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Amidst loan resumptions, court disputes over student loan plans, and job cuts in the Education Department, borrowers could find themselves perplexed about their student loan situations.

Amidst the resumption of loan collections, legal disputes over student loan programs, and job...
Amidst the resumption of loan collections, legal disputes over student loan programs, and job losses within the Education Department, student loan borrowers may find themselves perplexed about the current state of their loans.

Dive into Student Loans: Navigating Borrower Confusion Amidst Collections, Court Orders, and Loan Program Shifts

NEW YORK CITY - With collections resuming, court blockades on student loan programs, and department layoffs, borrowers could find themselves in a whirlwind regarding their student loans' status.

Let's break down the ongoing chaos surrounding the government's income-driven repayment plans.

At the heart of this turmoil are these repayment plans, designed for borrowers with lower incomes, which minimize monthly loan repayments. These plans halted after a federal court obstructed parts of them in February. Expect a bit of complications, as Natalia Abrams, president and founder of the Student Debt Crisis Center, eloquently puts it, "Confusion reigns supreme—they've made it painfully complex."

However, despite the confusion, borrowers looking to enroll in an income-driven repayment plan can apply, even though processing might take longer than usual. Applications reopened on May 10, 2025, and you can choose between the Income-Based Repayment Plan, the Pay as You Earn plan, and the Income-Contingent Repayment plan.

Abrams cautions that the high volume of applications is causing delays in processing. Yet, she anticipates that approved applications will continue to trickle in.

If you're already enrolled in an income-driven plan, keep an eye out for recertification notices, usually requiring annual updates on family size and income. These dates vary for each borrower. To review your options, check out the loan simulator at studentaid.gov.

Since the SAVE plan, a Biden administration plan offering a quicker path to loan forgiveness, faced legal challenges, borrowers enrolled in the SAVE plan have been placed in forbearance, meaning they don't need to make payments, and interest isn't accruing. Time in forbearance generally doesn't contribute toward Public Service Loan Forgiveness. The Education Department will keep borrowers updated regarding payments and litigation.

If you're contemplating merging multiple federal student loans into one, you can use the online loan consolidation form available on studentaid.gov/loan-consolidation. The consolidation typically takes 60 days to complete, and you can only consolidate your loans once.

It's doubtful that the Education Department could reinstate loans that were cancelled during President Biden's administration.

In terms of the Public Service Loan Forgiveness program, no changes have taken effect yet. Although, former President Trump's desire is to disqualify workers of nonprofit groups engaged in "improper" activities from this program, with no enforcement activity thus far.

For keeping track of your status, Abrams advises that borrowers take screenshots of their payments.

Contacting your loan servicer is crucial for managing and understanding your student loans. However, due to the sheer volume of borrowers seeking answers or applying for programs, loan servicers might take a while to respond.

If you're delinquent on your student loans, try to tackle the situation head-on. Once you're delinquent for 270 days, you default, leading to severe consequences. If you're delinquent but haven't defaulted, do whatever you can to avoid defaulting.

To familiarize yourself with potential options, such as forbearance, deferment, or income-driven repayment plans, reach out to your loan servicer.

If you've defaulted, the Education Department advises visiting its Default Resolution Group to discuss monthly payments, income-driven repayment plans, or loan rehabilitation. Borrowers in default can enroll in a loan rehabilitation program, with proof of income and expenses used to calculate a payment amount. After nine months of on-time payments, you can get out of default.

The Fresh Start program, which extended a helping hand to borrowers in default, has expired as of August 31, 2026.

Morga writes for the Associated Press

Additional Reading:

Department of Education Announces Loan Collections on Defaulted Borrowers, Potentially Impacting Millions

Trump Restarts Collection of Delinquent Student Loans after Five-Year Pause - Here's What Your Options Are

Older Americans in the Crosshairs: Social Security Income Garnished for Delinquent Student Loans

  1. Despite the ongoing confusion surrounding government income-driven repayment plans, one can still apply for them, albeit with potential delays in processing due to a high volume of applications.
  2. For those residing in California, UCLA offers various business and personal finance courses that may help in navigating student loan complexities.
  3. The Student Debt Crisis Center, located in Los Angeles, has been advocating for borrowers, providing insights on the frustrating intricacies associated with student loan repayment plans.
  4. If you find yourself in financial difficulties due to student loans, seeking education in fields like science or finance might provide you with career opportunities contributing to higher income, thereby easing your loan burden.
  5. As the government addresses student loan collections and related court orders, the Rams, Los Angeles-based professional football team, continue their successful run in the National Football League, a source of excitement and distraction for sports enthusiasts in the city.

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