(C) Common Dreams
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Trump administration restarts student loan collections for millions in default after years-long pause [1]

['Annie Nova']

Date: 2025-05-05

A person walks on campus at Muhlenberg College in Allentown, Pennsylvania, U.S. March 26, 2025. Hannah Beier | Reuters

Borrowers face plan changes, long waits for help

Collection activity on federal student loans has mostly been paused for half a decade. During that period, there have been sweeping changes and disruptions to the lending system. Millions of borrowers who signed up for the Biden administration's new repayment plan, known as SAVE, were caught in limbo after GOP-led lawsuits managed to get the plan blocked in the summer of last year. Many of those borrowers will now have to switch out of a Biden-era payment pause and into another repayment plan that will spike their monthly bill. In recent months, the Trump administration has eliminated the forgiveness provision from some student loan repayment plans.

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It also terminated staff at the Education Department, including many of the people who helped assist borrowers. Now some student loan borrowers report waiting hours on the phone before being able to reach someone about their debt. (The Trump administration has told defaulted borrowers to contact the department for options on getting current.) "The timing of the layoffs is unfortunate, given the need for borrowers to get help," said higher education expert Mark Kantrowitz, who added that he's heard from people stuck waiting on hold as long as eight hours to speak with someone at the department or their loan servicer.

Borrowers in default may see credit scores decline

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[1] Url: https://www.cnbc.com/2025/05/05/student-loan-collections-restart-for-borrowers-in-default.html

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