To deal with student loans is to wade through a quagmire of red tape on a regular basis, but in recent months, the system has fallen to new depths of chaos. “We’ve been hearing from borrowers who have seen debts that were canceled two years ago suddenly reappear on their credit reports,” says Mike Pierce, the executive director and co-founder of the Student Borrower Protection Center. “The infrastructure has been breaking down.”
The reasons for this are complicated, but the situation will almost certainly get worse before it gets better — if it gets better at all. While key components of Joe Biden’s student-loan plan languish in the courts, Trump has floated the idea of closing the Department of Education entirely (which he doesn’t have the authority to do — it would take an act of Congress, so who knows what will happen).
How can student borrowers navigate this fresh hell? It’s hard to say for sure, but there are ways to protect yourself when the federal student-loan system seems to be teetering on the edge of catastrophe. We spoke to student-loan experts to answer your questions.
Why are so many student borrowers seeing errors and disparities in their accounts right now? Is it Trump, or DOGE, or something else?
Most of these issues have nothing to do with White House policy, says Pierce. The problems have more to do with student-loan repayments restarting en masse last year. “A bunch of changes happened with the contractors who handle student loans in 2024, and they were supposed to have been fully implemented by the time President Trump took over,” he explains. But these loan-servicing systems are clunky and often poorly run, and many borrowers are just now seeing the downstream effects of errors that were triggered when the student-loan pause ended. “Millions of people are seeing information on their credit report about their loans for the first time since before the pandemic, and in some cases it’s wrong,” he says. “The current administration may not be doing anything to help, but these errors are not the direct result of any actions they took, either.”
What does this week’s court ruling, which blocked part of Biden’s student-debt-relief plan (known as SAVE), mean for student borrowers who had signed up for it?
Roughly 8 million people are enrolled in Biden’s SAVE plan, which aimed to lower monthly student-loan payments for millions of borrowers and speed up forgiveness for some. But before major parts of the program took effect last summer, several judges filed injunctions to block them. On Tuesday, an appeals court upheld the injunction — bad news for borrowers who were hoping to get some relief from the program.
This ruling is not a surprise. “I think we were all under the impression that SAVE was sunk,” says Betsy Mayotte, the president and founder of the Institute of Student Loan Advisors, a nonprofit that provides free student-loan advice. “With that said, it was troubling to see this court agree that the Education Department doesn’t have the authority to forgive loans under income-driven repayment, pay-as-you-earn, or SAVE plans.” In other words, certain borrowers that have been working toward debt forgiveness through those plans may now find themselves in the devastating position of no longer being eligible for debt cancellation. Basically, the goalposts have changed.
“We already expected borrowers on SAVE to eventually have higher payments,” says Mayotte. For SAVE plan borrowers who are currently in forbearance, there’s no change to the current timeline — you won’t have to make payments until September. “The best thing borrowers can do right now is to see what their payment would be under the other plans that are available, and budget accordingly,” says Mayotte. “Those plans will still exist — just perhaps not the forgiveness part.”
My loans were forgiven, but now they’re showing up again on my credit report. What do I do? Do I still owe that money?
No, you don’t! Don’t panic. “Borrowers who have gotten their loans forgiven because of PSLF, or because they were defrauded by their college, are debt-free under established law,” says Pierce. “There’s bipartisan consensus on this. Judges appointed by President Trump have said that once the Department of Education cancels a debt, they can’t reinstate that debt, and we’ve seen nothing from this new administration that suggests they’re questioning that principle.”
Then why did your loans resurface? It’s a glitch, says Pierce. He’s seen it mostly happen to people whose student-loan servicer is MOHELA, although it may happen with others. “This is not a policy change from the White House; it’s just a problem happening with a student-loan company’s system.”
If it happens to you, the first step is to dispute it as an error on your credit report, which you should do directly through the credit-reporting agency (see the steps here). “It’s important to frame the problem you’re experiencing as inaccurate information on your credit report. It’s a mistake,” says Pierce. Credit-reporting agencies operate independently from the government, and it’s part of their job to remove errors.
If you want to take things a step further, you should also lodge a complaint with your congressional representatives. “Historically, that’s not something we would have suggested,” says Pierce. “We would recommend that people contact the Department of Education or the Consumer Financial Protection Bureau to submit a complaint. But right now, those agencies are being ripped apart, so if something goes wrong with your student loan, you should reach out to your elected official.”
There’s an error on my student-loan account, and I can’t seem to get it fixed. What should I do?
Over the past several weeks, a number of student-loan borrowers have noticed errors or even blank pages when they check their government student-loan account. This is worrisome! But remember that you can also double-check your accounts and dispute errors through your loan servicer. “If you’re struggling with the government website, you can go to your servicer website to find your loan information there, too,” says Natalia Abrams, the president and founder of the Student Debt Crisis Center, a nonprofit that helps student borrowers advocate for themselves. “We recommend to all borrowers that they get familiar with their repayment plan, learn who their student-loan servicer is, what their balance is, and check their accounts regularly in case of disparities.”
If your loan servicer can’t clear something up for you, then your next stop is the Office of the Ombudsman at the Department of Education. But this is where things are looking dicey. “In the past, if a borrower noticed something wrong with their account and believed that their servicer didn’t address it correctly, then they could file a complaint with the ombudsman and get it reviewed,” says Mayotte. “If the borrower was correct, the ombudsman would get it fixed, and if the borrower wasn’t correct, the ombudsman would explain why.” However — prepare to be shocked — the office of the ombudsman is not exactly responding to complaints in a timely fashion these days.
“I know the office is understaffed and they have a big backlog, and it’s unclear whether this administration will staff it back up or not,” says Mayotte. (We can probably take a guess, though.) “I am concerned that if they don’t restaff the unit, borrowers won’t have anywhere to go when they need to dispute an error.”
It’s hard to offer advice here, says Abrams. “Borrowers are telling us that they have not received responses from the ombudsman regarding their complaints. So I don’t want to give false hope,” she adds. “We’re worried about this, and nonprofits and attorney groups are doing their best to see where they can take action.” If you have a case that you need help with, contact the Student Debt Crisis Center, the Institute of Student Loan Advisors, and the Student Borrower Protection Center for next steps.
I’ve heard that I’m supposed to document all of my loan terms and payments by taking screenshots, just in case. How will that help?
It’s unclear, says Mayotte. But it definitely never hurts to keep accurate records of your payments, especially if you’ve ever switched providers or you’re trying to qualify for federal student-loan cancellation, which requires you to make payments on time. Loan servicers that collect your payments often make errors in payment records, so it’s essential to check on them regularly.
“I encourage everyone to review their account thoroughly every year during tax season,” says Mayotte. “You’ve had to gather all the information anyway. So while you’re at it, take a look at your account, and see if there are any new student-aid programs that might be more beneficial to you now.”
What will happen to my student loans if the Department of Education no longer exists?
Again, it’s unlikely that the Department of Education will be shuttered completely, says Mayotte. Linda McMahon, whom Trump has nominated to lead the Department of Education, testified in her confirmation hearing last week that she supports deep cuts but will work with Congress to enact them. And no matter what happens, student loans aren’t going away.
“Even if the Department of Education is dismantled, student loans would just be transferred to another department, most likely the U.S. Treasury,” says Mayotte. “But that doesn’t mean the loan terms would change. A lot of people are worried that their interest rates and payment options will become less favorable, or that Public Service Loan Forgiveness will be gone. But that won’t be the case.” For what it’s worth, McMahon testified that she would honor existing Public Service Loan Forgiveness programs, which have bipartisan support.
In short, if you have existing student loans, the Trump administration probably won’t do much to mess with them explicitly. The federal government outsources most of the work to service student loans — like sending bills, managing accounts, tracking monthly payments, processing loan forgiveness, and reporting late payments — to third-party vendors whose contracts have nothing to do with who is president, says Pierce. “Most functions across the student-loan system are actually done by private-sector financial firms,” he explains. “Those services won’t change.”
I am currently in forbearance and I’m worried that I won’t be able to afford my payments once they restart. What should I do?
Start researching your options as soon as possible. “Many people are under forbearance right now, especially if you were enrolled in the SAVE plan, and you don’t want to wait until your forbearance period ends to see what happens if you can’t make your payments,” says Mayotte. And if no one’s home at the Department of Education, you won’t have anyone to help you.
Your options might seem limited, but they are much better than sticking your head in the sand. “I hear from borrowers all the time who say they can’t afford to pay, so they’re just going to default,” says Mayotte. “But if you can’t afford the lowest payment that you’re eligible for now, you’re really not going to be able to afford the loan when it defaults.”
Consider the math: “Right now, there are payment plans that allow borrowers to pay less than 10 percent of their adjusted gross income. But if you default, collection agencies will garnish 15 percent of your gross income — and they’ll add up to 24 percent collection costs,” she explains. So your loan balance will go up, as well as your monthly payments, and the money will be taken straight from your wages without any wiggle room. “I guarantee you that defaulting is going to be worse for your finances, both in the near and long term, than choosing one of the federal student-loan options available to you today,” says Mayotte. Again, these options may not be what you want. But the sooner you know about them, the better off you’ll be.
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