A HUGE legal win for MILLIONS of borrowers (Protect Borrowers)

Borrowers just secured a MAJOR victory! In AFT v. U.S. Department of Education (ED), the Trump Administration agreed to protect borrowers enrolled in Income-Driven Repayment (IDR) plans and deliver student debt relief to borrowers making payments under those plans for decades.

This is a huge milestone. At the time AFT originally filed the lawsuit in March 2025—represented by Protect Borrowers and Berger Montague—the Trump Administration had removed the application to enroll in IDR from government websites and had issued a secret order to student loan contractors to halt all IDR enrollment and processing. After we filed, the government quickly resumed accepting applications and, months later, began processing those applications again. ED’s recent agreement is the first time the Trump Administration has publicly committed its intent to follow the law, after representations it made that it wouldn’t cancel debt under certain—and at times, any—IDR plan.

The Administration has now agreed to:



• Cancel student debt for all eligible borrowers enrolled in Income-Based Repayment (IBR), Income-Contingent Repayment, and Pay As You Earn payment plans and the Public Service Loan Forgiveness (PSLF) program;

• Refund any borrower who makes additional payments beyond the date of eligibility for IDR cancellation;

• Process IDR applications and PSLF Buyback applications—including applications for the IBR plan from borrowers without a partial financial hardship.

• Recognize the date a borrower becomes eligible for cancellation as the effective date of discharge and not issue IRS forms suggesting that cancelled debt is taxable for borrowers whose effective date is on or before December 31, 2025; and

• File six monthly status reports with the court on the status of its IDR and PSLF application and loan cancellation processing—increasing transparency and accountability.

This relief will extend to all borrowers.

Borrowers urgently needed this agreement. Prior to it, borrowers eligible to have their loans cancelled in 2025 were at risk of getting stuck with a large tax bill due to the Administration’s processing delays. This is because Trump and Congressional Republicans’ “One Big Beautiful Bill Act” (OBBBA) permanently extended Congress’s 2018 action to exclude cancelled debts for death or disability from federal taxable income—but not all cancelled student loan debt. As a result, millions of borrowers who earn debt relief under an IDR plan after January 1, 2026, could see their taxes skyrocket. Working families can’t shoulder thousands of dollars in additional taxes—they’re already stretched thin by rising costs of living, a weak job market, mounting levels of debt, and OBBBA’s historic cuts to public benefits.

New York City Expands Student Loan Relief Program Amid Federal Overhaul

On August 7, 2025, Mayor Eric Adams announced that a citywide student-loan assistance program—previously limited to civil servants—will now be available to all eligible New Yorkers. Administered in partnership with the financial-technology company Summer, the initiative provides personalized guidance to help borrowers navigate complex repayment choices.

The expansion comes during a time of sweeping federal changes that are reshaping the student-loan repayment system. Millions of borrowers nationwide are losing access to popular repayment plans and facing higher long-term costs. For New York City’s 1.4 million student-loan borrowers, the local program offers a modest but timely safety net.

In July 2025, Congress passed the “One Big, Beautiful Bill,” restructuring the student-loan system and eliminating most existing income-driven repayment plans, including SAVE, PAYE, and ICR. By July 1, 2028, borrowers will be left with only an expanded Income-Based Repayment plan or the new Repayment Assistance Plan. Interest resumed for SAVE borrowers on August 1, 2025, adding an average of $3,500 per year in costs. The Repayment Assistance Plan will calculate payments between 1 and 10 percent of adjusted gross income, require a minimum payment of $10 per month, and extend loan forgiveness to thirty years. Consolidated Parent PLUS loans will now be eligible for Income-Based Repayment, giving families more flexibility. Analysts warn that these changes could push many borrowers toward private lenders, where interest rates may be higher and borrower protections more limited.

For New York City borrowers, the expanded local program offers critical help when federal protections are being reduced. Borrowers can receive one-on-one counseling and repayment optimization through Summer at no cost. With the Repayment Assistance Plan launching in July 2026 and older plans disappearing by 2028, New Yorkers face an urgent need to evaluate their repayment strategies. The changes are especially important for public service workers in the city, many of whom rely on the Public Service Loan Forgiveness program and could see shifts in their eligibility or timelines.

Federal loan policy is moving toward fewer and longer repayment options, with the possibility of higher total costs. New York City’s program offers an important safeguard, but it will only help those who know about it and take advantage of its services. For HEI professionals and student-support staff, ensuring that borrowers understand their changing options is now a pressing responsibility.

---

Sources
BK Reader – NYC Launches Student Loan Reduction Program for All New Yorkers
Times of India – Trump’s Student Loan Reset
The Sun – Big, Beautiful Bill and Student Loan Payments
Business Insider – Private Lending Expected to Expand Under New Rules
NerdWallet – Understanding the Repayment Assistance Plan (RAP)

Borrower Defense Story 1: I Did Everything Right. And I’m Still Paying for a Degree I Never Got (Chamberlain School of Nursing- Single Mom)

In 2010, I was a mom-to-be with one child already at home and a marriage quietly unraveling. I knew I had to secure a future for my children and myself. So, while pregnant with my second child, I made the leap and enrolled in nursing school. I borrowed around $30,000 in federal student loans to earn my associate degree in nursing, graduated, passed my boards, and began working immediately. For a while, things felt like they were on track.

By 2016, I was encouraged to advance my education and pursue my BSN. That’s when I heard about Chamberlain University. It sounded like the perfect fit — I was told I could finish in as little as six months, that I’d only pay one semester at a time, and that there would be no out-of-pocket costs. The admissions team made it sound like a streamlined path forward. It wasn’t.

Eighteen months later, I was nowhere near graduation, and my debt had ballooned by another $45,000, bringing my total student loan balance to $75,000 — and I still didn’t have a degree. Every time I asked how close I was to finishing, I was told “just another semester or two.” The promises felt endless, vague, and increasingly disheartening.

What’s worse: before I even began the program, I had emailed asking about credentialing in my state and clinical eligibility. The response I got was delayed and full of mixed messages. One advisor assured me they were “working through compliance,” but I was never given a definitive answer. That means I was never sure the clinicals I would complete — or the degree itself — would even be recognized by my state’s Board of Nursing. That ambiguity is one of many red flags I flagged in my Borrower Defense application.

By 2018, I had enough. I was exhausted by the emotional and financial toll and withdrew from the program just a few classes short of completing my BSN.

Since then, I’ve been steadily working as a nurse, raising my kids, and doing what so many borrowers do — making monthly payments while watching the interest grow faster than I could keep up. I never missed payments. I never defaulted. But it still didn’t feel like progress.

Then this year, I finally decided to buy a home — something I never thought possible as a single mom buried in debt. I was approved and in the final stages of closing. But when my lender pulled an updated credit report, a new collection for $1,115 had mysteriously appeared. It was from Chamberlain.

This debt had never shown up before. It wasn’t on my May report, but suddenly it showed up in June — just two months before it was scheduled to fall off my credit report entirely (August, 2025). With that, my mortgage approval was revoked.

I had the option to pay it off. But honestly? I couldn’t stomach paying another cent to a school that left me with no degree, unclear clinical credentials, and a mountain of debt. So I let the home go.

In the meantime, I’ve discovered resources I wish I’d known about years ago. I submitted an application for Public Service Loan Forgiveness (PSLF) — something I assumed I wasn’t eligible for because I was on a standard repayment plan. But I’ve now been told I have 144 qualifying payments on my original loans and around 70 qualifying months on the second set tied to Chamberlain. I'm now working on certifying my employment to formalize that progress. One where I have had 10, yes 10 failed submissions due to silly clerical errors.

I also submitted a Borrower Defense to Repayment application — twice. The first time, I felt unsure. The second time, I attached emails and evidence showing the misleading guidance, false promises about timelines and costs, and unclear accreditation issues. I now believe my application is materially complete, without any assurances or timeline. Promises from others shared experiences that this process will in fact take me years if not decades. With no legal representation, or protections like the earlier class action members. Feeling alone, and kind of like a loser. I just wish I had known about it sooner.

I know my case might be denied. I know this might take months — or years- or decades. But I’m not giving up. Because this isn’t just my story. It’s the story of so many of us who tried to do everything right… and are still paying for it.

“The Payback”: Kashana Cauley’s Fictional Rebellion Echoes a Real-Life Debt Hero

 

Kashana Cauley’s second novel, The Payback (out July 15, 2025), might read like a brilliantly absurd heist movie—but its critique of debt peonage, surveillance capitalism, and broken educational promises is dead serious. With its hilarious yet harrowing depiction of three underemployed retail workers taking on the student loan-industrial complex, The Payback arrives not just as a much-anticipated literary event, but as a cultural reckoning.

The protagonist, Jada Williams, is relentlessly hounded by the “Debt Police”—a dystopian twist that, while fictional, feels terrifyingly close to home for America’s 44 million student debtors. But instead of accepting a life of financial bondage, Jada and her mall coworkers hatch a plan to erase their student debt and strike back against the system that sold them a future in exchange for permanent servitude.

This wild caper—praised by Publishers Weekly, Bustle, The Boston Globe, and others for its intelligence and audacity—may be fiction, but it echoes the real-life story of one bold man who did exactly what Jada dreams of doing.

The Legend of Papas Fritas

In the mid-2000s, a Chilean man known only by his pseudonym, Papas Fritas (French Fries), pulled off one of the most radical and symbolic acts of debt resistance in modern history. A former art student at Chile’s prestigious Universidad del Mar—a private for-profit institution later shut down for corruption and fraud—Papas Fritas discovered that the university had falsified financial documents to secure millions in profits while leaving students in mountains of debt.

His response? He infiltrated the school’s administrative offices, extracted records documenting approximately $500 million in student loans, and burned them. Literally. With no backup copies.

He then turned the ashes into an art installation called “La Morada del Diablo” (The Devil’s Dwelling), displayed it publicly, and became an instant folk hero. For many Chileans, who had taken to the streets in the early 2010s protesting an exploitative and privatized higher education system, Papas Fritas was more than a trickster—he was a vigilante philosopher, an artist of revolt.

His act raised questions that still haunt us: What is the moral value of debt acquired through deception? Should the victims of predatory institutions be forced to pay for their own exploitation?

Fiction Meets Resistance

In The Payback, Cauley’s characters don’t just want debt relief—they want retribution. And like Papas Fritas, they understand that justice in an unjust system may require transgression, even sabotage. Cauley, a former Daily Show writer and incisive New York Times columnist, doesn’t shy away from this. Her prose is electric with rage, joy, absurdity, and clarity.

She also knows exactly what she’s doing. Jada’s plan to eliminate debt isn’t merely about numbers—it’s about dignity, possibility, and reclaiming a future that was sold for interest. Cauley’s fiction, like Papas Fritas’s fire, is not just a spectacle—it’s a warning, and a dare.

In an America where student debt totals over $1.7 trillion, where debt servicers act like bounty hunters, and where the promise of higher education has become a trapdoor, The Payback delivers catharsis—and inspiration.

Hollywood, take note: this story demands a screen adaptation. But more importantly, policymakers, debt collectors, and university administrators should take heed. The people are reading. And they’re getting ideas.

Preorder The Payback
Signed editions are available through Black-owned LA bookstores Reparations Club, Malik Books, and Octavia’s Bookshelf. National preorder links are now live. Read it before the Debt Police knock on your door.

Because as both Cauley and Papas Fritas remind us: sometimes, the only moral debt is the one you refuse to pay.

Trump's Department of Education Continues to Drag Feet on Borrower Defense

On June 26th, the US Department of Education was brought to the Ninth District Court (and Judge Alsup) to show how many the Borrower Defense to Repayment cases that have been resolved per court order.  

While we wait for a transcript of the latest episode of Sweet v McMahon, what we can tell you is that the Trump government continues to drag its feet in paying back debtors who have been defrauded.  

According to Theresa Sweet:

“We really need Borrower Defense applicants included in both the full and post class of Sweet to send any denials to the Project on Predatory Student Lending. It’s important for the legal team to be able to track this and make sure there are no patterns of boilerplate denials or mass denials. It’s also really important to remember that if a Sweet class or post class member gets a denial it should include a Revise and Resubmit notice, which *must* be resubmitted on time or the denial becomes final unless the person takes it to court on their own.”

More than 950.000 student loan debtors have filed borrower defense fraud claims.

See the Sweet v McMahon Borrower Defense Case Tomorrow Live

 The next episode of Sweet v. McMahon (formerly Sweet v. Cardona), "THE CLOCK IS TICKING," will premiere on Thursday, June 26, 2025. 

Judge Alsup is BACK. He wants updates. He wants answers. And he’s asking one thing — will the deadlines be met? Join in for the next drama episode in this six-year battle for justice!

Deets Below: 

Sweet v. McMahon: The Clock Is Ticking
Date: Thursday, June 26, 2025
Time: 2:00 PM ET / 11:00 AM PT

Zoom Courtroom – (https://cand-uscourts.zoomgov.com/j/1605814655...

) Passcode: 791667 

Cue Law & Order Theme (https://www.youtube.com/watch?v=xz4-aEGvqQM

). 

Borrowers are still waiting. Judge Alsup wants answers. The DOE is back in court. Will justice finally be delivered? Tune in. Speak up. This hearing will be fire!

#SweetJustice #LoanDischarge #TheClockIsTicking 

Report issues for class/post-class members to sweet@ed.gov and CC PPSL at info@ppsl.org 

Tracking the Elusive Truth: The Higher Education Inquirer Seeks Decades of Bankruptcy Loan Forgiveness Data

In a modest but potentially revealing inquiry, the Higher Education Inquirer has submitted a Freedom of Information Act (FOIA) request to the U.S. Department of Education asking for a count of the number of student loans discharged in bankruptcy from 1965 to 2024. The request, dated June 10, 2025, was acknowledged the same day by the Department’s FOIA Service Center under FOIA Request No. 25-03954-F.

“The Higher Education Inquirer is requesting a count of the number of student loans forgiven in bankruptcy per year from 1965 to 2024.”

It’s a simple request with profound implications. While the nation debates student loan forgiveness through executive action and legislative reforms, the forgotten path of bankruptcy discharge—once a legally viable option for debt relief—has been quietly buried over the past several decades.

A Timeline of Restriction: The Death of Bankruptcy Relief

When the Higher Education Act of 1965 established federal student loans, they were treated like other forms of consumer debt. Borrowers could, in principle, discharge them through bankruptcy just like credit card debt or medical bills.

But that began to change in the late 1970s, as concerns over potential abuse of the system gained traction in Congress. In 1976, a new law prohibited the discharge of federal student loans in bankruptcy within the first five years of repayment unless the borrower could prove “undue hardship”—a vague standard that was rarely met.

From there, the restrictions only grew tighter:

• 1990: The waiting period for dischargeability was extended to seven years.

• 1998: The option to discharge federal student loans in bankruptcy for any reason other than “undue hardship” was eliminated entirely. This meant student loan borrowers had to meet the strict and often inaccessible hardship standard at all times.

• 2005: Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), Congress extended the “undue hardship” requirement to most private student loans as well—effectively removing nearly all forms of bankruptcy relief from the table for student debtors.

These changes did not result from clear evidence of widespread abuse. Rather, they were fueled by myths of “deadbeat graduates” walking away from their obligations and by lobbying from banks, guaranty agencies, and debt collection firms that profited from non-dischargeable debt. Meanwhile, evidence of hardship among borrowers grew, especially for those who attended predatory for-profit colleges or dropped out without a degree.

The Brunner Barrier

The biggest obstacle for borrowers remains the so-called “Brunner test,” a three-prong legal standard established in a 1987 court case, Brunner v. New York State Higher Education Services Corp. It requires borrowers to prove:

1. They cannot maintain a minimal standard of living if forced to repay the loans,

2. Their financial situation is unlikely to improve, and

3. They made a good-faith effort to repay the loans.

Many judges interpreted these criteria narrowly, creating a virtually insurmountable hurdle. Borrowers with severe disabilities, advanced age, or long-term unemployment have been denied relief even when destitute.

What We Still Don’t Know

Despite these legal developments and the hardship they created, data on how many people have succeeded in discharging their student loans through bankruptcy remains remarkably scarce. Advocacy groups and journalists have long questioned why no federal agency tracks this information in a clear, public-facing format.

That’s what prompted the Higher Education Inquirer’s FOIA request—an effort to establish a factual baseline. We asked the Department of Education for an annual count of bankruptcy discharges involving student loans over a 60-year period, from 1965 to 2024.

The Bureaucratic Wall

According to the Department’s FOIA Service Center, the average processing time for such requests is currently 185 business days—about nine months. While the Department did not ask for clarification immediately, it reserves the right to do so within ten business days. Failure to respond to such a request would result in administrative closure of the FOIA—yet another form of delay that keeps the public in the dark.

This bureaucratic stonewalling is part of a larger pattern. While the Department of Education has been quick to announce student loan forgiveness programs under executive orders or settlement agreements, it remains reluctant to shine a light on longstanding failures—especially the erosion of legal remedies like bankruptcy.

A Step Toward Truth and Accountability

The public deserves a clear view of the history and consequences of stripping bankruptcy protections from student borrowers. It’s not just a legal matter—it’s a story of systemic neglect, political pressure, and financial exploitation. Without access to historical data, reform remains a guesswork operation and accountability remains elusive.

We at the Higher Education Inquirer will continue to press for answers. If and when the FOIA request is fulfilled, we will publish the data and conduct a thorough analysis, year by year. We believe that exposing the truth about student loan bankruptcy isn’t just a matter of curiosity—it’s a step toward justice.

If you have experience with student loan bankruptcy, data that could assist our investigation, or simply want to share your story, contact us at gmcghee@aya.yale.edu.

Latest Borrower Defense to Repayment Numbers (US Department of Education)

The Higher Education Inquirer has received information today from the US Department of Education about Borrower Defense to Repayment claims.  Here are the results from ED FOIA 25-02047-F.  

 

Trump’s Education Department is Closing. And Also Starting A Long Rulemaking Process. (David Halperin)

Although President Donald J. Trump last month signed an executive order directing Secretary of Education Linda McMahon “to the maximum extent appropriate and permitted by law, take all necessary steps to facilitate the closure of the Department of Education,” and although DOGE efforts and layoffs have cut the Department staff by half, the Department announced today that it will embark on an extensive round of meetings to draft new regulations governing student financial aid.

Unlike most federal agencies, the Department is generally required to engage in an elaborate process called negotiated rulemaking before it can issue or cancel regulations. This has meant — on issues from campus sexual assault to performance standards guarding against predatory college abuses — years of public hearings, formal convenings of rulemaking panels, written public comments and meetings on draft regulations, and more. It also has produced a decades-long ping pong match of final regulations made by one party and overwritten by the other, from the Obama to Trump I to Biden, followed by years of court challenges.

The first Trump administration staffed its higher education jobs with former executives of predatory for-profit colleges, and they eliminated both regulations and enforcement efforts aimed at protecting students and holding predatory schools accountable.

Today’s notice, signed by James P. Bergeron, Acting Under Secretary of Education, says the first round of Trump II negotiated rulemaking will likely include consideration of Public Service Loan Forgiveness and other loan repayment programs “or other topics that would streamline current federal student financial assistance programs.”

Other language in the notice suggests the Department may go deep, perhaps working to cancel the Biden rules creating performance standards for for-profit and career college programs (the gainful employment rule) and providing debt relief for students scammed by their colleges and government recoupment of funds from dishonest schools (the borrower defense rule). The notice opines that current regulations “may be inhibiting innovation and contributing to rising college costs” and that it wants to “streamline” the rules “while maintaining or improving program integrity and institutional quality.” “Innovation,” while a great thing for education when it can really happen, has been a buzzword used by the for-profit college industry to fight against rules aimed at protecting against predatory programs. Gutting the Biden rules would increase the vulnerability of both students and taxpayers to billions in waste, fraud, and abuse from deceptive, poor quality schools — even though the stated purpose of DOGE is to halt government excess.

When pro-student Democratic members of the House of Representatives  held a press conference outside the Department headquarters yesterday after they met with McMahon to discuss such concerns, she followed them. But she quickly fled when Rep. Mark Takano (D-CA) asked her when she would shut down the building.

The Department’s rulemaking process begins with public hearings on April 29 and May 1, the first in-person at Department headquarters and the second online. Advocates for students and taxpayers should register to speak and show up to make their voices heard.

[Editor's note: This article originally appeared on Republic Report.]

 

March Update on Student Debt (Debt Collective)

The federal government is a sh*t show right now. From ICE abductions of pro-Palestine college students to proposed cuts to Social Security and Medicaid, the Trump administration is wreaking havoc on all of our communities.

We want to take a moment and specifically talk about student debt and higher education — work that we’ve been doing for a while now. Here’s some of what we know, what we think, and what we should do:

In recent days, the Trump administration issued an executive order to dismantle the Department of Education. Legally, this cannot be done without Congress, but in practice, this means most of the staff was simply fired. We talked a little bit about what that means for student debtors in this Twitter thread. In short, this makes the student debt crisis much worse.

Shortly after that, Trump ordered the entire federal student debt portfolio — all $1.7 trillion — to be moved from the Department of Education to the Small Business Administration (SBA). The Small Business Administration is another agency within the federal government. That means our collective creditor would still be the federal government. But will this move actually happen? Will our federal student loans somehow end up privatized? There is a LOT up in the air right now, and the short answer is we don’t know exactly what will happen, but we as debtors should remain nimble so we can exercise our collective power when we need to. Moving our student debt from the Department of Education to the SBA would be 1) illegal 2) administratively and practically difficult 3) lead to possible errors with your account.

If you haven’t already, we still highly recommend going to studentaid.gov and finding your loan details and downloading and/or screenshotting your history.

The traditional infrastructure we have long suggested debtors utilize to solve problems with their student debt — the Consumer Financial Protection Bureau (CFPB), the FSA ombudsman team, etc — have either been undermined or outright destroyed. This means there are fewer and fewer ways for us, student debtors, to get answers to problems with our student debt accounts. But we shouldn’t let Congress off the hook — we should make student loans Congress’ problem. They’re elected to serve us and it’s their job to attend to your needs.

Our friends at Student Borrower Protection Center (SBPC) have put together a helpful tool to open a case at your member of Congress’s office.

Lastly, we want to talk about what we mean when we say Free College. Student debt has ruined lives, and will continue to as long as it exists. We shouldn’t have to borrow to pay for college — in fact, we shouldn’t have to pay at all. It should be free. And that’s what we’re fighting for. But our vision for College For All doesn’t stop at tuition-free — it means ICE and cops off campus; it means paying workers, faculty and staff a living wage; it means standing up for free speech; it means ending domestic and gender based violence on campus; and it means universities that function as laboratories for democracy and learning, not as laboratories for landlords and imperialism.

On April 17th, Debt Collective is co-sponsoring the National Higher Education Day of Action to demand our vision of College For All and oppose the hell the Trump administration is causing right now. Find an event near you HERE to participate — or start an event on your own!

And THIS SATURDAY – April 5th –we’re taking to the streets with hundreds of thousands of people across the country to tell Trump and Musk “Hands Off Our Democracy!” They’re stripping America for parts, and it's up to us to put an end to their brazen power grab. This will be one of the largest mass mobilizations in recent history — and we need you in the streets with us. There are hundreds of actions planned, find one to join near you HERE.

Whatever happens in the future, we will be more likely to win if we gird ourselves with each other’s stories and experiences so we can fight together. This is why we built a debtors’ union — the only virtual factory floor for debtors. Debt acts as a discipline and keeps people from joining the struggle for things we care about — but we can increase our numbers and build power by canceling unjust debts. We all share the same creditor and we need to stay connected to one another. Forward this email to a friend or family member and tell them to join the union and our email list so we can stay connected.

In Solidarity,

Debt Collective

More than 200,000 former Walden University students owe more than $9 Billion

The Higher Education Inquirer has recently received a Freedom of Information (FOIA) response regarding student loan debt held by former Walden University students.  The FOIA was 25-01941-F.  

More than 290,000 Liberty University student loan debtors owe more than $8 Billion

The Higher Education Inquirer has recently received a Freedom of Information (FOIA) response regarding student loan debt held by former Liberty University students.  The FOIA was 25-01939-F.  

265,000 DeVry student loan debtors owe $5.2 Billion

The Higher Education Inquirer has recently received a Freedom of Information (FOIA) response regarding student loan debt held by former DeVry University students.  The FOIA was 25-01942-F.  

The Future of Federal Student Loans

The U.S. student loan system, now exceeding $1.7 trillion in debt and affecting over 40 million borrowers, is facing significant challenges. As political pressures rise, the management of student loans could be significantly altered. A combination of potential privatization, the elimination of the U.S. Department of Education (ED), and a new role for the Department of the Treasury raises critical questions about the future of the system.

U.S. Department of Education: Strained Resources and Outsourcing

The U.S. Department of Education (ED) is responsible for managing federal student loan servicing, loan forgiveness programs, and borrower defense to repayment (BDR) claims. However, ED has faced ongoing issues with understaffing and inefficiency, particularly as many functions have been outsourced to contractors. Companies like Maximus (including subsidiaries like AidVantage) manage much of the administrative burden for loan servicing. This has raised concerns about accountability and the impact on borrowers, especially those seeking loan relief.

In recent years, ED has also experienced staff reductions and funding cuts, making it difficult to process claims or maintain high-quality service. The potential for further cuts or even the elimination of the department could exacerbate these problems. If ED’s role is diminished, other entities, such as the Department of the Treasury, could assume responsibility for managing the student loan portfolio, though this would present its own set of challenges.

Potential for Privatization of the Student Loan Portfolio

One of the most discussed options for addressing the student loan crisis is the privatization of the federal student loan portfolio. Under previous administration discussions, including those during President Trump’s tenure, there were talks about selling off parts of the student loan portfolio to private companies. This would be done with the aim of reducing the federal deficit.

In 2019, McKinsey & Company was hired by the Trump administration to analyze the value of the student loan portfolio, considering factors such as default rates and economic conditions. While the report's findings were never made public, the idea of transferring the loans to private companies—such as banks or investment firms—remains a possibility.

The consequences of privatizing federal student loans could be significant. Private companies would likely focus on profitability, which could result in stricter repayment terms or less flexibility for borrowers seeking loan forgiveness or other relief options. This shift may reduce borrower protections, making it harder for students to challenge repayment terms or pursue loan discharges.

The Department of the Treasury and its Potential Role

If the U.S. Department of Education is restructured or eliminated, there is a possibility that the Department of the Treasury could step in to manage some aspects of the student loan portfolio. The Treasury is responsible for the country’s financial systems and debt management, so it could, in theory, handle the federal student loan portfolio from a financial oversight perspective.

However, while the Treasury has experience in financial management, it lacks the specialized knowledge of student loans and borrower protections that the Department of Education currently provides. For example, the Treasury would need to find ways to process complex Borrower Defense to Repayment claims, a responsibility ED currently manages. In 2023, over 750,000 Borrower Defense claims were pending, with thousands of claims related to predatory practices at for-profit colleges such as University of Phoenix, ITT Tech, and Kaplan University (now known as Purdue Global). Additionally, some of these for-profit schools were able to reorganize and continue operating under different names, further complicating the situation.

The Treasury could also contract out loan servicing, but this could increase reliance on profit-driven companies, possibly compromising the interests of borrowers in favor of financial performance.

Borrower Defense Claims and the Impact of For-Profit Schools

A large portion of the Borrower Defense to Repayment claims comes from students who attended for-profit colleges with a history of deceptive practices. These institutions, often referred to as subprime colleges, misled students about job prospects, program outcomes, and accreditation, leaving many with significant student debt but poor employment outcomes.

Data from 2023 revealed that over 750,000 Borrower Defense claims were filed with the Department of Education, many of them against for-profit institutions. The Sweet v. Cardona case showed that more than 200,000 borrowers were expected to receive debt relief after years of waiting. However, the process was slow, with an estimated 16,000 new claims being filed each month, and only 35 ED workers handling these claims. These delays, combined with the uncertainty around the future of ED, leave borrowers vulnerable to prolonged financial hardship. 

Lack of Transparency and Accountability in the System

While the U.S. Department of Education tracks Borrower Defense claims, it does not publish institutional-level data, making it difficult to identify which schools are responsible for the most fraudulent activity. 

In response to this, FOIA requests have been filed by organizations like the National Student Legal Defense Network and the Higher Education Inquirer to obtain detailed information about which institutions are disproportionately affecting borrowers. 

In one such request, the Higher Education Inquirer asked for information regarding claims filed against the University of Phoenix, a school with a significant number of Borrower Defense claims.

The lack of transparency in the system makes it harder for borrowers to make informed decisions about which institutions to attend and limits accountability for schools that have harmed students. If the Treasury or private companies take over management of the loan portfolio, these transparency issues could worsen, as private entities are less likely to prioritize public accountability.

Conclusion

The future of the U.S. student loan system is uncertain, particularly as the Department of Education faces the potential of funding cuts, staff reductions, or even complete dissolution. If ED’s role diminishes or disappears, the Department of the Treasury could take over some functions, but this would raise questions about the fairness and transparency of the system.

The possibility of privatizing the student loan portfolio also looms large, which could shift the focus away from borrower protections and toward financial gain for private companies. For-profit schools, many of which have a history of predatory practices, are responsible for a disproportionate number of Borrower Defense claims, and any move to privatize the loan portfolio could exacerbate the challenges faced by borrowers seeking relief from these institutions.

Ultimately, there is a need for greater transparency and accountability in how the student loan system operates. Whether managed by the Department of Education, the Treasury, or private companies, protecting borrowers and ensuring fairness should remain central to any future reforms. If these issues are not addressed, millions of borrowers will continue to face significant financial hardship.

What now for the US Department of Education?

What happens now with the US Department of Education now that Elon Musk claims that it no longer exists? It's hard to know yet, and even more difficult after removing career government workers that we have known for years.  

We are saddened to hear of contacts we know who have been fired: hard working and capable people, in an agency that has been chronically understaffed and politicized. 

We also worry for the hundreds of thousands of student loan debtors who have borrower defense to repayment claims against schools that systematically defrauded them--and have not yet received justice. 

And what about all those FAFSA (financial aid) forms for students starting and continuing their schooling? How will they be processed in a timely manner?

Without funding and oversight, the Department of Education looks nearly dead. But with millions of poor and disabled children relying on Title I funding and IDEA and tens of millions more with federal student student loans, it's hard to imagine those functions disappearing for good.  

Let's see how much slack is taken up by private enterprise and religious nonprofits who may benefit from the pain. With student loans, much of the work has already been contracted out. It would not be out of the question for the student loan portfolio to be sold off to corporations who could profit from it. And that may or may not require Congressional approval.  

New Findings Highlight Borrowers' Student Loan Repayment Challenges and Impact on Key Milestones (Laurel Road)

[Editor's note: The Higher Education Inquirer is presenting this press release for information only. This is not an endorsement of the organizations mentioned in article.]

NEW YORK, Jan. 27, 2025 /PRNewswire/ -- A new survey, The Student Debt Dilemma: The Impact on Financial Milestones, released today by Laurel Road, a digital banking platform of KeyBank with specialized offerings for healthcare and business professionals, in partnership with Luminary, a global professional education and networking platform, and conducted by Kantar, reveals the obstacles borrowers face in managing student loan repayment – from information overload to confidence gaps.

The survey of 1,714 U.S. adults found that 70% felt overwhelmed when navigating repayment options, with 76% of respondents experiencing an overload of information, underscoring the significant anxiety and confusion faced by borrowers. These findings underscore the impact of debt on milestone life events as well as the difficulty of navigating an intricate repayment system.

Challenges amid Regulatory Changes
Recent changes and fluctuating regulations in the federal student loan system have created ongoing uncertainty for borrowers navigating their repayment options. According to the survey, 82% of respondents aged 25 to 44 reported feeling "unsure what plans/options are right for me," demonstrating the ever-changing environment as a primary pain point.

Additionally, 58% of individuals in the combined 25-44 age group reported feeling moderately overwhelmed – a significantly higher percentage compared to the 45 and older age group (34.8%)– emphasizing the unique challenges younger borrowers face in making informed decisions.

Low Levels of Confidence in Repayment Strategies
Navigating student loan repayment is a complicated process, requiring borrowers to understand available options, conduct thorough research to identify loan management opportunities, and select the most appropriate repayment plan or forgiveness program.

According to the survey, 26% of respondents noted that they did not have a plan for managing their student loans, while 20% indicated they planned to use Federal Income-Driven Repayment, and 15% intended to pursue the Public Service Loan Forgiveness (PSLF) program.

Confidence is another major concern, as 61% of borrowers surveyed reported a lack of confidence in their repayment strategies while only 13% reported feeling confident in their approach.

"This study confirms everything we believed to be true relating to confusion and lack of confidence student loan borrowers face today. Information overload and ambiguity has left borrowers yearning to understand the repayment and forgiveness options available to them, and to receive this information in a clear, concise manner," said Alyssa Schaefer, General Manager and Chief Experience Officer at Laurel Road. "Laurel Road is at the forefront of helping borrowers gain their confidence by offering free consultations with student loan experts who can help them make informed decisions, navigate the complexities of repayment, and build the confidence needed to reach their financial goals – ultimately securing their financial futures."

Impact of Student Loans on Financial Futures
In addition to being difficult to navigate, the student loan landscape has the potential to largely affect borrowers' overall financial well-being and long-term goals. The survey revealed that student loan debt has delayed significant life milestones for respondents, with borrowers reporting the following impacts:

• 79% struggle to save for emergencies or retirement
• 75% are unable to invest for the future
• 52% are unable to purchase a home
• 35% are postponing starting a family

"Luminary has seen first-hand the impact of student loan debt on our Members, from a lack of understanding about available options to the affect it has on an individual's mental health due to stress, worry and anxiety, " said Luminary founder and CEO Cate Luzio. "While this isn't new information for us, given our longstanding partnership with Laurel Road, we felt this survey was necessary to demonstrate the real toll it's taking on people. As we prepare for a new administration in 2025, this is top of mind as we continue developing programming to educate and inform those affected."

Delays in life milestones not only affect individual wellbeing but also pose broader risks to economic stability and financial security. Through online resources and student loan consultations, borrowers can gain confidence in understanding and tackling student loan repayment and get on track for important financial milestones.

For additional results from this survey, visit http://laurelroad.com/resources/financial-survey-student-debt-dilemma/ 

Methodology
This survey was conducted online from September 30, 2024, to October 31, 2024 among 1,714 U.S. adults with either private or federal student loans, by Luminary and the Kantar Profiles Respondent Hub. The primary age group analyzed ranged from 25–44 years old, though responses were collected from ages 18–65+. The gender breakdown of the respondents was 47% male, 51% female, 2% non-binary, and 0.4% preferring not to answer. Statistical significance testing was completed between groups to ensure the results did not occur by chance. 

About Laurel Road
Laurel Road is a digital banking platform and brand of KeyBank that provides tailored offerings to support the financial wellbeing of healthcare and business professionals. Laurel Road's banking and lending solutions – including Checking and High Yield Savings accounts, Student Loan Forgiveness Counseling, Student Loan Refinancing, Mortgages, Personal Loans, and more – provide our members with a simplified, personalized experience that helps them better navigate their financial journey with ease.

Laurel Road has reimagined banking and financial management for physicians and dentists through Laurel Road for Doctors, a tailored digital experience made up of banking, insights, and exclusive benefits to provide the financial help and peace of mind they need through each career stage. In spring of 2022, Laurel Road also launched Loyalty Checking, the first checking account designed with nurses in mind, furthering the company's commitment to healthcare professionals. Visit www.laurelroad.com for more information.

About Luminary
Luminary is a global membership-based professional education and networking platform created to address and impact the systemic challenges faced by women and underrepresented communities across all industries and sectors, and through all phases of their professional journey. Founded in 2018 by former finance executive Cate Luzio, Luminary is a dynamic, gender-inclusive, multi-generational, and intersectional community focused on creating connection, collaboration, and change through global expert- and Member-led programming, as well as services, activations, content, and culture. In addition, Members have access to perks and amenities including a vast digital content library; a five-floor building in the heart of NoMad in New York City that is home to work and social spaces, including a rooftop restaurant; and entree to Luminary's international Partner Network of women-forward communities. Luminary continues to build its ecosystem of high-touch engagement for both individual and enterprise members and has grown to be a multimillion-dollar global B2C and B2B business with more than 15,000 members and over 100 enterprise members. In late 2023, the company acquired The Cru to add to its robust product offering, and in January 2025 announced its acquisition of Hey Mama.

Media Contact: laurelroadpr@kwtglobal.com

U.S. Department of Education's Trump Appointees and America First Agenda

The U.S. Department of Education has announced a team of senior-level political appointees who will support the implementation of President Trump’s America First agenda.  

The Trump Administration, by Executive Order, has already required colleges and universities to eliminate diversity, equity and inclusion measures and schools are scrambling to be compliant with this new federal policy. New policies may also affect grants from the Department of Health and Human Services, which includes the Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health.

Notable actions the Department of Education has already taken include: 

• Dissolution of the Department’s Diversity & Inclusion Council, effective immediately;
  • Background:The Diversity & Inclusion Council was established following Executive Order 13583 under then - President Obama. President Trump has rescinded the Executive Orders that guide the Council and issued a new Executive Order, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” that terminates groups like the Diversity & Inclusion Council. DEI documents issued and related actions taken by the Council have been withdrawn.
• Dissolution of the Employee Engagement Diversity Equity Inclusion Accessibility Council (EEDIAC) within the Office for Civil Rights (OCR), effective immediately and pursuant to President Trump’s Executive Order “Ending Radical and Wasteful Government DEI Programs and Preferencing”;
• Cancellation of ongoing DEI training and service contracts which total over $2.6 million;
• Withdrawal of the Department’s Equity Action Plan;
• Placement of career Department staff tasked with implementing the previous administration’s DEI initiatives on paid administrative leave; and
• Identification for removal of over 200 web pages from the Department’s website that housed DEI resources and encouraged schools and institutions of higher education to promote or endorse harmful ideological programs.

At least four appointees to the Department of Education, as well as including incoming Secretary of Education Linda McMahon, have worked at the America First Policy Institute (AFPI). AFPI's higher education proposals are posted here and noted at the bottom of this article. AFPI has been accused of using dark money to prevent student loan forgiveness and its rhetoric clearly advances this agenda.

Rachel Oglesby – Chief of Staff

Rachel Oglesby most recently served as America First Policy Institute's Chief State Action Officer & Director, Center for the American Worker. In this role, she worked to advance policies that promote worker freedom, create opportunities outside of a four-year college degree, and provide workers with the necessary skills to succeed in the modern economy, as well as leading all of AFPI’s state policy development and advocacy work. She previously worked as Chief of Policy and Deputy Chief of Staff for Governor Kristi Noem in South Dakota, overseeing the implementation of the Governor’s pro-freedom agenda across all policy areas and state government agencies. Oglesby holds a master’s degree in public policy from George Mason University and earned her bachelor’s degree in philosophy from Wake Forest University. 

Jonathan Pidluzny – Deputy Chief of Staff for Policy and Programs 

Jonathan Pidluzny most recently served as Director of the Higher Education Reform Initiative at the America First Policy Institute. Prior to that, he was Vice President of Academic Affairs at the American Council of Trustees and Alumni, where his work focused on academic freedom and general education. Jonathan began his career in higher education teaching political science at Morehead State University, where he was an associate professor, program coordinator, and faculty regent from 2017-2019. He received his Ph.D from Boston College and holds a bachelor’s degree and master’s degree from the University of Alberta. 

Chase Forrester – Deputy Chief of Staff for Operations 

Virginia “Chase” Forrester most recently served as the Chief Events Officer at America First Policy Institute, where she oversaw the planning and execution of 80+ high-profile events annually for AFPI’s 22 policy centers, featuring former Cabinet Officials and other distinguished speakers. Chase previously served as Operations Manager on the Trump-Pence 2020 presidential campaign, where she spearheaded all event operations for the Vice President of the United States and the Second Family. Chase worked for the National Republican Senatorial Committee during the Senate run-off races in Georgia and as a fundraiser for Members of Congress. Chase graduated from Clemson University with a bachelor’s degree in political science and a double-minor in Spanish and legal studies.

Steve Warzoha – White House Liaison

Steve Warzoha joins the U.S. Department of Education after most recently serving on the Trump-Vance Transition Team. A native of Greenwich, CT, he is a former local legislator who served on the Education Committee and as Vice Chairman of both the Budget Overview and Transportation Committees. He is also an elected leader of the Greenwich Republican Town Committee. Steve has run and served in senior positions on numerous local, state, and federal campaigns. Steve comes from a family of educators and public servants and is a proud product of Greenwich Public Schools and an Eagle Scout. 

Tom Wheeler – Principal Deputy General Counsel 

Tom Wheeler’s prior federal service includes as the Acting Assistant Attorney General for Civil Rights at the U.S. Department of Justice, a Senior Advisor to the White House Federal Commission on School Safety, and as a Senior Advisor/Counsel to the Secretary of Education. He has also been asked to serve on many Boards and Commissions, including as Chair of the Hate Crimes Sub-Committee for the Federal Violent Crime Reduction Task Force, a member of the Department of Justice’s Regulatory Reform Task Force, and as an advisor to the White House Coronavirus Task Force, where he worked with the CDC and HHS to develop guidelines for the safe reopening of schools and guidelines for law enforcement and jails/prisons. Prior to rejoining the U.S. Department of Education, Tom was a partner at an AM-100 law firm, where he represented federal, state, and local public entities including educational institutions and law enforcement agencies in regulatory, administrative, trial, and appellate matters in local, state and federal venues. He is a frequent author and speaker in the areas of civil rights, free speech, and Constitutional issues, improving law enforcement, and school safety. 

Craig Trainor – Deputy Assistant Secretary for Policy, Office for Civil Rights 

Craig Trainor most recently served as Senior Special Counsel with the U.S. House of Representatives Committee on the Judiciary under Chairman Jim Jordan (R-OH), where Mr. Trainor investigated and conducted oversight of the U.S. Department of Justice, including its Civil Rights Division, the FBI, the Biden-Harris White House, and the Intelligence Community for civil rights and liberties abuses. He also worked as primary counsel on the House Judiciary’s Subcommittee on the Constitution and Limited Government’s investigation into the suppression of free speech and antisemitic harassment on college and university campuses, resulting in the House passing the Antisemitism Awareness Act of 2023. Previously, he served as Senior Litigation Counsel with the America First Policy Institute under former Florida Attorney General Pam Bondi, Of Counsel with the Fairness Center, and had his own civil rights and criminal defense law practice in New York City for over a decade. Upon graduating from the Catholic University of America, Columbus School of Law, he clerked for Chief Judge Frederick J. Scullin, Jr., U.S. District Court for the Northern District of New York. Mr. Trainor is admitted to practice law in the state of New York, the U.S. District Court for the Southern and Eastern Districts of New York, and the U.S. Supreme Court. 

Madi Biedermann – Deputy Assistant Secretary, Office of Communications and Outreach 

Madi Biedermann is an experienced education policy and communications professional with experience spanning both federal and state government and policy advocacy organizations. She most recently worked as the Chief Operating Officer at P2 Public Affairs. Prior to that, she served as an Assistant Secretary of Education for Governor Glenn Youngkin and worked as a Special Assistant and Presidential Management Fellow at the Office of Management and Budget in the first Trump Administration. Madi received her bachelor’s degree and master of public administration from the University of Southern California. 

Candice Jackson – Deputy General Counsel 

Candice Jackson returns to the U.S. Department of Education to serve as Deputy General Counsel. Candice served in the first Trump Administration as Acting Assistant Secretary for Civil Rights, and Deputy General Counsel, from 2017-2021. For the last few years, Candice has practiced law in Washington State and California and consulted with groups and individuals challenging the harmful effects of the concept of "gender identity" in laws and policies in schools, employment, and public accommodations. Candice is mom to girl-boy twins Madelyn and Zachary, age 11. 

Joshua Kleinfeld – Deputy General Counsel 

Joshua Kleinfeld is the Allison & Dorothy Rouse Professor of Law and Director of the Boyden Gray Center for the Study of the Administrative State at George Mason University’s Scalia School of Law. He writes and teaches about constitutional law, criminal law, and statutory interpretation, focusing in all fields on whether democratic ideals are realized in governmental practice. As a scholar and public intellectual, he has published work in the Harvard, Stanford, and University of Chicago Law Reviews, among other venues. As a practicing lawyer, he has clerked on the D.C. Circuit, Fourth Circuit, and Supreme Court of Israel, represented major corporations accused of billion-dollar wrongdoing, and, on a pro bono basis, represented children accused of homicide. As an academic, he was a tenured full professor at Northwestern Law School before lateraling to Scalia Law School. He holds a J.D. in law from Yale Law School, a Ph.D. in philosophy from the Goethe University of Frankfurt, and a B.A. in philosophy from Yale College. 

Hannah Ruth Earl – Director, Center for Faith-Based and Neighborhood Partnerships

Hannah Ruth Earl is the former executive director of America’s Future, where she cultivated communities of freedom-minded young professionals and local leaders. She previously co-produced award-winning feature films as director of talent and creative development at the Moving Picture Institute. A native of Tennessee, she holds a master of arts in religion from Yale Divinity School.

AFPI Reform Priorities

AFPI's higher education priorities are to:

• Reform America’s Dysfunctional Higher Education Accreditation System

• Rethink Public Financing of Postsecondary Study to Encourage Competition and Accountability

• Open New Pathways to Family-Sustaining Careers

• Combat the Politicization of Higher Education and Encourage Viewpoint Diversity on U.S. Campuses

• Protect Students’ and Professors’ First Amendment Rights

 Related links:

Trump's Education Department dismantles DEI measures, suspends staff (USA Today) 

California State University changes 'illegal' program that excluded White men (Fox News)

America First Policy Institute Team

America First Policy Initiatives