Regardless of your emotional response to the election results, the question on your mind now is, “Now what?”. Will student loan programs be axed? Will some be saved? The door is wide open to possibilities, but lets start with what the new President can and can’t do. There are issues that are within his control, and others that fall under Congress’ domain.
The Big Questions
The question I received during the poll results (yes, I received a Facebook message as soon as Florida began to look shifty) was how IBR might be affected. That’s just one of the issues. The other thing folks want to know his if forgiveness will be removed or altered. I don’t know what will happen, but I know what can happen.
IDR (Income Driven Repayment) consists of 5 different plans:
- ICR – Income Contingent Repayment
- IBR – Income Based Repayment
- PAYE – Pay As You Earn
- New IBR
- REPAYE – Revised Pay As You Earn
Good News: ICR, IBR, New IBR
The good new is that ICR, IBR, and New IBR are laws. The President can’t change these programs. Congress can, but I can’t speculate if that is on the Congressional agenda or what changes Congress might consider.
Bad News: PAYE and REPAYE
The bad news is about PAYE and REPAYE. These plans were brought forth through executive action, which means they can be erased through executive action as well. If terminated, anyone who borrowed loans prior to 2014 will be forced to choose between IBR and ICR. That means a 15% formula instead of a 10% formula, and 25-year forgiveness instead of 20-year. You’ll have to pay a little more for an extra 5 years.
Good news about PSLF (Public Service Loan Forgiveness). That is also a law. Only Congress can alter it. There have been talks about capping the amount of forgiveness, but we won’t know if that is an issue until the budget discussions begin.
Again, since ICR, IBR, and New IBR are law, the forgiveness that results from these programs is also protected from executive action.
It’s no secret that most Republicans do not support the CFPB (Consumer Finance Protection Bureau). The agency is certain to be in the cross-hairs of the new Congress. If the agency is dismantled, or looses authority to act, the lose of oversight of consumer protections will most certainly be felt by student loan borrowers. The CFPB has been watching over debt collectors and servicers, and has made suggestions for what servicers should be doing as well as prosecuting rogue debt collectors. While the FTC (Federal Trade Commission) also has power over debt collectors, the CFPB has been much more proactive about punishing violations. If nothing else, the CFPB has been very good about publicizing student loan borrowers’ rights, protections, and options. Loss of this watchdog would be huge.
I’ll also add that the number of scam student loan help/consolidation companies will grow since the CFPB seems to be the only agency doing anything about the gross misrepresentation and fraud such companies commit.
If this losing the CFPB is a concern to you, please contact your Congressional representatives. I especially urge those of you with Republican Representatives and Senators to make your voices heard. They need to know their constituents want this agency to continue and that it could cost them a vote when it’s time for reelection. This is most important for House members as they are up for reelection in just two short years.