Tip of the Week

The Department of Education is extending an urgent “ask” of colleges to help with default prevention.

In a May 5 Electronic Announcement the Department of Education reminds schools that the federal student loan programs are a shared responsibility between student borrowers, the Department, and participating schools, with borrowers having the primary responsibility for repaying their loans.

The Department requests that colleges provide the following information to all borrowers who ceased enrollment at the school since January 1, 2020, and for whom they have contact information:

• Remind the borrower that he or she is obligated to repay any federal student loans that have not been repaid and are not in deferment or forbearance;
• Suggest that the borrower review information on StudentAid.gov about repayment options; and 
• Request that the borrower log into StudentAid.gov to update their profile with current contact information and ensure that their loans are in good standing. 

The Department has requested that schools contact borrowers by June 30, 2025. Mapping Your Future has created a flyer to help schools with this communication effort. Schools can customize the flyer by adding their logo and contact information on the lower right side.

In the announcement, the Department said schools are responsible for providing clear and accurate information about repayment through entrance and exit counseling and when disclosing annual tuition and fees and the net price of a college education.

Schools are required to keep their cohort default rates (CDR) low, otherwise they face losing eligibility for federal student aid programs. With the end of the repayment pause in October 2023, the CDR rates published in 2026 will include borrowers who entered repayment in 2023 and defaulted in 2023, 2024, or 2025.

It was previously announced that collection on defaulted student loans would resume on May 6, 2025, including the restart of the Treasury Offset Program. Default or late-stage delinquency makes up almost 25% of the student loan portfolio.

The Department of Education estimates that only 38% of Direct Loan and Department-held Federal Family Education Loan Program (FFELP) borrowers are in repayment and current on their student loans.

Later this month the Department plans to calculate rates of nonpayment-by-institution that will be published on the Federal Student Aid Data Center. More information on this publication process will be released soon.

– By Marlene Seeklander