Student Loan Tracking: Government Oversight Over Years

Student loan debt is a significant issue in the United States, with the Education Department holding $1.5 trillion in federal loans for nearly 43 million borrowers as of January 2024. The U.S. government offers various programs and incentives to assist borrowers in repaying their student loans. Federal student loan payments resumed in October 2023 after a 3-year pause due to the COVID-19 pandemic. The government provides income-driven repayment (IDR) plans, such as the Saving on a Valuable Education (SAVE) Plan, which offers forgiveness of any remaining balance after a certain number of payments over 10, 20, or 25 years. Agencies are required to report annually to the U.S. Office of Personnel Management (OPM) on their use of student loan repayment authority, including the number of employees receiving benefits and the cost to the government. While the government promotes and facilitates student loan repayment, it is not clear if they actively track individual loans that have been paid off for extended periods.

Student loan repayment plans

Know Your Loan Details

Firstly, it's important to understand the details of your loan. Make a list of your student loans, including whether they are private or federal, the monthly payment and due date, current and principal balances, interest rates, and servicer. Federal loans may be of different types, such as PLUS, subsidized, or unsubsided, and it's helpful to know which type you have. You can look up federal loans at studentaid.gov.

Understand Repayment Options

There are several repayment options available for federal student loans. One option is the income-based repayment (IBR) plan, where monthly payments are based on your income and family size. Another option is the Saving on a Valuable Education (SAVE) repayment plan, which generally offers lower payments. If you are experiencing financial difficulties or meet certain requirements, you may be eligible for forbearance, which temporarily pauses your loan payments. Deferment is also an option for eligible borrowers based on factors such as enrolment in school or financial hardship.

Stay Organised and Keep Records

It is essential to stay organised and keep good records when it comes to student loan repayment. Keep your servicer updated with your current mailing address, phone number, and email address. Open their mail and respond to their calls to stay informed about any issues. Keep notes from your conversations with the servicer, including the date, the name of the person you spoke to, and the details of your discussion.

Make Extra Payments if Possible

If you can afford it, making extra payments can help you get out of debt faster and save you money on interest. Inform your servicer to apply extra payments to your highest-interest-rate loans first to maximise the benefit.

Claim Interest on Your Tax Return

Depending on your income and tax filing status, you may be able to claim up to $2,500 of the student loan interest you paid in a given year on your tax return.

Seek Help if Needed

If you have any problems or disputes regarding your student loan, you can submit a complaint to the Consumer Financial Protection Bureau (CFPB) or Federal Student Aid. You can also contact your state attorney general or your state's student loan ombudsman for guidance and assistance.

Student loan forgiveness

There are several strategies and tips for paying off student loans, such as making extra payments, staying in touch with loan servicers, and claiming student loan interest on tax returns. However, the focus of this discussion is on loan forgiveness, which has been a subject of controversy and legal challenges.

The Biden administration introduced an income-driven repayment program called the SAVE (Saving on a Valuable Education) plan, which offers lower monthly payments and forgiveness of any remaining balance after a fixed repayment term. This plan, along with other income-driven repayment plans, has been blocked by the Trump administration, causing turmoil in the federal student loan repayment system. The SAVE plan has been challenged in court, with the 8th Circuit granting a preliminary injunction that has kept millions of borrowers in forbearance, unable to make progress toward loan forgiveness.

The impact of student loan forgiveness has been studied, and some unintended consequences have been observed. According to an economic analysis, loan forgiveness has led to beneficiaries taking on more non-student loan debt, working less, and earning less. The study also found that loan forgiveness disproportionately benefited higher-income borrowers. This has resulted in taxpayers being burdened with the cost of canceled student loans, estimated to be at least $133 billion.

The debate around student loan forgiveness is complex, with advocates arguing for the benefits of freeing borrowers from debt, while critics highlight the costs imposed on others and the potential for borrowers to take on additional debt. The Trump administration and the 119th Congress plan to address the root causes of excessive college cost increases through legislation like the College Cost Reduction Act, aiming to incentivize colleges to keep costs down and promote student success.

Student loan interest

For federal loans, it is important to know what type of loan it is (e.g. PLUS, subsidized, or unsubsidized) and the name of your repayment plan. Federal loans may offer income-driven repayment (IDR) plans, which base monthly payments on a borrower's income and family size and offer forgiveness of any remaining balance at the end of the repayment period. If you have certain older federal loans that are not owned by the federal government, interest may capitalize after the post-school grace period or a deferment on an unsubsidized loan, or after certain types of forbearance. Forbearance is available to borrowers experiencing financial difficulties or who meet certain requirements, such as serving in AmeriCorps or the National Guard.

To pay off student loan debt more easily, it is recommended to make extra payments, if you can afford them, and to apply them to your highest-interest-rate loans first. It is also important to stay in touch with your loan servicer and keep good records of your payments and communication with them.

Student loan debt relief

The US government keeps track of student loan debt and repayment, with the Education Department holding $1.5 trillion in federal loans for nearly 43 million borrowers as of January 2024. The resumption of federal student loan payments in October 2023, after a 3-year pause due to the COVID-19 pandemic, has brought attention to the issue of student loan debt relief.

The Biden administration has announced final student loan debt relief approvals, including forgiveness for over 150,000 borrowers through borrower defence, Public Service Loan Forgiveness (PSLF), and total and permanent disability discharges. Additionally, $4.5 billion in student loan forgiveness has been approved for 261,000 borrowers who attended Ashford University. The administration has also addressed "administrative failures" in income-driven repayment (IDR) programs, correcting eligible payment counts on borrowers' accounts.

To qualify for student loan debt relief, borrowers can explore various options:

• Borrower Defence: This option is available if you believe you were defrauded by your school.
• Public Service Loan Forgiveness (PSLF): This program offers loan forgiveness for borrowers working in public service jobs.
• Total and Permanent Disability Discharges: Borrowers with permanent disabilities may qualify for loan discharges.
• Closed School Discharges: If your school closed under "exceptional circumstances," you may be eligible for a discharge if you didn't complete your program and were enrolled more than 120 days before the closure.
• Income-Driven Repayment (IDR) Plans: These plans base monthly payments on income and family size, offering forgiveness of any remaining balance at the end of the repayment period.
• Deferment and Forbearance: These temporary options are available during financial hardship or if you're still enrolled in school.

Additionally, there are strategies to manage and repay student loans more effectively:

• Know Your Loans: Make a list of your loans, including their type, monthly payment, due date, balances, interest rates, and servicer.
• Stay Organised: Keep your servicer updated with your contact information and open their mail to stay informed about any issues.
• Extra Payments: If possible, make extra payments towards your highest-interest loans to reduce debt faster and save on interest.
• Claim Interest on Tax Returns: Depending on your income, you may be able to claim student loan interest on your tax returns.
• Submit Complaints: If you encounter problems with your student loans, you can submit complaints to the Consumer Financial Protection Bureau (CFPB) or Federal Student Aid.

Student loan repayment benefits

There are several ways in which employers can assist with student loan repayment, including recurring payments, signing bonuses, and paid time off (PTO) exchanges. Recurring payments involve employers making regular instalments towards the employee's loan. Signing bonuses are a one-time payment made to new employees to help pay off their student loan balance. PTO exchanges allow employees to swap their unused paid time off for cash that is then applied to their student loans.

Some employers may offer student loan repayment assistance from an employee's start date, while others may require them to be with the company for a set period before becoming eligible. It is important to understand the specific ground rules and payment terms of each company's program, as there is often a maximum amount that employers are willing to contribute.

Additionally, federal and state government agencies may offer student loan repayment assistance programs based on an individual's career choice. For example, health professionals, public defenders, military members, and STEM workers may be eligible for loan repayment assistance through government initiatives.

It is worth noting that student loan repayment assistance was previously considered taxable income for employees. However, the CARES Act, passed in March 2020, allowed employers to provide up to $5,250 in annual student loan repayment assistance without tax consequences. This tax break has been extended through 2025, providing a valuable incentive for companies to assist their employees in managing student loan debt.

Frequently asked questions