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Student loan forgiveness could fall through for 30 million borrowers. If it does, consider these 4 relief options

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After President Joe Biden’s historic announcement that tens of millions of Americans would get up to $20,000 in student loan forgiveness, borrowers’ celebrations were short-lived.

Conservative groups and Republicans soon brought a number of legal challenges against the president’s plan, arguing that the policy was unfair and an overreach of executive authority. Two of those lawsuits have been successful in halting the Biden administration from canceling hundreds of billions of dollars in student debt. In February, the U.S. Supreme Court will have the final say on if the plan can proceed or not.

The disappointment and financial distress that borrowers will feel if Biden’s forgiveness plan is struck down — a likely outcome, according to experts — is likely to be massive.

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A group of borrower advocacy groups, in a recent brief to the highest court, said student debt forgiveness was essential to the country’s recovery from the public health crisis, which exacerbated the financial difficulties for “borrowers who have, for decades, been at the mercy of a broken student loan system.” Without the cancellation, they warned, “working and middle-class borrowers are at substantial risk of default.”

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If that is the way things go, however, here are four of the other relief options for struggling borrowers.

1. Defer payments (once they resume)

The pandemic-era policy suspending federal student loan payments and the accrual of interest is still active. The U.S. Department of Education has said borrowers won’t need to start making payments on their debt again until 60 days after the litigation around its forgiveness plan resolves.

If the lawsuits are still pending at the end of June, the bills will resume 60 days after that, at the end of August.

If you’re unemployed or dealing with another financial hardship at that time, you can put in a request for an economic hardship or unemployment deferment. Those are the ideal ways to postpone your federal student loan payments, because interest doesn’t accrue.

If you don’t qualify for either, though, you can use a forbearance to continue suspending your bills. Just keep in mind that with forbearance, interest will rack up and your balance will be larger — possibly much larger — when you resume paying.

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2. Use the Public Service Loan Forgiveness program

The Biden administration has recently made a number of improvements to the Public Service Loan Forgiveness program, which allows those who work for the government and certain nonprofits to get their debt cleared after a decade of payments.

There are typically three primary requirements for public service loan forgiveness, although the recent changes provide some more wiggle room in certain cases:

  1. Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service.
  2. Your loans must be federal Direct loans.
  3. To reach forgiveness, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan.

The best way to find out if your job qualifies as public service is to fill out the so-called employer certification form.

In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for the program.

3. Find a more affordable repayment plan

If you find your student loan payments too high when the bills resume, you should explore the different income-driven repayment plans. These programs aim to make borrowers’ payments more affordable by capping their monthly bills at a percentage of their discretionary income and forgiving any of their remaining debt after 20 or 25 years.

To determine how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

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President Biden: 22 million people have signed on for student debt relief

If you do decide to change your repayment plan, Mayotte recommends submitting that application to your servicer well ahead of the timeline for payments to restart. Lenders will likely be overwhelmed when they have to begin collecting loan payments from tens of millions of people again.

“I have significant concerns that there will be some big servicing delays,” Mayotte said.

4. File for bankruptcy protection

The Biden administration recently announced updated guidelines that will make it easier for those severely burdened by their student debt to discharge it in bankruptcy.

Currently, it’s difficult, if not impossible, for someone to walk away from their federal student debt in a normal bankruptcy proceeding.

“The new rules do give some hope to federal loan borrowers who may be struggling with their loans for 10 years or more,” Mayotte said.

The federal government will be less likely to object to borrowers’ attempts at discharging their debt, she said, if they have a record of making an effort to repay their student loans but don’t have a high enough income to cover the bill while also meeting their basic needs.

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Durant’s Donation Will Support Athletic Facility Upgrades and University Athletics Programs

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MEDIA CONTACT: David Thompson, dlthompson@bowiestate.edu, 301-860-4311

(BOWIE, Md.) – Prince George’s County native Kevin Durant and the Durant Family Foundation have committed to joining the Bowie State University Athletics Department in the transformation of the university’s main basketball gym and supporting BSU athletics programs.

 

“We are dedicated to providing resources and possibilities to students for higher education, especially in Prince George’s County,” said Wanda Durant, who leads the Durant Family Foundation. “Bowie State was the perfect place to make a meaningful impact.”

The foundation has committed $500,000 towards renovations of the basketball arena in the Leonidas S. James Physical Education Complex at BSU. Renovations will include installation of a new basketball court, expansion of seating capacity and upgrades to the press box area. The gift will also provide financial support for men’s and women’s basketball and university athletics programs. It also will establish a scholarship for Durant Center College Track students who attend BSU.

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Bowie State President Aminta Breaux expressed her gratitude for Durant’s generosity.

“We’re grateful for the resources that Kevin Durant and his family foundation have generously donated to Bowie State University to advance student success in achieving their academic goals,” said Breaux. “His contributions will go a long way towards updating our facilities and ensure a top-tier athletic experience for all of our students. The foundation has already built a network of community-centric services within the Durant Center in Prince George’s County that is exemplary.”

Durant’s donation to Bowie State is just the latest in the Seat Pleasant native’s philanthropic efforts in Prince George’s County. In 2019, Durant’s foundation partnered with College Track to establish College Track at the Durant Center in Suitland, MD, to help first-generation and low-income students pursue higher education.

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About Bowie State University
Bowie State University (BSU) is an important higher education access portal for qualified persons from diverse academic and socioeconomic backgrounds, seeking a high-quality and affordable public comprehensive university. The university places special emphasis on the science, technology, cybersecurity, teacher education, business and nursing disciplines within the context of a liberal arts education. For more information about BSU, visit bowiestate.edu.

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About the Durant Family Foundation
The Durant Family Foundation is a 501 (c)(3) non-profit organization founded in 2013 by Prince George’s County native Kevin Durant. The foundation’s mission is to enrich the lives of at-risk youth from low-income backgrounds through educational, athletic and social programs. The foundation supports youth athletics, organizations addressing youth homelessness, disaster & emergency relief efforts, renovates basketball courts across the world, and provides educational opportunities for low-income and first generation college students via our partnership with College Track. As of 2019, the Durant Center, based in Prince George’s County, has been the home for Durant Family Foundation charitable programs and community initiatives.

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Morgan State University Launches $30M Renovation of Two Campus Dorms

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Morgan State University is launching a renovation of two student residence halls as part of a long-term effort to expand and improve student housing in the wake of a massive enrollment spike at the historically Black university.

Morgan State will spend $30 million on a complete renovation of its Baldwin and Cummings residential halls, transforming them from 1950s-era facilities into more modern living spaces for around 200 students.

“These are post-World War II facilities,” said Sidney Evans, Jr., executive vice president for finance and administration at the school. “They are just not conducive for the 21st century.”

The traditional stone facade of the two residence halls will remain in place while the insides will be gutted, he said. During the renovations of Baldwin and Cummings next year, the students who would normally be in the dorms will be placed in three apartment buildings that Morgan State leases,Evans said. Whiting-Turner Contracting Co. won a $1.5 million contract for pre-construction services for the project at the state Board of Public Works meeting on Wednesday.

Morgan State took out a $65 million loan with the federal HBCU Capital Financing Program to pay for the dorm renovations along with several other campus improvements. The loan will help Morgan State complete the renovation of the Murphy Fine Arts Center, the Hurt Gymnasium and other deferred campus maintenance. The program provides a low-interest-rate loan that is approved by the federal government. The institution previously used the loan to finance the public safety building at Northwood Commons, Evans said.

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“It’s the most cost-efficient way for HBCUs to borrow,” he added. “When I first presented this to the Morgan Board of Regents, [Board of Public Works], and the capital vulnerability committee they were so impressed with this program, they said, ‘why hasn’t Morgan done this before?’”

In recent years, the university has taken several steps to build more housing in response to a massive influx of students. Earlier this year, the HBCU completed the Thurgood Marshall Housing complex and is now constructing a 604-bed tower addition. Thurgood Marshall was the first new on-campus student housing built in 31 years at Morgan State, Evans said.

Along with the renovations to Baldwin and Cummings, the university is planning to renovate another older student dorm in 2024 and tear down the aging O’Connell Hall student housing dorm to build a new residential facility, Evans said.

The university currently has a total enrollment of over 9,100 students, a new record, with only 2,119 beds on campus, according to a Morgan State spokesperson. The university signed a partnership last year with the Lord Baltimore Hotel downtown to house an additional 440 students because of the lack of on-campus housing options. The Board of Public Works in November approved a $1.7 million extension of Morgan State’s lease with the hotel to provide 248 beds for students until next May.

“Our enrollment projections exceeded our expectations,” Evans said. “So we’re trying to bring things back in line.”

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Delaware’s Only HBCU is Building a Legacy — Here’s How Capital One is Helping

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At the unveiling event, Capital One and Delaware State University also shared a few updates related to their partnership, including:

  • An executive mentorship program to pair Capital One executives with University sophomores.
  • $270K in grants provided by the Capital One Foundation for the University’s Career Services Experiential Learning program.
  • Plans to deepen recruitment ties with the University to focus on connecting students to career pathways in business analysis, technology, and product development.

In attendance at the Riverfront ceremony were Delaware congressional delegates as well as civic leaders who highlighted the critical role that public-private partnerships have in strengthening HBCU infrastructure and expanding career pathways for HBCU graduates.

But it’s not all just about the one-to-one relationships between public and private organizations.

The whole educational landscape has a chance to benefit from these types of partnerships. Both Capital One and the University are strong advocates for the passage of the IGNITE HBCU Excellence Act, bipartisan federal legislation that proposes to make historic federal investments in HBCUs and strengthen public-private partnerships to enhance and grow these institutions. The bill is co-sponsored by U.S. Senators Chris Coons (D-D.E.) and Tim Scott (R-S.C.), U.S. Representatives Alma Adams (D-N.C.) and French Hill (R-A.R.), and 175 other members of U.S. Congress.

Delaware State University President Tony Allen, who serves as Chair of President Biden’s Board of Advisors on Historically Black Colleges and Universities, noted HBCUs are a central driver to propelling financial advancement for those from low-resourced backgrounds into the American middle class.

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