What’s Going on With Student Loans?
Whenever I sit down to read an article about the current state of student loans in the United States, my head starts to spin. Even when the system was working, it was hard to understand. Now, it’s just a mess.
I want to help break down the current state of student loans, how this affects borrowers, and what you should do now to protect yourself.
How Did We Get Here?
The U.S. Department of Education paused federal student loan payments at the beginning of the COVID-19 pandemic. During this time, borrowers were not required to make monthly payments on federal student loans and enjoyed a 0% interest rate.
In August 2023, the Biden-Harris Administration introduced the Saving on a Valuable Education (SAVE) Plan. It’s an income-driven repayment (IDR) plan that calculates payments based on income and family size, with the remaining balance forgiven after a set number of years.
The SAVE Plan replaced the Revised Pay As You Earn (REPAYE) Plan and is one of four IDR options: Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE). This plan is seen as having favorable terms that may halve monthly payments and put some on a path to loan forgiveness.
In the spring of 2024, a federal court issued an injunction preventing the U.S. Department of Education from fully implementing the SAVE Plan, after an estimated 8 million had enrolled. The court claimed that the department had likely exceeded its authority by implementing a plan that may result in broad loan forgiveness. This freeze also raised legal questions about other IDR plans and even led to the temporary removal of the Department of Education’s online applications for IDR plans and Direct Consolidation Loans, which have been two helpful tools for borrowers to manage repayment. The application has since been restored, but it helps characterize the current state of affairs as a tug-of-war.
Current State of Student Loans
As things stand now, the legality of the SAVE Plan (and other IDR plans) is being determined in court. One proposal from the Trump campaign, the “One Big Beautiful Bill”, suggests consolidating all federal student loan repayment plans into two options: a standard repayment plan and a modified income-driven repayment plan. The Trump Administration will need to determine the path forward with IDR borrowers in resuming payments.
The other big issue that needs to be addressed is the processing of student loan forgiveness. As mentioned, IDR Plans offer a path to student loan forgiveness after a certain number of payments are made. Since the Biden administration left, virtually no forgiveness applications have been processed.
My guess is, if the SAVE Plan is ended and Trump institutes his own solution, all these borrowers will need to have their repayment terms and monthly payments recalculated. Once the SAVE injunction is resolved, I also expect IDR forgiveness for other plans to resume. I’m skeptical this will be the end of this situation, though. I expect more lawsuits to follow from student loan advocacy groups if the SAVE Plan is deemed unconstitutional.
How Does This Affect Borrowers?
This administrative mess can cause anxiety and confusion for most borrowers not following these developments (and understandably so). Many borrowers on standard repayment schedules have already resumed payments. In fact, the Education Department resumed collecting on defaulted student loans on May 5, 2025. However, if you applied for the SAVE Plan when it was announced, or if you were enrolled in an IDR plan, your student loans may still be in deferment.
Depending on what happens with these IDR plans, repayment terms and monthly payments will need to be determined. Borrowers enrolled in these plans also have their monthly payments tracked to determine loan forgiveness eligibility.
In the background of all this, you might have received emails asking you to create a new account to pay a new company for your loans. Student loans can be sold to other servicers, which can complicate things even further.
Figuring all this out is not a straightforward process, which is why you may notice your payment due dates changing frequently. I do expect there to be steps taken to resolve this in the summer, but it’s anyone’s guess as to when this finally gets straightened out.
What Should You Do Now?
There are some important things you can do now to get organized and protect yourself.
Login to studentaid.gov
This is the hub for all your federal student loans and grants.
Note: This information applies only to federal student loans. Private loans are handled differently and don’t offer the same protections.
From here, you can see what your total outstanding balance is. You should also have information such as your repayment term, interest rate, and student loan servicer.
Monitor your credit
The process to refer defaulted federal student loans resumed in May 2025. It’s crucial to monitor your credit report for large dips that may be driven by overdue student loan payments. It’s estimated that over 5 million borrowers have loans in default status. With how this situation has been handled, I suspect many of those borrowers have not paid since COVID and never realized payments resumed.
Borrowers in default will receive an email from the Office of Federal Student Aid asking to make a payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. Later this summer, they will receive notices beginning wage garnishment.
Be your own advocate
I tell my clients all the time that they need to be their own advocates. Whether it’s keeping proper documentation for your taxes or giving yourself grace in another aspect of life, you control what you control.
If you are enrolled in an IDR plan eligible for student loan forgiveness, put together a list of your payments. I’ve read countless stories, and experienced myself, poor service and inaccurate records from these companies.
Also, the topic of student loans has become increasingly politicized over the last few years. This area impacts a large group of citizens in this country and is a complicated issue requiring a multi-faceted solution. When discussing the topic, try to have an open mind, because every situation is highly individualized.
Stay informed, stay proactive, and don’t be afraid to ask for help. I’ll continue to share updates as things develop.
