The Department of Education is making its student loan collection on-ramp a little longer, announcing that it will start reporting late or missed student loan payments to credit bureaus in early 2025, a delay from the originally planned start date this month. This pushes the start of mandatory collections “and other consequences” as the department put it, into late 2025 at the earliest. The timing of the announcement was called into question when it was made less than a month before the presidential election.
Driving the news: The student loan repayment “on-ramp” was introduced a year ago as a way to ease borrowers back into making payments after a three-year pandemic-era payment pause. The on-ramp delayed the reporting of late payments and initiation of collection activities for up to a year. It also reset anyone who was delinquent or in default on their student loans back to being in good standing.
- Now, in January 2025, the department will begin reporting late or missed payments for most federal student loans to national credit reporting agencies, and loans may enter default.
- The consequences of default include mandatory collections, such as tax refund offsets and the withholding of federal benefits — escalating collection activity come the end of 2025.
The big picture: Even with government interventions like income-driven repayment plans and loan forgiveness initiatives, millions of borrowers are still struggling to afford monthly payments.
Among the options being presented to individuals who are at risk of falling behind on their student loan payments are:
- Applying for loan forgiveness
- Consider changing repayment plans
- Applying for an IDR plan in order to be placed into a processing forbearance for up to 60 days. Borrowers whose applications have not been processed within 60 days will then be moved from the processing forbearance into a general forbearance during which they are not required to make payments and interest does not accrue.
- Request forbearance or deferment
- Make repayment arrangements
