On May 5, 2025, the U.S. Department of Education (DOE) issued a “Dear Colleague Letter (DCL)” to institutions of higher education reminding them of their shared responsibility under Title IV of the Higher Education Act of 1965 to support student loan borrowers.
The DOE issued guidance on the same day it resumed involuntary collections on student loans, which had been paused since the beginning of the COVID-19 pandemic.
According to the DOE, only 38% of Direct Loan and Department-held Federal Family Education Loan Program borrowers are in repayment and current on their student loans. The DOE estimates that 25% of the entire portfolio is either in default or a late stage of delinquency. Given these challenges, the DOE is taking immediate steps to engage student borrowers and support the repayment of their federal student loans, including:
- Resumption of collections on defaulted federal student loans through the Treasury Offset Program and Administrative Wage Garnishment.
- An outreach campaign to remind borrowers of their repayment obligations and provide resources to assist them in selecting the best repayment plan.
- Launch of an enhanced income-driven repayment plan process to simplify enrollment and eliminate the need for many borrowers to manually recertify their income each year.
The DOE noted the integrity of the loan programs has always been a shared responsibility among student borrowers, the DOE and participating institutions. Although borrowers have the primary responsibility for repaying their student loans, institutions play a key role in the DOE’s ongoing efforts to improve loan repayment outcomes. The DOE outlines the role of the institutions as:
- Institutions are responsible for providing clear and accurate information about repayment through entrance and exit counseling.
- Institutions must disclose annual tuition fees and net prices to students and their families.
- Institutions are required to keep their cohort default rates low to maintain eligibility for federal student assistance.
The letter also urges all institutions of higher education that receive federal funding assistance to reach out to all former students to remind them of their obligation to repay any federal student loan that is not in deferment or forbearance, and that they do so before June 30, 2025. The DOE also notes that it maintains data on the repayment status of federal student loan borrowers and provides information in the College Scorecard about the status of each institution’s borrowers after they enter repayment. The DOE plans to use the data to calculate rates of nonrepayment by institution and will publish the information on the Federal Aid Data Center later this month.
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