In Houston, Texas (KTRK), the Trump administration is actively working on reducing the size of the Department of Education, impacting more than just public schools. This reduction is also affecting student loan borrowers by introducing new repayment rules.
Recent actions by federal courts have paused some of the popular programs introduced during the Biden administration. These programs aimed to shorten the time needed to qualify for loan forgiveness and limit monthly loan payments to 5% of a borrower’s income.
As a result of these changes, the Department of Education has taken down the applications for these programs from its website. This move effectively prevents borrowers from adjusting their repayment plans, especially if they are unable to afford the standard repayment rate.
A loan expert joined ABC13 Eyewitness News Tuesday morning and said anyone who is 91 days delinquent on April 1 will be reported to credit bureaus for the first time in five years.
You can watch that full interview in the video player above.
READ MORE: What is the Department of Education? Here’s a look at some of its key functions
What dismantling the Department of Education could mean for schools
“If you’re going to buy a car or get an apartment or a mortgage or another credit card, you will see your credit score drop precipitously,” Jack Wallace told ABC13. “It’s important not to ignore the notices you’re getting.”
If the department is eventually dismantled, student loans could land at the treasury, commerce, or the Small Business Administration.
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