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The U.S. Department of Education (ED) has a nearly $1.7 trillion loan portfolio with about seven million borrowers in default. ED and the U.S. Department of Treasury (Treasury) recently announced a Federal Student Assistance Partnership to enhance the administration of the federal student assistance programs.
- Treasury will assume operational responsibility for collecting defaulted federal student loan debt and provide support to ED’s efforts to return borrowers to repayment.
- In the future, Treasury will work to provide operational support over non-defaulted federal student loan debt while also seeking opportunities to provide operational support to Federal Student Aid’s (FSA) other functions.
- All existing federal student aid systems will remain in place and will continue to be administered in accordance with applicable statutory requirements. FSA and Treasury will continue to communicate with colleges and universities through existing FSA Knowledge Center.
- Borrowers will not need to take additional action and must continue to repay their student loans and work with their assigned loan servicer for any questions or assistance.
- ED and Treasury have provided a Federal Student Assistance Partnership fact sheet regarding this partnership.
In late February, a judge dismissed the case to end the Saving on a Valuable Education (SAVE) repayment plan, stating no ruling was needed since both parties (Missouri and ED) were in agreement to end the plan. This ruling caused continued confusion, leaving SAVE borrowers in limbo on next steps. Shortly after the news of the case’s dismissal, a Federal appeals court officially ordered the end of the SAVE plan.
- SAVE borrowers have been in administrative forbearance since summer 2024. During this forbearance, interest is accruing (since August 2025), and the time does not count toward student loan forgiveness.
- Roughly 7.2 million borrowers were still enrolled in the forbearance as of December 2025.
- Undersecretary of Education Nicholas Kent issued a comment regarding the ruling, “In the coming weeks, the Department will issue clear guidance on next steps for borrowers enrolled in the illegal SAVE Plan, including details regarding how borrowers can move into a legal repayment plan.”
- Experts say SAVE borrowers should do the following in preparation for ED’s forthcoming communications about next steps:
- Log into their online accounts at both studentaid.gov and their loan servicer’s website to check their current loan status and update contact information.
- Compare other repayment plan options. Borrowers can use ED’s online Loan Simulator Tool.
- Consider if ED’s Public Service Loan Forgiveness Buyback opportunity is an option to have the time in forbearance count toward PSLF.
Are Your Loans Nearing Default?
Loans enter a delinquency status the first day after a missed payment. Below are three tips to help prevent entering loan default:
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Check your loan status. Borrowers may be at risk for future wage garnishment if the loans have been moved to ED's collection agency, the Default Resolution Group. Log into your online account at your loan servicer’s website to check the loan balance is listed and active. If you are unsure who your loan servicer is, you can look it up by logging into studentaid.gov, navigating to your “Dashboard” and then the “My Loan Servicers” section.
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Explore different repayment options. You may be eligible for a more affordable payment plan based on your income. You can apply for an income-driven repayment plan online.
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Apply for a deferment or forbearance. Both options would put a temporary pause to repayment for a period of time. You can apply online through your loan servicer.
Are Your Loans in Default?
Loans enter default after 270 days have passed without making a loan payment. There are three ways to get out of default:
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Pay the loan in full. Contact the Default Resolution Group or visit myeddebt.ed.gov to confirm the amount owed.
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Rehabilitate the loan. Loan rehabilitation involves making nine consecutive, on-time payments based on income. This option takes longer to get out of default but can save on overall collection costs.
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Consolidate the loans. Consolidation combines multiple loans into one loan with new loan terms. Once the consolidation is complete, the borrower is eligible for lower monthly payments, and the loan status is restored to good standing. Borrowers can apply for loan consolidation online.
More information on getting out of default and comparing your options is available at studentaid.gov.
Interested in learning more about borrowing student loans and student loan repayment? Sign up for a free webinar!
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