NEWS & BLOG
EDCAP’s Student Loan News Updates & Insights: March 27th, 2025
Join Our Upcoming Webinar on Weathering the Storm:
Attend our free webinar on April 9th at 12 PM ET for the latest updates, including recent executive orders, layoffs, and a live Q&A with student loan experts! We will also discuss Income-Driven Repayment plan options, Public Service Loan Forgiveness and loan management tips.
Executive Order to Shut Down the Department of Education
The President issued an Executive Order (EO) instructing the Secretary of Education, Linda McMahon, to facilitate the closure of the Department of Education. The EO also directs the withholding of federal funding for schools supporting DEI programs deemed to be in violation of anti-discrimination laws and promoting gender ideology. If implemented, this could significantly impact higher education.
Student Loans to Move to the Small Business Administration (SBA)
The President announced that federal student loans will be managed by the SBA, but legal challenges may delay the transition.
Key Takeaways for Borrowers:
- The transition will take time and may cause servicing and processing delays.
- Student loans are not being discharged, and collections on defaulted loans will continue.
- Missing payments for 90+ days will be reported to credit bureaus, impacting credit scores.
Regularly save loan records, including details from StudentAid.gov, payment history, key notifications, and PSLF/IDR tracker screenshots.
Public Service Loan Forgiveness (PSLF) Executive Order
A new Executive Order seeks to redefine which agencies qualify for PSLF, targeting those violating federal laws on immigration, terrorism, child abuse, discrimination, or state tort laws. PSLF rules remain unchanged for now, and most government and 501(c)(3) employees are protected unless Congress acts. The order mainly affects non-501(c)(3) nonprofit employees who qualify under regulations.
IDR Applications Restored, Processing Still Paused
The American Federation of Teachers (AFT) sued the Department of Education over the blocking of IDR plans and PSLF access. Following a recent court hearing, ED has reinstated online IDR applications, but processing remains on hold. More updates to come.
Updated FSA Guidance on IDR Recertification
FSA provided updated guidance regarding IDR recertifications. Read the guidance carefully and monitor your servicer accounts.
For Recertifications Due on or Before February 20, 2025:
- Submitted and processed before Feb. 20, 2025: No impact.
- Submitted by Feb. 20, 2025, but not processed: Recertification extended by one year—no action needed.
- Not Submitted by Feb. 20, 2025: Payment temporarily recalculated without income and family size. Submit a new IDR application to adjust your payment.
For Recertifications Due on or After February 21, 2025:
- Recertification is extended by one year—no action required.
- Some borrowers may see incorrect payment amounts; servicers are actively working on corrections.
Next Steps for Borrowers
If your servicer asks you to recertify, contact them for guidance. Failure to recertify typically resets payments to the standard 10-year plan rate but does not remove you from your IDR plan.
Update on Total and Permanent Disability (TPD) Discharge Application Process
The TPD discharge application process is transitioning to ED, and FSA has updated its submission guidelines. Borrowers can now submit their applications online. For detailed instructions, visit the TPD information page.
Once you submit your application, closely monitor your account to ensure timely processing. For additional assistance, you can contact customer support at 1-888-303-7818.
IRS and ICE Nearing Agreement to Share Tax Data
The IRS and ICE are reportedly close to finalizing an agreement to share tax data for deportation purposes. Currently, families using Individual Taxpayer Identification Numbers (ITINs) for FAFSA purposes cannot link their accounts to the IRS, keeping the systems separate for ITIN users and those who do not file taxes. However, with this development, mixed-status families may be even more concerned about applying for FAFSA. Learn more.
FAFSA Application Update
As of March 17, 2025, 8 million students have submitted FAFSA forms for the 2025-2026 academic year, a 50% increase from last year. If you’re pursuing higher education in New York State, be sure to also utilize the Tuition Assistance Program.
Filing Complaints
Due to the recent reductions in the FSA Ombudsman team and the CFPB, the Student Borrower Protection Center has provided resources for borrowers seeking to file complaints through their elected officials. See the Congressional Casework Tool for more information. As a reminder, if you live in New York, you can also file a complaint with DFS.
