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Parent Plus Loans – Decoding Double Consolidation Amidst SAVE Plan Deadline



Parent Plus Loans - Decoding Double Consolidation Amidst SAVE Plan Deadline

Resurgence of Federal Student Loan Repayments

Amidst the resurgence of federal student loan repayments in October, Michele Lloyd, aged 57, found herself confronting a stark reality. Balancing her personal educational loans and the financial commitment she undertook for her daughter’s collegiate pursuit, she realized she’d be servicing the substantial $110,000 debt well into her seventies.

Overwhelming Financial Challenge

The monthly financial demand, a formidable $600, posed an overwhelming challenge for Lloyd, who, as a therapist establishing a new practice, found her resources stretched thin. Unfortunately, avenues to alleviate this fiscal strain were limited. The Parent Plus loans secured for her daughter’s education were excluded from the government’s most economical repayment schemes.

Advocacy Against Abusive Parent Plus Loans

Expressing her discontent, Lloyd, residing in Detroit, decried the Parent Plus loans as abusive. This program, harboring a staggering $111 billion in outstanding debt distributed among 3.7 million individuals, presented issues of predatory interest rates and burdensome payments. Given her income, Lloyd lamented, “I can’t afford what they want me to pay.”

Double Consolidation Strategy

A glimmer of hope emerged when, a few weeks ago, an advocacy group enlightened Lloyd about a potential strategy to alleviate her debt burden: “double consolidation.” This clandestine yet enduring loophole conceals the presence of Parent Plus debt beneath layers of new loans, amalgamated into a singular entity. This consolidated loan subsequently becomes eligible for more flexible repayment alternatives, including President Biden’s widely acclaimed Saving on a Valuable Education (SAVE) plan.

Legal Affirmation and Impending Closure

Consumer advocates in the legal arena affirm that the strategy of “double consolidation” has witnessed an upsurge in popularity, especially in the wake of the introduction of the Saving on a Valuable Education (SAVE) initiative. This surge gained further momentum following the Education Department’s revelation of intentions to close this loophole come July 2025.

Department’s Stance and Legal Shelter

When queried regarding the existence and imminent closure of the consolidation loophole, the Education Department directed attention to sections within the SAVE regulation, disseminated in the Federal Register in July. Within these passages, the agency acknowledged that “limitations in Department data” might have facilitated the enrollment of a Parent Plus loan, which underwent double consolidation, into any income-driven repayment plan. The agency clarified its stance, stating, “The Department will not adopt this clarification for borrowers in this situation currently on an IDR plan because we do not think it would be appropriate to take such a benefit away.”

Urgency and Complex Process

State government and advocacy organizations are actively urging dad and mom to capitalize in this opportunity earlier than the impending closing date. However, the method is difficult and time-eating, fraught with capacity pitfalls that could thwart the endeavor. Complicating subjects further, the absence of an legit coverage tenet manner that student mortgage servicers are unable to guide borrowers thru the important steps.

Parent Plus Loans Challenges

Despite these challenges, individuals like Lloyd and other parents are willing to take calculated risks to liberate themselves from one of the most constrictive and costly manifestations of federal education debt — the Parent Plus loans. Originally conceived to provide parents with limited financial means a more accessible avenue to support their children’s college expenses, these loans underscore the federal government’s greater willingness to extend credit to low-income parents compared to private lenders. However, the terms offered to parents are significantly less favorable than those extended to students.

Contrasting Interest Rates and Limited Options

While the interest rate for a typical undergraduate loan stands at 5.5 percent, the landscape differs significantly for a Parent Plus loan, where the interest rate escalates to 8.05 percent. Students, in contrast, enjoy a plethora of repayment alternatives, including schemes that factor in their income and may eventually render them eligible for loan forgiveness. In stark contrast, parents find themselves constrained, navigating only a limited selection of payment plans.

Income-Driven Repayment Options

For parents, the lone income-driven plan accessible is the Income-Contingent Repayment (ICR), and it stands as the most frugal option. To qualify, parents are obligated to consolidate the Plus loan into a Direct Consolidation Loan. Under the ICR, monthly payments are capped at 20 percent of the borrower’s discretionary income, delineated as the earnings exceeding 100 percent of the federal poverty line, amounting to $14,580 for an individual.

SAVE Plan and Department’s Stance

In contrast, the recently introduced SAVE plan imposes a cap on payments at 10 percent of discretionary income, distinctly defined as 225 percent of the federal poverty line. Should parents be granted eligibility to enroll in SAVE, the resultant monthly bills would be notably more affordable. In formalizing the SAVE regulation, the Education Department asserted the ineligibility of Parent Plus loans, citing Congress’s original intent, which did not envision parents having widespread access to repayment plans based on their earnings.

Impasse and Double Consolidation

Despite advocacy groups contending that the genesis of the new repayment plan shares the same authority as the creation of ICR, they argue that there is no inherent obstacle preventing the department from granting parents access to SAVE. Despite appeals from the NAACP urging Education Secretary Miguel Cardona to reconsider, the department remains steadfast on its stance. This impasse has given rise to the utilization of the double consolidation loophole.

Operational Mechanism

Here’s the operational mechanism: Parents must possess a minimum of two loans, either two distinct Plus loans or a Plus loan combined with the loans acquired for the parent’s own education. In cases where only Plus loans are in play, applicants need to submit separate requests to two distinct loan servicers, seeking to consolidate one of their Plus loans with one servicer and the remaining with the other. After the completion of this process within a span of four to six weeks, a final consolidation is then executed to amalgamate all the loans into a unified entity.

Risks and Caution

Individuals, such as Lloyd, who bear the burden of debt from their own educational pursuits, can streamline the process by submitting a singular application to consolidate all of their Plus loans. Following a waiting period of up to six weeks for processing, they can then proceed to initiate the final consolidation, combining the newly formed loan with their existing one. To facilitate this process, the Massachusetts attorney general’s office has provided comprehensive instructions online for both scenarios, accompanied by illustrative flow charts.

Cautionary Note

There exist inherent risks in this strategy, and a failure to meticulously adhere to the prescribed steps could potentially nullify the entire approach, cautioned Winston Berkman-Breen, the legal director at the Student Borrower Protection Center, an advocacy group. Berkman-Breen emphasized the importance of precise sequencing, stating, “You can’t consolidate everything together. You have to sequence it right so that you’re not stuck after one consolidation with only access to the ICR plan.”

Interest Rates and Temporary Measures

Additionally, the act of consolidation may inadvertently subject some borrowers to slightly elevated interest rates. This outcome arises from the calculation of interest, which involves determining an average based on the varying rates present across the loans. Ordinarily, consolidating student debt would result in the loss of credit towards any loan forgiveness programs. However, the Education Department has introduced a temporary measure, counting accrued payments until the year’s end. This grants Parent Plus borrowers a narrow window until December 31 to leverage the double consolidation for maximum credit on their loans, as advised by Berkman-Breen.

Deadline Considerations

For those who miss this deadline, Berkman-Breen recommends waiting until July 1 to initiate the second consolidation. This marks the full implementation of the SAVE regulation, allowing borrowers to consolidate without forfeiting credit towards debt cancellation. Approaching the double consolidation with a measured acknowledgment of the associated risks and an optimistic outlook for potential success, Lloyd articulates, “All I can be is hopeful. I’m hoping that there are no mishaps, that my applications are received and processed, and that I’m able to secure a reasonable repayment plan, avoiding a situation where I have to choose between groceries and paying the bill.

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Why People Are Leaving Ireland World’s Richest Country



Why People Are Leaving Ireland World's Richest Country

In recent years, Ireland, once one of the poorest countries in Europe, has surpassed wealthy nations like the USA, UK, Kuwait, and even Qatar in terms of wealth. However, it’s curious to note that despite its riches, about 70% of its population no longer desires to live there. To understand why the urban population of one of the world’s richest countries is reluctant to reside there, we must first explore how Ireland became so affluent.

Merely 150 years ago, during the catastrophic Irish Potato Famine, also known as the Great Hunger, which spanned from 1845 to 1852, Ireland was in dire straits. The famine claimed the lives of approximately 1 million people and decimated about 11% of the population. This disaster was so severe that to this day, Ireland’s population has not fully recovered, making it the only country in Europe, and indeed the world, whose current population is less than it was in 1840.

Ireland gained independence from British control in 1922, but it wasn’t until it joined the European Economic Community in 1973 that it saw a real opportunity to amend its fortunes. This membership meant that Ireland could trade freely within the member states while being subject to only one tax jurisdiction. Seizing this advantage, Ireland announced favorable conditions for businesses establishing operations within Europe, which spurred significant economic activity and growth. The country’s economy began growing at a pace comparable to that of Singapore and South Korea and was soon dubbed the “Celtic Tiger.” Despite the global financial crisis of 2008, Ireland responded by eliminating certain tax rates, which further attracted high levels of foreign direct investment, transforming it into the “Silicon Valley of Europe.”

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However, today, a vast majority of young Irish people between the ages of 18 and 24 wish to leave Ireland permanently. There are several reasons for this dissatisfaction. First, the reality of Ireland’s wealth does not match its GDP figures. While Ireland boasts one of the highest GDP per capita ratings globally, other statistics reveal a different story. For example, the average annual salary in Ireland is lower than that in all Scandinavian countries and is on par with nations like Belgium and Austria, whose GDPs are significantly lower than Ireland’s. Additionally, the household disposable income statistics place Ireland at a mere 177th globally, indicating a substantial disparity between the perceived economic success and the standard of living experienced by its citizens.

A second significant issue is the housing crisis. Like Canada and Australia, Ireland is experiencing a severe shortage of affordable housing due to unfavorable policies for real estate developers. This shortage has driven housing prices sky-high, and in cities like Dublin, long lines of people waiting to view rental properties are a common sight.

Lastly, the healthcare system in Ireland is overwhelmed. Many Irish doctors move abroad in search of better salaries, leaving those who remain to face excessive workloads. This results in long waiting lists for patients.

Overall, Ireland’s apparent economic success heavily depends on an artificially inflated GDP figure. If Ireland reverts from its zero-taxation policy, it may lose its unique advantage, prompting many foreign companies to relocate back to their home countries. This would severely expose Ireland’s economic progress as unsustainable. For long-term success, it is crucial for Ireland to strengthen its domestic industries rather than relying solely on foreign investment, as economic figures may improve but not the ground-level progress.

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Biden’s plan to forgive student loan



Biden's plan to forgive student loan

The Biden administration is expanding its efforts to cancel student debt. Recently, the White House revealed that an additional 277,000 borrowers will have their student loans erased, totaling approximately $7.4 billion in forgiven debt. These borrowers qualify for relief because they participated in one of the administration’s loan repayment or forgiveness initiatives, which were established or revised alongside the original broad loan cancellation proposal.

This announcement follows President Biden’s recent unveiling of more details regarding Plan B for student loan forgiveness, nearly a year after the Supreme Court, led by a conservative majority, invalidated their initial attempt.

Although Plan B is narrower in scope compared to the initial proposal, which aimed to forgive up to $10,000 in debt for most borrowers, it remains ambitious. Plan B utilizes a different legal basis from the one employed in 2022, builds upon existing programs that have not encountered significant legal opposition, and is more precisely targeted. These adjustments are aimed at avoiding the legal challenges that the first loan forgiveness plan encountered in the Supreme Court.

The Biden administration may encounter opposition from Republicans and conservative critics, who could seek to challenge the plan through the federal court system once again. It remains uncertain whether voters, particularly younger demographics, will perceive Biden’s efforts positively, given that the plan primarily benefits borrowers who have carried debt for an extended period, such as millennials and Gen X-ers.

In conjunction with other loan forgiveness initiatives implemented during President Joe Biden’s tenure, Plan B is expected to alleviate debt for over 30 million Americans, as stated by the White House. Under this new proposal, over 4 million individuals would have their entire debt forgiven, while an additional 10 million would receive at least $5,000 in relief. Furthermore, 23 million borrowers would have their accrued interest wiped away, which represents the additional debt accumulated on top of the principal amount.

However, any relief is likely several months away. The plan announced on Monday is the outcome of a regulatory process initiated a month after the Supreme Court invalidated the initial plan. It still necessitates a public comment period before implementation, meaning that the earliest commencement of debt relief would likely be in the fall.

Who would benefit from Biden’s planned student loan forgiveness?

This plan would cater to five categories of borrowers, with most not needing to complete an application process; instead, the Education Department would utilize existing data to implement forgiveness once the plans are finalized.

1. Borrowers who currently owe more than their original loan amount would have up to $20,000 of interest erased, irrespective of their income. They would still be responsible for repaying the initial loan amount.

2. Individuals earning less than $120,000 annually, or couples earning less than $240,000 annually, would be eligible for full forgiveness of their interest.

3. Borrowers who have been carrying loan debt for at least 20 years would qualify for complete forgiveness. This applies to those who commenced repayment of undergraduate debt 20 years ago or more, and for graduate school debt, 25 years ago or more.

This plan also targets individuals who took out loans for academic programs classified as “low-value” by the federal government. These borrowers attended institutions or programs deemed to have low financial worth, defined by the White House as those losing eligibility for federal student aid participation, engaging in student deception, or leaving graduates with earnings after school no better than high school diploma holders.

Additionally, those eligible for existing loan forgiveness programs but not currently enrolled would be automatically included under this plan. This provision aims to enroll borrowers qualified for forgiveness through revamped income-driven or public service forgiveness programs.

Furthermore, individuals facing financial hardships, including medical debt or expensive childcare costs, who do not qualify for other forgiveness or repayment programs would be considered. This category encompasses borrowers at risk of default.

What distinguishes this approach to student loans is its focus on accrued interest, referred to as “runaway interest” by both the White House and the Department of Education. Similar to all loans, student loan debt comprises a principal amount (the initially borrowed sum) and interest. When the interest costs surpass the payments made, the interest is appended to the loan balance, resulting in a continually escalating owed amount over time, even with regular payments.

This accumulated interest often merges with the principal, amplifying future interest charges. The White House has already initiated alterations to the capitalization of interest—its addition to the principal balance, further generating interest—and this plan expands upon those regulatory adjustments by wholly forgiving interest.

On Monday, Biden and his administration are promoting this new plan in crucial cities, including swing states. The president is currently in Madison, Wisconsin, while Vice President Kamala Harris is en route to Philadelphia. Meanwhile, her husband is traveling to Phoenix, and Miguel Cardona, the Secretary of Education, is meeting with borrowers in New York City.

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Employee Layoffs at University of Texas Due to State DEI Ban



Employee Layoffs at University of Texas Due to State DEI Ban


The University of Texas at Austin initiated extensive staff layoffs shortly after a statewide prohibition on diversity, equity, and inclusion initiatives in public colleges was implemented. As per a report, the university terminated numerous employees involved in their DEI programs to adhere to the new state legislation.

On Tuesday, April 2, 2024, University of Texas President Jay Hartzell declared that the institution will disband the Division of Campus and Community Engagement and reassign programs and funding to alternative divisions.

This decision arises as the university endeavors to adhere to a recent Texas statute enacted on January 1. Senate Bill 17 effectively dissolved DEI entities at public colleges and universities across the state. An insider informed the Austin American-Statesman that the university eradicated 60 positions associated with DEI endeavors.

The legislation requires all governing boards of public colleges and universities to ensure that their institutions forbid the establishment and operation of a Diversity, Equity, and Inclusion (DEI) office and the issuance of “DEI Statements.” Additionally, hiring practices and training are no longer permitted to utilize DEI statements.

Regarding the new law, Hartzell remarked, “I acknowledge that SB 17 has evoked strong emotions from the outset and will influence the perceptions of many Longhorns about these measures.” He further stated, “It is crucial that our community remains inclusive and supportive to all.”

This decision marks another escalation in the increasing attacks on programs benefiting marginalized groups within higher education. In conservative states like Texas and Florida, anti-DEI legislation has previously led to the closure of safe spaces for LGBTQ students in the past year.

However, concerns arose that professors and students might relocate to more liberal states as a result. The University of Texas has not officially disclosed the number of staff positions and employees facing layoffs. Nevertheless, sources indicated that at least 60 individuals were let go on Tuesday afternoon. Among them, 40 belonged to the Division of Campus and Community Engagement.

The University of Texas, however, has not responded to these assertions. In his communication, Hartzell assured that student-facing roles would remain intact for the remainder of the semester. He also mentioned that dismissed employees would have the opportunity to apply for other positions within the university.

These terminations followed state Sen. Brandon Creighton, a Republican, outlining the anticipated compliance expectations for universities. Creighton conveyed the gravity of the legislation in a letter, emphasizing that the measure “mandates a fundamental shift in the operation of our higher education institutions.”

Additionally, he emphasized the importance of fostering a “merit-based environment” within universities. Moreover, the Senator elaborated that the Texas Senate Committee on Education will convene a hearing in May. This hearing will scrutinize higher education institutions’ chancellors and “general counselors” to demonstrate their compliance with the law.

Creighton cautioned that failure to adhere to the state law could result in funding cuts for the universities. Apart from the layoffs, the law also had repercussions on cultural graduation ceremonies, sparking outrage among certain students. The closure of the university’s Multicultural Engagement Center (MEC) in compliance with the state law affected cultural graduations. This impact was observed in ceremonies such as Black Graduation, Latinx Graduation, and GraduAsian ceremonies. Similar to the University of Texas, the University of Florida terminated all its DEI employees to comply with state regulations.

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