Local economics professor reacts to changes to federal student loan policies
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BUFFALO, N.Y. (WIVB) -- The Trump administration and the Department of Education recently announced significant changes to federal student loan policies. Collections on defaulted federal student loans will resume in less than two weeks.
President Donald Trump said the move is necessary to return accountability to borrowers. But college graduates said they're hurting enough.
"Even before all of this, current college students and college graduates have been struggling," said Wendi Dittmar, who graduated from the University at Buffalo. "The cost of everything has gone up."
According to the Department of Education, there are 42.7 million borrowers who owe more than $1.6 trillion in student debt. But the burden may be felt by more than just those with loans.
Experts warn this could have a major impact on the economy, including in our region.
"You're going to have to cut out things to be able to pay your loan payment," said Dr. Fred Floss, an economics professor at Buffalo State University. "This is going to have an impact in Western New York particularly because of the tariffs and the Canadians not coming here. We're going to see a bigger slowdown in the Western New York economy."
Floss said the biggest shock is going to be for families who aren't used to taking this money out of their budgets.
For those who have already graduated, Floss recommends preparing for this change in advance. He said setting aside small amounts of money into a savings account to adjust to having less disposable income is a good idea.
For those still considering attending college, his advice is to try your best to stay local where tuition and living costs may be more manageable.
"In New York State because of TAP and Pell grants, you should be able to have your tuition, fees and books paid for," said Floss.
The Department of Education is recommending borrowers to enroll in an income-driven repayment plan or sign up for loan rehabilitation. You can find more information here.
Borrowers in default will receive emails in the coming weeks.
Trina Catterson joined the News 4 team in 2024. She previously worked at WETM-TV in Elmira, a sister station of WIVB. See more of her work here.