As the end of the year approaches, federal student loans are undergoing unprecedented changes. New legislation passed by Congress is already impacting repayment and student loan forgiveness, and even bigger changes will start taking effect starting next year.
If you have student loans, now is the time to take stock of your options and start considering what you may have to do in the coming weeks and months. In some cases, borrowers may have only a limited time to act. Here’s what borrowers should take action on before the end of 2025.
Check Student Loan Status And Download Key Records
Many borrowers have not had to make payments on their student loans in years due to the pandemic-era forbearance period followed by temporary flexibilities extended under the Biden-Harris administration. But those flexibilities have ended, and student loan repayment has resumed.
Borrowers may not be receiving timely notices of repayment obligations or other important correspondence if they have moved during the last few years, or haven’t updated their contact information. Take the following steps to ensure everything is in order:
- Log into your StudentAid.gov account, which will provide key information on your student loans including your balance, your loan servicer, your loan status, and your student loan forgiveness progress.
- Update any contact details that are out of date, including your email address.
- After confirming who your student loan servicer is, log into your online loan servicer account to see if any payments are due, and whether any important notices or correspondence are in your online account inbox.
While you’re logged into your accounts, take screenshots and download key records for safekeeping. You may never need them, but given the near-constant changes to federal student loan systems and the possibility of loan servicing transfers (which can result in lost records), it’s generally good practice to periodically download and retain key student loan records.
Get Your Student Loan Out Of Delinquency Or Default
The federal student loan collections apparatus is getting back up and running after years of being shut down. More than five million borrowers are in default on their federal student loans, and that number is expected to double by the end of the year, according to the Department of Education. That means that one in four borrowers could be in default on their student loans by the time the dust settles – an astounding figure.
Defaulting on federal student loans can have serious consequences including negative credit reporting, the denial of new federal aid, and administrative collections efforts including the seizure of federal tax refunds and wage garnishment. The Department of Education had expected to resume wage garnishment activities by the end of the summer, but operational issues have led to delays. Borrowers who are nearing default or have already defaulted should take this opportunity to fix their situation if they can before wage garnishment begins, as garnishment may make it more difficult and expensive to get their federal student loans back into good standing:
- Borrowers who are behind on student loan payments or are recently defaulted should contact their loan servicer to determine their options for returning to good standing. This could involve requesting a retroactive forbearance to cancel out the past-due status, applying for an income-driven repayment plan, or a combination thereof.
- Borrowers who are already in default on their federal student loans and whose loans are now being handled either by a guaranty agency or the Department of Education’s Default Resolution Group or Default Management and Collections System should explore options for restoring their loans to good standing, such as through rehabilitation or Direct loan consolidation. They should also evaluate whether they may qualify for an administrative discharge.
Student Loan Borrowers In SAVE Plan Should Consider Switching
Borrowers who are still stuck in the SAVE plan forbearance should consider applying for a different income-driven repayment plan. The time spent in the forbearance still does not count toward student loan forgiveness under IDR plans or under Public Service Loan Forgiveness, or PSLF. In addition, the Trump administration restarted interest accrual for SAVE plan borrowers in August, causing loan balances in the forbearance to balloon. And under a recent settlement agreement to resolve a variety of IDR-related issues, the Department of Education has indicated that borrowers enrolled in SAVE who have reached the 20- or 25-year threshold for student loan forgiveness must apply to switch to a different IDR plan by December 31, 2025 to avoid potential tax liability associated with IDR loan forgiveness starting next year.
Currently, borrowers can apply to switch to ICR, IBR or PAYE, depending on eligibility. ICR and PAYE will be phased out by July 2028 under legislation passed by Congress earlier this summer, but borrowers can still enroll in those plans for now.
Start Considering New Student Loan Repayment Plan
The legislation passed by Congress earlier this summer also will create a new income-driven option called the Repayment Assistance Plan, or RAP. That plan is expected to become available later in 2026.
The Department of Education recently finalized a rulemaking process for RAP, so the details of the plan are becoming more clear. RAP will have a number of benefits including affordable payments and an interest subsidy that will prevent student loan balances from ballooning. But RAP will also have a minimum monthly payment requirement (which will make it more expensive for low-income borrowers) and a 30-year repayment term for student loan forgiveness. Borrowers should take the time now to start evaluating the pros and cons of RAP so that they can make an informed decision when the plan goes live next year.
Some Student Loan Borrowers Should Consider Reapplying For IBR
Student loan borrowers who previously applied for the IBR plan but haven’t been able to enroll may want to consider reapplying.
Those who applied before the summer, or borrowers who submitted a paper application or who manually uploaded their tax return into the online IDR application system, may experience faster processing by resubmitting an online IBR request and consenting to link to an IRS tool that automatically imports income data, says the Department of Education.
In addition, student loan borrowers who were denied access to IBR because they do not have a “partial financial hardship” are invited to reapply for IBR under a recent settlement agreement with the Department of Education over improperly rejected IBR applications. Under the agreement, the department will hold onto these IBR requests until they are able to update their systems to reflect the removal of the partial financial hardship requirement.
“We encourage borrowers who applied for the IBR Plan and were denied due to lack of partial financial hardship before we instructed servicers to hold these applications to reapply,” says Education Department guidance issued earlier in November.
Certify Employment For Student Loan Forgiveness Under PSLF
Now is a good time to certify employment for the PSLF program. PSLF allows for student loan forgiveness in as little as 10 years for borrowers who make payments on their student loans while working full-time as an employee for nonprofit or government organizations. The only way to get payments “counted” toward loan forgiveness is to periodically certify your employment, which can be done online at StudentAid.gov.
The Trump administration is moving forward to implement new rules that could restrict student loan forgiveness under PSLF based on an organization’s activities. Those proposed new regulations are currently being challenged, but it is too soon to know how those legal challenges may play out. If the rules aren’t blocked, they will go into effect next summer, but the restrictions won’t be retroactive, and no PSLF credit would be clawed back. Certifying employment now can help borrowers continue to work toward student loan forgiveness before the new restrictions become effective.
Student Loan Borrowers With Parent PLUS Loans Should Consider Consolidation
Student loan borrowers who have Parent PLUS loans are on a time crunch, as the recent legislation passed by Congress will limit the ability of Parent PLUS borrowers to access income-driven repayment and student loan forgiveness. Under the new rules, Parent PLUS borrowers must consolidate their Parent PLUS loans by July 1, 2026, and enroll in the ICR plan and make at least one payment under ICR by July 1, 2028, in order to be eligible to switch to the IBR plan. All other Parent PLUS borrowers would be cut off from affordable payments and loan forgiveness.
“Borrowers who must consolidate in order to access the IBR, ICR, and PAYE Plans must have their consolidation loan disbursed no later than June 30, 2026, in order to access IBR, ICR, and PAYE,” says the Department of Education in guidance published on its website. “Borrowers who must consolidate their Parent PLUS loans in order to access IBR and ICR don’t need to be enrolled in ICR before June 30, 2026, in order to eventually access IBR. Borrowers who receive disbursements on new loans or on a new consolidation loan on or after July 1, 2026, won’t have access to IBR, ICR, or PAYE even if they were previously enrolled in any of those plans. We strongly encourage borrowers who must consolidate their loans in order to access the IBR, ICR, and PAYE Plans to apply for their consolidation loan at least three months before July 1, 2026, to ensure that their consolidation loan is disbursed before July 1, 2026.”
Importantly, combining existing federal student loans with Parent PLUS loans through a single consolidation could limit a borrower’s repayment options. But failing to consolidate Parent PLUS loans by the cutoff date could also be disastrous, and could cause a borrower to lose access to affordable payments or pathways to student loan forgiveness. Now is the time for Parent PLUS borrowers to carefully evaluate their options and make sure they do what is needed before the applicable deadlines.