If You Have a Student Loan, Pay Attention Now!

Anyone with a federal student loan needs to be aware of huge changes to the loan process!   The Biden Administration in the SAVE Plan gave late paying borrowers a break (an “on ramp”) from repayment (forbearance) due to the impact of COVID-19.  The Administration also created a (“fresh start”) plan to help millions of people resume paying after default. 

The Trump Administration changed all of that. 

Federal student loan debt collection began May 5^th after a nearly 5-year break.  The U. S. Department of Education mailed 30-day action notices to 195,000 borrowers.  Up to 5.3 million additional notices will be sent by the end of the summer. 

If you haven’t paid on your loan for 90 days, bad things can happen. For example, a report to the credit bureau will lower your credit rating, making it more difficult to get a loan for a car, for rent, to buy a house, or to get cash for emergencies. 

Federal student loans go into default when payment has not been made for 270 days, so debt collection on defaults will be in full swing by fall. Once that happens, the government can garnish (take) part of your wages, take money from your income tax returns, take money from your checking or saving accounts, take money from your pension plan, or take your Social Security payments.

Unfortunately, the whole loan system is a mess, so it can be hard to figure out what the repayment options are and what you should do. 

Because the Trump Administration has made changes to the repayment plans, you need to find out how your plan has been affected.  Complicating this situation, people are having difficulty accessing the Department of Education for help because the Trump Administration’s massive staffing cuts.  As the Administration tries to shut the Department of Education down, people are waiting for hours to get connected to their loan provider.

We understand how confusing and stressful this situation can be.  It may feel easier to just ignore the whole thing, but don’t!  Stay with it.  Get help from one of the options listed below.  This may take some time, but we encourage you to pursue it for your financial safety and to protect your future.

1. The law requires that you must be notified if your payments are restarting.  If you get a letter, respond immediately so that you can find out your options.

   
   

2. If you get a phone call from your loan provider, check the number first to make sure it is valid and not from a scammer.  If valid, call back immediately because they might be letting you know that you are getting close to default.

   
   

3. If you are not sure who your loan provider is, go to the Federal Student Aid website and search Find My Servicer to see what information is available under your loan options.  studentaid.gov 

   
   

4. To get information on repayment plans contact Student Loan Repayment at http://www.usa.gov/repaying-student-loan

   
   

5. Free information and help is available from your loan servicer and from advocacy groups.  Your loan provider may have plans to help you with repayment if you tell it your payment problems.  Look for free help from advocacy groups such as The Institute of Student Loan Advisors (TISLA), the Student Debt Crisis Center (SDCC), or the National Consumer Law Center (NCLC).  

   
   

6. If you have already reached the default stage, you are no longer part of your regular loan provider’s plan.  Instead, you are transferred to the Education Department’s Default Resolution Group (DRG).  Their website is myeddebt.gov                             Phone:  800-621-3115

   
   

7. Do not pay for help.  Watch out for debt-relief companies that pretend to help you with your loans but just take your money.  Contact the attorney general in your state to see what companies have complaints filed against them.  If there is no listing of the company’s name, that could also mean that the company does not exist. 

   
   

References:

1. Student Borrowers Protection Center                        https://protectborrowers.org

2. U. S. Department of Education                                      https://www.ed.gov

3. Getting Started Repaying Your Student Loans       https://www.us.gov/repaying-student-loan

4. 6 Things Borrowers Should Know About Student Loans Right Now    By Cory Turner    NPR     https://www.npr.org/2025/03/31/nx-s1-53437701/trump-student-loan-forgiveness

5. Millions of Student Loan Borrowers Are Behind on Payments  By Stacy Cowley      New York Times  https://www.nytimes.com/2025/04/21/business/student-loan-borrowers-payment.html