What is happening with Federal Student Loans?  

Student Loan borrowers are confused and have faced a rapidly changing repayment environment in the last several years. Presently, borrowers are watching the news coming from the Administration. Recently the Trump administration signed an order to dismantle the Department of Education which administers all federal Student Aid (FSA) including Federal Student Loans.  Initially the Administration signaled that federal student loans would remain under a reimagined Department of Education. But more recently the administration indicated that Federal Student Loan implementation and administration would be shifted to the Small Business Administration which could cause disruptions in service and confusion for borrowers struggling to repay their loans. What’s more, Congress established the Department of Education and authorized the implementation and administration of student loan under the DoE as such, it may require an Act of Congress to allow the dismantling of the DoE as well as the shift of student loans to a new federal agency like the SBA (or any other federal agency). In addition, several consumer and borrower advocacy groups concerned with borrower rights have indicated that additional legal challenges may result.   

In the meantime, there are other lawsuits pending resolution that impact more than 8 million borrowers enrolled in the SAVE repayment program enacted under the Biden Administration who are presently in forbearance pending legal resolution causing even more confusion for borrowers waiting to resume repayment on their loans. An additional million borrowers who have submitted applications for alternative income driven repayment program applications are in a backlog since IDR applications had been suspended. All of this coupled with the potential pending administrative change to student loans is causing stress and confusion for borrowers.  

What should borrowers do?  

All of the changes to student loans over the last several years have been confusing for borrowers. Now, with the pending legislation around the SAVE program and the potential federal student loan administrative changes, borrowers are unsure what steps to take. Because so much is pending, borrowers are encouraged to stay calm, keep the course and read all correspondence. In order to stay on track and informed borrowers should:  

• Continue to make timely payments to assigned federal student loan servicer(s) 

• Seek other repayment options or wait for resolution if impacted by the SAVE forbearance pending the legal challenges 

• Review all communication from loan servicers, the Department of Education or other departments 

• Keep copies of all correspondence, transactions and written documentation of communication regarding their federal student loans 

• Seek guidance and assistance from their loan servicers if struggling to make payments or find a payment plan that works 

• Borrowers seeking help/guidance with student loan repayment should check to see if employers offer a student loan coaching or repayment benefit