The new year marks a new chapter for federal student loan borrowers. As the White House transitions from President Joe Biden’s administration to President-elect Donald Trump’s, a few key updates will impact borrowers. It’s not certain what changes may come under the second Trump administration, but with ideas like the closure of the Education Department on the table, borrowers will want to keep an eye on the news for updates. Here’s what we know borrowers can expect in the coming year.
1. Credit impacts for missed payments and defaults are back
Following the expiration of Biden’s repayment on-ramp in October 2024, student loan servicers have been able to resume reporting late and missed payments to credit agencies. And as of this month, servicers are able to resume collecting on defaulted loans through wage garnishments. The on-ramp formally expired in October, but the Biden administration gave borrowers an extra few months before allowing these collection activities to resume, Politico reported. Ideally, you can make your student loan payment in full and on time each month. But if you do miss a payment or can’t pay, you’ll want to reach out to your servicer as soon as possible to see what options you have to avoid the harshest consequences. Loans are delinquent the day after a missed payment, and after 90 days your servicer will report the delinquency to the credit reporting agencies. After 270 days of nonpayment, your loan will enter default. At that point, the entire balance comes due immediately and you could be subject to wage garnishments or the seizure of your tax refund or other federal benefits.
2. Broad debt forgiveness isn’t happening, but some pathways are still open
Borrowers hoping for a last-minute act from Biden to forgive debt may have been disappointed to learn that wasn’t happening. The Biden administration was in the final stages of implementing rules to allow the Secretary of Education discharge loans for long-term borrowers and those facing a variety of financial hardships. However, the Biden team withdrew those plans altogether in December. It was unlikely the Trump administration would finish the process and enact the forgiveness anyway. The Biden administration cited
What to know about student loans before the White House transition
