State student loan advocate seeing surge of borrowers seeking help

CHRIS FARRELL: This is Minnesota Now. I'm Chris Farrell, in for Nina Moini.

So the entire landscape of student loans is undergoing a lot of change. Starting tomorrow, thousands of Minnesotans who are on the student loan SAVE plan will see their balances grow with interest now being reapplied. Those SAVE borrowers payments are still on pause. So that's one of the many changes that are taking place over the next several years.

The state of Minnesota has one person dedicated to helping borrowers navigate their repayments. Jabra Kawas is the state's first and only student loan advocate. And he works with the Minnesota Department of Commerce and joins me now. Welcome.

JABRA KAWAS: Thanks, Chris. Thanks for having me today.

CHRIS FARRELL: So just to start off, tell us about your role as a student loan advocate for the state.

JABRA KAWAS: Yeah. Well, as you indicated, I mean, I'm the only person in this role. It's a relatively new role. It was instituted two years ago. So I've been with the Department of Commerce almost two years. And it's designed to assist consumers who may be having issues with their student loan servicer, who may be having issues with understanding the terms of their student loans. It really varies, the issues that I'm seeing, and the assistance I'm giving to consumers.

CHRIS FARRELL: So there have been a lot of changes recently to the student loan program. So are more people reaching out to you and asking for your help?

JABRA KAWAS: Yeah, absolutely. Just to give you a little data, some numbers, last year, I had opened about 230 new cases. And as of today, I'm at 260, just through July. So we're on pace to-- we already have broken the numbers. The cases we opened last year.

And I think it's because a lot of this is getting-- well, there's a lot of changes, a lot of confusion. And it's in the news a lot, which is good. I think it's a good thing, because people should be aware of what their student loans-- what the ramifications are and what the processes are. But yeah, like I said, we're seeing an increase in people reaching out to us.

CHRIS FARRELL: Now, I've been reading a lot of these articles, hearing about it, tearing out my hair, trying to understand what's going on here. I mean, this is all part of President Donald Trump's One Big Beautiful Bill. And there's a number of changes that have been brought to the student loan ecosystem. So explain the part that you're focusing on, helping people navigate this.

JABRA KAWAS: Yeah. And you're right. A lot of these changes were triggered by the new legislation. And what I focus on is-- I guess the distinction pretty much is if you're entering repayment or in repayment, that's where I can assist you. That's where I come in.

CHRIS FARRELL: OK. Yeah, so you're at the stage where you're paying back your student loans, trying to figure out how to do it.

JABRA KAWAS: Yeah, correct, correct. If you're in school, then what I encourage people to do is reach out to their financial aid office. I've had several people reach out who have asked about, hey, how do I do my FAFSA or my financial aid and all that? I'm able to answer some of the basic questions, but then I always refer them to their college or university.

CHRIS FARRELL: So what starts happening tomorrow? This is August 1.

JABRA KAWAS: Well, yeah, yeah, as you know, and I'm sure there's a lot of people know, interest starts accruing again for those who are on the SAVE plan, where the interest hadn't been accruing for years. I mean, COVID-- there was the COVID pause. And then it went back into repayment for a little bit. And then there were the court injunctions that put a halt on that.

So interest will start accruing again tomorrow for consumers and borrowers who are not in repayment but in the SAVE plan. That doesn't mean that the forbearance is over. It's kind of confusing. The forbearance actually is still in place, because payments aren't due yet. They haven't determined what the payments are going to look like. They still have to give us direction on what payments are going to look like, what plans you're going to be able to access. So yes, interest accrues. Payments aren't necessarily due right now.

CHRIS FARRELL: And just to be clear, so the SAVE program, this is one of the income-based repayment programs. And it was particularly favorable for borrowers who were repaying their student loans if they went into the SAVE program. Right?

JABRA KAWAS: Yeah, that is correct. It offered lower payments. And I think what we're going to see is-- and information that I'm seeing, is that payments are going to go up for most borrowers in whatever new plan that exists. One of them-- I mean, what is going to happen is there's going to be a Repayment Assistance Plan, RAP. And that will be an income-based plan, where your payment will be determined by your income. And it's broken down by tiers. So $0 to $10,000 is 1% of your income, and so on and so forth.

So there still is that income-based plan in place. It's just it's different, and it's whittled down. There were several different-- at least six, if not more, different repayment plans. Now there's basically going to be two. There's going to be the standard and then the RAP one.

CHRIS FARRELL: So the SAVE plan's ending. So people who are on SAVE who are listening to us, when should they start planning on moving their plan?

JABRA KAWAS: That is open to debate. I've seen many different things, many different-- much different guidance, much-- a lot of different guidance from different sectors. It really is kind of an individual decision. And I guess that's where I put the plug in for our office. If people have questions or concerns or need some help navigating that, reach out to us because one of the things that I like to emphasize is no two borrowers situations may be exactly the same. So what may be good for borrower A may not be good for borrower B

So I think not-- payments aren't resuming yet, but I think it's important for consumers to start realizing payments are going to be resuming. And how do I work that into my budget? And how do I keep up to date on all the information? One thing I want to throw out there is people should have their information, contact information, updated with their student loan servicer as well as federal student aid. That way, they're getting updates real-time as they come in.

CHRIS FARRELL: So what's the biggest concern that you're hearing from people, who-- you mentioned, was it 260, I think it was, you said-- have already reached out? What's the biggest concern that stands out?

JABRA KAWAS: It depends. I think most recently, since May, it's been the default, the fact that the government was going to be going after-- if you're in default, they're going to be going after those payments.

CHRIS FARRELL: So they can garnish your wages? They can take a percentage of your wage to-- that goes to help pay off the student loan?

JABRA KAWAS: Yeah. That's correct. They could potentially do that. And there's also the Treasury Offset Program where they can basically take your tax refund to repay whatever defaulted loans you're in. So that's been the one that's been, I guess, one of the top issues.

Another one is public service loan forgiveness. People-- I've had so many consumers reach out who are at-- for PSLF, Public Service Loan Forgiveness, you need to hit 120 payments, which is basically 10 years of payments. So many that are sitting at 115, 110, 115, and they've been stuck there for going on a year now because none of their payments are counting if they're making payments. But they certainly don't have to. So that is another big thing too. That particular forgiveness program is causing so much confusion and a lot of angst.

CHRIS FARRELL: Sure. Because it matters, because then your student loans are forgiven if you've met the terms, right?

JABRA KAWAS: Yeah, yep. That is correct. That is what the terms of that particular program.

CHRIS FARRELL: OK. We could talk a lot more about student loans because there's so many twists and turns. But thank you very much for taking your time.

JABRA KAWAS: Yeah, thanks, Chris. I appreciate it. Take care.

CHRIS FARRELL: Jabra Kawas is a state student loan advocate.