Student loan defaults rising, what to know about repayment plan changes

Student loan repayment plan changes: What to know

Defaults on student loans are continuing to rise and the Department of Education says millions of borrowers are falling behind on student loan payments. Many changes to repayment plans has left borrowers confused and Consumer Reporter Heather Sullivan breaks down what's happening.

HOUSTON - Defaults on student loans are rising fast. The U.S. Department of Education says millions of borrowers are falling behind on student loan payments and that number could double by the end of the year.

This comes as changes to student loan repayment options have come down from the courts, the Trump administration, and Congress, leaving many borrowers confused and with fewer options.

Student loan repayment issues

The Federal Reserve Bank of New York reports delinquencies have jumped to more than 10% of student loan debt, and could rise to 25% by the end of the year.

Defaults are now in collections after being paused for five years.

Loan repayment plan changes to know

What we know:

Interest resumed Aug. 1 for SAVE Plan borrowers, even though they've been in forbearance for a year while legal challenges to the plan worked through the courts.

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Many of those borrowers have applied to switch to a different payment plan, but 1.5 million are stuck in a backlog, according to the Department of Education.

Student loan forgiveness under SAVE, ICR, or the Pay As You Earn plans remains paused due to a court order. Forgiveness through Income-Based Repayment is blocked while the Department of Education says systems are being updated to accurately count the months that people have made payments.

"There are borrowers in the SAVE plan who are close to getting forgiveness, who want to get out of the SAVE plan and they can’t. There are borrowers who won’t be able to afford any of the repayments under any of the plans. They’re just scared and worried about how they will afford rent, groceries, medical bills, child care," said Khandice Lofton with the Student Borrowers Protection Center.

President Trump's One Big Beautiful Bill, which he signed into law in July, is making big changes to student loan repayment plans.

IBR will only be available to current borrowers. The SAVE, PAYE, and ICR plans will be phased out.

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People who consolidate their loans, or take out a new federal loan after July 1, 2026, will only be able to access the Repayment Assistance Plan. This is a new income-driven repayment plan that requires 30 years of payments before forgiveness.

What you can do:

Borrowers can get more information on their loans and repayment options at StudentAid.gov or by contacting their loan servicer. They can also reach out the Student Borrower Protection Center, the National Consumer Law Center, and their congressional representative's office for help.