Department of Education Updates
Trump's Education Department Shutdown: What It Means for College Students
President Trump has signed an executive order initiating the dismantling of the Department of Education. While the complete shutdown requires Congressional approval, the order sets in motion a significant downsizing and shift in the federal government’s role in education. Here's what that could mean for college students:
Key Takeaways:
- Federal student Loans and Pell Grants Likely to Continue (For Now): The White House has indicated that the Department of Education, even in a significantly reduced form, will continue administering student loans and Pell Grants. This is a crucial point, meaning current students shouldn't expect an immediate disruption to these programs. However, there may be issues with the reduced staff and their ability to maintain normal processing times.
- PLUS loans may no longer be offered in the near future: There is a proposal to remove the Grad PLUS and Parent PLUS loan options after July 1. These federal loans have generally had higher interest rates than other federal student loans, and they also have an origination fee. Private student loans will be an option for many students and parents that relied on the PLUS program.
- Uncertainty About Long-Term Administration: While the immediate administration of loans and grants is expected to continue, the long-term picture is less clear. If the Department is eventually dissolved, it raises questions about which federal agency would take over these responsibilities. Trump has previously suggested the Treasury, Small Business Administration, or Commerce Department.
- Potential Changes to Loan Servicing: A shift in the administering agency could lead to changes in loan servicing companies, repayment options, and the overall borrower experience. Keep a close eye on announcements from the Department of Education (and any successor agency) regarding potential changes to loan servicing. This only impacts federal student loans.
- Focus on State Control: The broader goal of the executive order is to return more control over education to the states. This could lead to greater variation in tuition costs, financial aid availability, and educational standards across different states.
- Potential Impact on Loan Forgiveness Programs: Any changes to the administration of federal student loans could affect existing loan forgiveness programs like Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans. Students should closely monitor any developments.
What You Should Do:
- Stay Informed: Keep up-to-date on the latest news and announcements from the Department of Education and other reliable sources. LendKey will also provide updates as the situation evolves.
- Review Your Repayment Options: Make sure you understand your current student loan repayment options, including income-driven repayment plans and potential loan forgiveness programs.
- Consider Refinancing (with Caution): If you have student loans, refinancing could be an option to potentially lower your interest rate or monthly payments. However, carefully consider the pros and cons before refinancing federal loans, as you'll lose access to federal benefits like income-driven repayment and loan forgiveness programs should they be available.
The Bottom Line:
The dismantling of the Department of Education introduces uncertainty into the landscape of higher education and student loans. While some programs are expected to continue in the short term, students should stay informed and prepared for potential changes in the future. LendKey is committed to providing you with the resources and information you need to navigate these developments.
Disclaimer: This information is for informational purposes only and does not constitute financial advice. Please consult with a qualified financial advisor for personalized advice.