The recent dismissal of almost half of the U.S. Department of Education’s (DOE) employees and proposals to eliminate the DOE completely have families on edge as they wait to hear about federal financial aid for their college students.
We spoke to AAA Northeast’s Donald Kerr, director of student lending and college services, to get answers to some student loan frequently asked questions and concerns regarding recent student loan updates.
In order to help our members keep up with this rapidly changing situation, AAA Northeast will monitor developments and refresh the student loan FAQ below as we learn more. Bookmark this page and check back often for the latest information.
What should college students and their parents do now?
Even with information changing daily, Kerr advises parents to go about business as usual. They should file their Free Application for Federal Student Aid (FAFSA), if they haven’t already, await notification of federal grants or loans and try to keep up with the news about the loan program. So far, the system is working, Kerr said, although DOE layoffs could cause delays in processing financial aid applications.
“I don’t think anything will be stopped this year, but it’s causing a lot of angst with families; some people already are afraid that federal money won’t be available,” said Kerr, whose office has been fielding phone calls. “Parents usually start worrying about other means of financing around May 1, but already people are asking about what other sources they should look into.”
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Download NowCould the DOE really be eliminated?
Eliminating a federal agency requires an act of Congress, which is not a simple process.
What happens to financial aid if the DOE is eliminated?
If that were to happen, Title IV of the federal Higher Education Act of 1965 requires that the DOE’s obligations be met by another agency. Congress would have to enact legislation to put another agency in charge of the DOE’s responsibilities.
What can I do if I need help repaying an existing federal student loan?
Unfortunately, the divisions of the DOE that deal with assistance for student loan repayment are not available, Kerr said. Borrowers no longer have online access to any loan consolidation programs or any income-based repayment plans. These agreements must be renewed annually, and some borrowers could see their monthly payments jump when their current agreement lapses. They still could apply for a deferment or extend the repayment period, but that will result in paying more over the course of the loan.
People also could mail in an application requesting a loan consolidation or a new repayment plan, but how or when that would be answered is uncertain, according to Kerr. Borrowers also can try calling 1-800-433-3243 or reaching out to the Federal Student Aid Contact Center.
What can I do if my child doesn’t get much, or any, federal student aid because of the changes?
To be safe, start investigating private loans and grants now, to be prepared in case you have a funding shortfall, Kerr said. “Try to have a backup plan if federal aid doesn’t come through,” he said.
Learn more about AAA Student Lending services and how you can get in touch with a specialist today.
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