Personal Finance

Borrowers must act by April 30 to qualify for student loan forgiveness

Published

1 year ago

April 7, 2024

Business Finance News

Worried woman looking at her mobile phone.

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There’s a student loan forgiveness opportunity available to many borrowers, but they’ll have to act by April 30 to qualify, the Consumer Financial Protection Bureau says.

The U.S. Department of Education is conducting a one-time adjustment of borrowers’ payments this summer, and those who request a consolidation by the end of this month — which will leave them with one, larger loan — could get their debt canceled immediately or sooner than they would have otherwise.

“The one-time adjustment is designed to count more of the payments you made, so they can be added to the payments required for cancellation,” the CFPB says.

Here’s what to know.

Consolidation can get you closer to loan forgiveness

Income-driven repayment plans, which date to 1994, set borrowers’ monthly payments based on a share of their discretionary income. Those payments are typically lower than under standard repayment, and can be zero under some plans.

Borrowers typically get any remaining debt forgiven after 10, 20 or 25 years, depending on the plan.

One complicating factor for borrowers in these programs is that they often have multiple loans, taken out at different times, said higher education expert Mark Kantrowitz.

“They get at least one new loan each year in school, on average,” he said.

That can mean a borrower has multiple timelines to forgiveness, one for each of those loans.

Now, the Biden administration is temporarily offering borrowers the chance to combine their loans and to get credit going back as far as their first loan payment on the oldest of their original loans in that bundle.

This could be a good deal for many, experts say.

For example, say a borrower graduated from college in 2004, took out more loans for a graduate degree in 2018 and is now in repayment under an income-driven plan with a 20-year timeline to forgiveness. Consolidating could lead them to immediately qualify for forgiveness on all of those loans, experts say, even though they’d normally need to wait at least another 14 years for full relief.

Usually, a student loan consolidation restarts a borrowers’ forgiveness timeline, making it a terrible move for those working toward cancellation. But the Biden administration has changed that program detail through April 30.

What to know about consolidating your student loans

All federal student loans are eligible for consolidation, including Federal Family Education Loans, Parent Plus loans and Perkins Loans, Kantrowitz said.

You can apply for a Direct Consolidation Loan at StudentAid.gov or with your loan servicer.

“So long as the application is submitted by April 30, they should be fine, even if the servicers take longer to process it,” Kantrowitz said.

Recent student loan debt forgiveness is making good on previous legislation: Bharat Ramamurti

Some borrowers who took out small amounts may even be eligible for cancellation after as few as 10 years’ worth of payments, if they enroll in the new income-driven repayment option, known as the SAVE plan.

Consolidating your loans shouldn’t increase your monthly payment, since your bill under an income-driven repayment plan is based on your earnings and not your total debt, Kantrowitz said.

The new interest rate will be a weighted average of the rates across your loans.

Before consolidating, it may be a good idea to get a complete payment history of each loan, so that you can later make sure you’re getting the full credit you’re entitled to, said Elaine Rubin, director of corporate communications at Edvisors, which helps students navigate college costs and borrowing.

You should be able to get a history of your payments at StudentAid.gov by looking into your loan details. You can also ask your servicer for a complete record.

The payment history counts when your loans first entered repayment, not when the loan was borrowed, Rubin said.

If a borrower believes there is an issue with their payment count, they can talk to their loan servicer or submit a complaint with the Department of Education’s Federal Student Aid unit, she added.

You should never have to pay a fee to consolidate your loan, the CFPB says. It is mostly scammers that would try to get you to do so.

Personal Finance

Student loan borrower in SAVE forbearance says interest growing

Published

4 hours ago

June 9, 2025

Business Finance News

Los Angeles, CA – May 17: Signage and people along Bruin Walk East, on the UCLA Campus in Los Angeles, CA, Wednesday, May 17, 2023.

Jay L. Clendenin | Los Angeles Times | Getty Images

An unexpected $3,000 in interest

Ellie Bruecker

Courtesy: Bruecker Family

Despite the government’s promises, Bruecker’s student debt has grown by around $3,000 during the roughly year-long SAVE reprieve, her loan documents show.

“I saw those numbers and my eyes bugged out of my head,” said Bruecker, 34.

She’s not the only SAVE borrower seeing interest accruing: Other people facing the same issue have taken to social media to try and get answers.

At one point, around 8 million people were enrolled in the SAVE plan, according to the Education Dept.

Bruecker happens to work as the director of research at The Institute for College Access & Success, a nonprofit that does advocacy work in the higher education space. But she wonders how many student loan borrowers will even know that this wasn’t supposed to happen, let alone be able to get it corrected.

“Will they resolve this for everyone, or just those who get them on the phone and are loud about it?” she said.

Advocate: Check your loan history

It’s unclear how widespread the issue is.

A spokesperson for the Education Dept. did not answer CNBC’s questions about the issue some borrowers are facing, but said that those “enrolled in the SAVE Plan remain in a forbearance that is not accruing interest.”

Mohela did not immediately respond to a request for comment.

But Mohela has a notice at the top of its website that reads: “If you recently received an interest notice for your student loan account, please know that this is not a bill, and no action is necessary at this time.”

The notice goes on to say that, “For borrowers on the SAVE administrative forbearance, interest is currently set at 0%. Refer to your loan details in your notice.”

The company does not say that the alerts were sent in error, but they likely were, said higher education expert Mark Kantrowitz.

“MOHELA sent out misleading notices to their borrowers who are in the SAVE repayment plan,” Kantrowitz said.

“Borrowers who are worried about the MOHELA letter should check their loan history to see if the balance has changed,” Kantrowitz added. If their debt has grown since July 2024, “they should contact MOHELA,” he said.

Educator and former U.S. Representative Dr. Jamaal Bowman speaks to hundreds of students from Washington, DC universities protesting U.S. President Donald Trump’s dismantling of and funding cuts to the Department of Education, in Washington, D.C., U.S. April 4, 2025.

Allison Bailey | Reuters

Bruecker said her loan records from both Mohela and the Education Dept. reflect a higher balance after roughly around $3,000 in interest was added to her debt during the forbearance.

“Mohela has been allowing interest to accrue the entire time my loans have been in this SAVE forbearance,” she said.

She tried to contact Mohela to correct the error, but said she was unable to reach a representative despite waiting on the phone for hours.

In recent months, the Trump administration has terminated around half of the Education Department’s staff, including many of the people who helped assist borrowers when they ran into issues like this one. A federal judge has ordered Trump officials to reinstate the terminated employees, but the administration is now asking the Supreme Court to block that order.

“With the level of dysfunction at the Education Department right now, I have a real distrust this is going to get resolved for people,” Bruecker said.

Personal Finance

Job market is ‘trash’ right now, career coach says — here’s why

Published

7 hours ago

June 9, 2025

Business Finance News

Nitat Termmee | Moment | Getty Images

The U.S. job market isn’t looking too hot for recent college graduates and other job seekers, according to economists and labor experts.

“The job market is kind of trash right now,” said Mandi Woodruff-Santos, a career coach and personal finance expert.

“I mean, it’s really difficult,” she added. “It’s really difficult for people who have many years of experience, so it’s going to be difficult for college kids.”

‘Tough summer’ for job seekers

That may seem counterintuitive.

The national unemployment rate in May was relatively low, at 4.2%. The layoff rate has also been historically low, suggesting employers are holding on to their workers.

Yet, hiring has been anemic. The pace of employer hiring in April was the lowest in more than 10 years, since August 2014, excluding the early months of the Covid pandemic.

The rate at which workers are quitting — a barometer of worker confidence about their job prospects — has also plummeted to below pre-pandemic levels, a stark reversal from the “great resignation” in 2021 and 2022.

“It will be a tough summer for anyone looking for full-time work,” Heather Long, chief economist at Navy Federal Credit Union, wrote in an e-mail Friday.

“This is an ‘abundance of caution economy’ where businesses are only filling critical positions and job seekers, especially recent graduates, are struggling to find employment,” she said.

Steady job market erosion ‘cannot continue forever’

While the job market may be limping along by some measures, Long also said a recession doesn’t seem “imminent.”

Businesses added more jobs than expected in May, for example. But those gains have slowed significantly — a worrisome sign, economists said.

Employers appear reluctant to hire in an uncertain economy.

Economy is cooling but not rolling over, says Morgan Stanley's Michael Gapen

CEO confidence plummeted in the second quarter of 2025, seeing its largest quarterly decline on record dating to 1976, according to a survey by The Conference Board. Uncertainty around geopolitical instability, trade and tariff policy were the largest business risks, according to Roger Ferguson Jr., the group’s chair emeritus.

The share of CEOs expecting to expand their workforce fell slightly, to 28% in Q2 from 32% in Q1, and the share planning to cut their workforce rose 1 point, to 28%.

“The steady erosion in the US job market cannot continue forever — at some point, there will just not be much left to give,” Cory Stahle, an economist at the Indeed Hiring Lab, wrote in an analysis Friday.

“In a low-hiring, slow-growth environment, employers can only hold onto their existing employees for so long before they too will have to be let go — increasing unemployment even as job opportunities continue to shrink,” Stahle wrote.

Don’t underestimate personal connections

Don’t underestimate the “power of personal connections” to help get noticed in a competitive job market like this one, said Woodruff-Santos, the career coach.

Her No. 1 piece of advice: Make yourself “uncomfortable” in order to network and build professional relationships.

“You need to put yourself in situations where you may not know everybody, you may not know one person, where you may actually need someone to give you a bit of a helping hand, and to feel confident and OK doing that,” Woodruff-Santos said.

If you’re pushed to accept a job you don’t love to make ends meet, make a plan to keep current in the field to which you aspire, she said.

In other words, build the skills that will eventually help you get that job, perhaps by taking a training course, getting a certificate or doing contract work, she said. Also, consider joining a professional organization, putting yourself in the same room as people in your desired field and with whom you can connect, she said.

These steps raise your chances of getting attention from future employers and keeping your skills sharp, Woodruff-Santos said.

She also had some words of encouragement.

“The job market has been trash before,” she said. “It’ll be trash again. This probably won’t be your first trash job market. And you’re going to be OK.”

Personal Finance

What Pell Grant changes in Trump budget, House tax bill mean for students

Published

1 day ago

June 8, 2025

Business Finance News

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For many students and their families, federal student aid is key for college access.

And yet, the Trump administration’s budget proposal for fiscal year 2026 calls for significant cuts to higher education funding, including reducing the maximum federal Pell Grant award to $5,710 a year from $7,395, as well as scaling back the federal work-study program. The proposed cuts would help pay for the landmark tax and spending bill Republicans in the U.S. Congress hope to enact.

Roughly 40% of undergraduate students rely on Pell Grants, a type of federal aid available to low-income families who demonstrate financial need on the Free Application for Federal Student Aid. Work study funds, which are earned through part-time jobs, often help cover additional education expenses.

President Donald Trump‘s “skinny” budget request said changes to the Pell Grant program were necessary due to a looming shortfall, but top-ranking Democrats and college advocates say cuts could have been made elsewhere and students will pay the price.

“The money we invest in post-high school education isn’t charity — it helps Americans get good jobs, start businesses, and contribute to our economy,” Sen. Elizabeth Warren, D-Mass., told CNBC. “No kid’s education should be defunded to pay for giant tax giveaways for billionaires.”

Pell Grants are ‘the foundation for financial support’

Nearly 75% of all undergraduates receive some type of financial aid, according to the National Center for Education Statistics.

“Historically the Pell Grant was viewed as the foundation for financial support for low-income students,” said Lesley Turner, an associate professor at the University of Chicago Harris School of Public Policy and a research fellow of the National Bureau of Economic Research. “It’s the first dollar, regardless of other types of aid you have access to.”

Under Trump’s proposal, the maximum Pell Grant for the 2026-2027 academic year would be at its lowest level in more than a decade.

“The Pell reduction would impact the lowest-income families,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

More than 92% of Pell Grant recipients in 2019-2020 came from families with household incomes below $60,000, according to higher education expert Mark Kantrowitz.

How Pell Grant cuts could affect college students

If the president’s cuts were enacted and then persisted for four years, the average student debt at graduation will be about $6,500 higher among those with a bachelor’s degree who received Pell Grants, according to Kantrowitz’s own calculations.

“If adopted, [the proposed cuts] would require millions of enrolled students to drop out or take on more debt to complete their degrees — likely denying countless prospective low- and moderate-income students the opportunity to go to college altogether,” Sameer Gadkaree, president and CEO of The Institute for College Access & Success, said in a statement.

Already, those grants have not kept up with the rising cost of a four-year degree. Tuition and fees plus room and board for a four-year private college averaged $58,600 in the 2024-25 school year, up from $56,390 a year earlier. At four-year, in-state public colleges, the average was $24,920, up from $24,080, according to the College Board.

The Pell program functions like other entitlement programs, such as Social Security or Medicare, where every eligible student is entitled to receive a Pell award.

However, unlike those other programs, the Pell program does not rely solely on mandatory funding that is set in the federal budget. Rather, it is also dependent on some discretionary funding, which is appropriated by Congress.

The Congressional Budget Office projected a shortfall this year in part because more students now qualify for a Pell Grant due to changes to the financial aid application, and, as a result, more students are enrolling in college.

Cutting the Pell Grant is ‘extreme’

Although there have been other times when the Pell program operated with a deficit, slashing the award amount is an “extreme” measure, according to Kantrowitz.

“Every past shortfall has been followed by Congress providing additional funding,” he said. “Even the current House budget reconciliation bill proposes additional funding to eliminate the shortfall.”

However, the bill also reduces eligibility for the grants by raising the number of credits students need to take per semester to qualify for the aid. There’s a concern those more stringent requirements will harm students who need to work while they’re in school and those who are parents balancing classes and child care.

“These are students that could use it the most,” said the University of Chicago’s Turner.

“Single parents, for example, that have to work to cover the bills won’t be able to take on additional credits,” Mayotte said.

“If their Pell is also reduced, they may have to withdraw from school rather than complete their degree,” Mayotte said.