll in the current Income-Based Repayment (IBR) plan [3] Impact on Borrowers - Monthly payments under RAP are expected to be significantly higher for lower-income borrowers compared to the IBR plan, with some facing payments of at least $10 per month instead of $0 [4][14] - The average lower-income borrower could pay 734% more under RAP than under IBR, with total payments over the life of the loan increasing from $0 to $12,287 for those with families [14][19] Financial Examples - A borrower with an annual income of $23,475 would pay $4,512 over 20 years under IBR, while under RAP, they would pay $38,510 over 30 years [9][10] - For an average income borrower earning $68,400, total payments would be $54,867 under IBR and $55,165 under RAP, indicating minimal difference for this income bracket [15][18] Additional Provisions - The Department of Education will contribute up to $50 a month to lower the principal balance for borrowers, but this support may not be sufficient for those with low incomes and high loan amounts [13]