Three years on from the pandemic-era pause on student loan payments, and the student debt system is even more broken than before, says Debt Collective, a membership-based union for debtors and allies.
“It’s clearer than ever that the federal government’s many administrative failures have caused real, immediate, and irreparable harm to millions of student debtors,” they recently told supporters while calling on the Trump administration to pause all federal student loan payments.
The US student debt system is undergoing a massive, chaotic overhaul following the judicial termination of the SAVE plan and the implementation of the Working Families Tax Cuts Act (also known as the “One Big Beautiful Bill” or OBBB).
Millions of borrowers face rising delinquencies, confusing transitions, and stricter borrowing limits. Delinquency rates have surged past 25% for borrowers with active payments due.
Debtors are receiving conflicting deadlines with severe consequences. Between loan servicers, StudentAid.gov, and the Department of Education, debtors are being pressured to switch out of the affordable SAVE plan to more expensive repayment options before they are legally required to do so.
Switching to another repayment plan could double or even triple debtors’ monthly payments, but accurate information about what’s happening on the Student Loan front is difficult or impossible to find.
Loan servicers can’t transfer accounts without making basic errors. The Consumer Financial Protection Bureau, an independent agency of the United States government responsible for consumer protection in the financial sector, has found one of every five accounts transferred between servicers has missing or inaccurate payment histories, incorrect billing statements, and even lost progress towards debt cancellation.
Debt Collective organizers say millions of debtors cannot access accurate payment histories, delaying their progress towards loan cancellation under Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) programs.
After firing more than half their staff last year, the US Department of Education has failed to respond to thousands of complaints submitted by debtors to the Office of Federal Student Aid (FSA).
Meanwhile, more than 530,000 debtors who applied for a new income-driven repayment plan are still waiting to be enrolled, and thousands more are waiting on the PSLF and IDR debt cancellation they’re owed.
The rules keep changing. The Department of Education wants debtors to consider unstandardized repayment plans without clarifying eligibility, ability to enroll, and payment amounts.
Under the OBBB affordable plans like PAYE and REPAYE should be available to debtors through July 2028, but servicers are currently preventing enrollment in these plans.
For these reasons and more, Debt Collective is calling on the Trump administration to pause all monthly federal student loan payments until debtors have access to complete, timely, and accurate information about their repayment options; and protect debtors during the payment pause by counting months towards debt cancellation and setting the interest rate on federal student loans to 0%.
You can learn more about Debt Collective here.
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