The Trump Administration is going to have to deal with a new legal problem in April. The American Federation of Teachers is suing the Trump administration to bring back programs that make it easier for people to pay back and get rid of student loans.
This comes after the Trump administration made it hard to use programs that let people pay back their loans based on their income. Moving student loans from the Education Department to the Small Business Administration (SBA) has also caused a lot of trouble for the administration.
Current state of student loans under the Trump Administration
Right now, people who have student loans are in a tough spot. The reason for this is that the Biden Administration’s SAVE plan is in court right now. On top of that, the Trump Administration recently made it impossible to use any programs that based on income to repay debt.
These kinds of programs let you change how much you pay each month based on your family size and income. You need these kinds of programs to make sure you can pay back your loans every month.
$1,700,000,000 is owed in student loans right now. There are a lot of students who can not pay back their student loans because they can not get into these income-based payment programs.
The current policy on Student Loan Forgiveness from the U.S. Department of Education is required by law. This is because the federal government has to give students these kinds of repayment plans.
The Trump Administration blocks access to repayment programs
It was because the Trump Administration sent a “stop work order” to the loan servicers that the American Federation of Teachers had hired in March that the union filed a motion against the Trump Administration.
The Administration told the loan servicers to stop working on the income-based repayment plans right away. The Department of Education also got rid of the online and paper forms for applying to the programs.
This is being done because the Department of Education can not use the SAVE plan, which is one of the income-based repayment programs put in place by the Biden Administration.
For students on the ICR, PAYE, and IBR plans, too, the stop work order means they can not work. This means that borrowers can not join these programs, change their program, and then figure out their payments again.
Without Congressional authorization, the defendants have inexplicably and irrationally issued a Stop Work order shutting down all access to all income-driven repayment plans for borrowers seeking to enroll,” reads the motion. “Millions of student loan borrowers are being denied Congressionally mandated student loan repayment and forgiveness programs, simply because the defendants have unlawfully ceased to accept and process enrollment applications.”
The next meeting between the two groups is set for April. It is not clear what will happen, but those who will benefit should expect the Trump Administration to make new plans and implementation of changes. The stop order currently affects more than a million student loan borrowers, which means they can not get the affordable payment plans they are legally entitled to.
Controversy over the move to the SBA
The Trump Administration has also taken over student loans from the Department of Education and given them to the Small Business Administration (SBA). This has caused problems with the income-driven repayment programs. This comes at the same time that the SBA said they would be laying off 40% of their staff, which worries a lot of people.
The biggest worry is that one of the biggest programs is being moved from the Department of Education to an outside group that is cutting back and going through a lot of changes inside.
Along with the current stop-work order for the income-driven repayment programs, this may make it even harder for the student loan programs to run. Some people may choose private loan repayment programs over federal ones because of these problems.
