As part of its initiative to downsize the federal government and reduce government spending, the Trump Administration has made significant staffing cuts to numerous federal agencies, including the U.S. Department of Education. President Trump has also proposed to eliminate the Department of Education. However, the Department of Education administers the federal student loan program. The program allows students to repay their loans via income-based repayment (IBR) plans, which calculate monthly payments based on borrowers’ discretionary income. However, staff cuts at the Department of Education may mean significant consequences for the income-based repayment program.
Understanding Income-Based Repayment Plans
The Department of Education’s income-based repayment plans allow borrowers to reduce their monthly payments on their federal student loans to a percentage of discretionary income, which can help borrowers whose income may not support traditional monthly payments. For individuals who took out their first student loans before July 1, 2014, IBR plans require borrowers to pay 15 percent of their discretionary income, with forgiveness of the remaining student loan balance provided after 25 years of qualifying repayments. Individuals who took out their first student loans on or after July 1, 2014, will pay 10 percent of their discretionary income, with forgiveness provided after 20 years of qualifying repayment.
How Staff Cuts Can Disrupt IBRs
Department of Education staff oversee the IBR programs, including assessing borrowers’ eligibility, determining monthly payments, and processing discharges for borrowers who complete the program. Staff also manage borrowers’ appeals of initial denials of requests for entry into the program or determinations of monthly payments. As a result, the ongoing staff cuts at the Department of Education could result in issues such as errors in repayment determinations, slower response times, and delayed application processing.
What Borrowers Should Watch Out For
Potential issues caused by Department of Education staff cuts that student loan borrowers should watch out for include:
- Delays in application approvals
- Erroneous application denials (the stated reason for the denial lacks factual support)
- Misapplied payments
- Confusing notices that contain information irrelevant to a borrower’s specific circumstances or outdated information
Steps You Can Take to Protect Your Rights
Borrowers can protect their rights under student loan laws and regulations by taking proactive measures, such as:
- Keeping detailed records of paperwork, payment history, and correspondence to have documentation to correct errors that may occur with borrowers’ accounts, such as misapplied payments
- Contacting loan servicers proactively to get administrative processes started when issues arise
- Promptly recertifying income or giving the Department of Education access to IRS records for income recertification
- Regularly monitoring loan accounts to ensure proper application of payments and continued participation in the IBR program
- Reading all notices issued by the Department of Education or loan servicers
- Speaking with an attorney if you experience issues with your federal student loans
Contact Our Firm Today to Discuss Your Options
If you struggle with repaying your student loans, talking to an experienced attorney about your legal options can help you find solutions. Contact Marrs & Terry, PLLC, today for an initial consultation with our legal team to learn more about repayment programs for federal student loans.