Key Points
- President Trump’s executive order to begin dismantling the Department of Education focuses mostly on K-12 oversight and does not immediately affect student loans or college funding.
- Federal Student Aid has extended recertification deadlines for income-driven repayment (IDR) plans including IBR, ICR, and PAYE, giving borrowers more time amid processing delays.
- Credit scores continue to fall for borrowers who’ve missed payments; many are unsure if they owe anything. Only those on the SAVE plan currently have paused payments.
The past week has brought a surge of headlines related to student loans, federal education oversight, and borrower confusion. While the Trump administration took a major political step with an executive order aimed at winding down the Department of Education, the action so far centers on shifting K-12 control to the states.
At the same time, Federal Student Aid moved to ease pressures on borrowers by pushing back upcoming income recertification dates for several income-driven repayment plans. But confusion still lingers, especially for those unsure whether they should be making payments now. The result for some has been missed bills—and lower credit scores.
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Trump’s Order To Wind Down The Department Of Education
President Trump signed an executive order Thursday directing Secretary of Education Linda McMahon to take steps “to the maximum extent appropriate and permitted by law” to dismantle the Department of Education. The order reaffirms the administration’s view that education oversight should rest with the states.
Related: What Abolishing The Department of Education Looks Like Logistically
But when it comes to federal student aid and college financing, the order leaves existing structures in place. While the order criticizes the department’s student loan portfolio and calls out its “bank-like” size, it stops short of transferring that responsibility. The order states that higher education funding and financial aid programs should remain operational and “uninterrupted.”
For now, borrowers should expect no immediate changes to how loans are managed or how aid is distributed. College students will continue to interact with the same systems and servicers, though staffing reductions at the department may continue to slow processing times.
IDR Recertification Deadlines Extended After Weeks of Confusion
In a welcome update, Federal Student Aid announced this week that recertification deadlines for income-driven repayment plans like IBR, PAYE, and ICR will be extended until at least February 2026. The news comes after widespread confusion and frustration as borrowers were unable to submit updated income information due to a system-wide freeze on IDR application processing.
Previously, some servicers had stated they received no instructions from the department to delay recertification deadlines. Borrowers received higher bills as a result, with payments recalculated under the standard 10-year plan due to missing income updates.
This new extension means that affected borrowers should not need to recertify their income or family size until at least next year. However, it may take several weeks for systems to reflect the change. Furthermore, it may take several days before call center representatives have this updated information.
In the meantime, borrowers can cancel auto-pay if their bill has gone up unexpectedly, or request a temporary forbearance until their situation is sorted out.
Missed Payments And Falling Credit Scores Add To Borrower Stress
While millions of borrowers remain in an administrative forbearance under the SAVE plan due to legal challenges, many others are expected to make payments, and some don’t realize it.
Roughly 22 million borrowers have exited forbearance since the pandemic-era payment pause ended. Of those, over 9 million are already delinquent, according to data from VantageScore. The result has been widespread credit damage. Some borrowers have seen their scores fall by more than 100 points.
This situation is made worse by limited communication and staffing cutbacks at loan servicers and the Department of Education. Many borrowers are uncertain whether they owe anything, or if their account is part of the SAVE plan’s automatic forbearance.
It’s critical for borrowers to log in to their loan servicer’s portal or StudentAid.gov to confirm their repayment status. Those who missed payments should ask their servicer about retroactive forbearance or request that late marks be removed as a one-time courtesy. Not all requests will be approved, but it’s worth trying.
What Borrowers Should Do Now
There are a lot of moving parts right now with student loans, and the key to staying on top of things is being organized with your student loans.
- Check your loan status: Log in to your servicer’s account and StudentAid.gov to see if you’re in repayment or in an active forbearance.
- Watch for billing: Make sure you understand when your payments may be due and what amount.
- Monitor your credit: If you’ve missed payments, check your credit reports. You can request a free report weekly at AnnualCreditReport.com or sign up for a free credit monitoring service.
- Reach out if you’re unsure: Call your servicer for clarification, even if hold times are long. Getting accurate information is worth the effort.
Right now, the key is simply knowing your own situation. Your loan situation may not be the same as your neighbors, or what you're reading on Reddit. Check your own accounts, and know what applies to you.
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Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.