GAO Study Examines How ED Communicated the Return of Student Loan Repayment to Borrowers
By Maria Carrasco, NASFAA Staff Reporter
A new study from the Government Accountability Office (GAO) looks at how the Department of Education (ED) communicated with borrowers about resuming student loan payments and temporary relief options following the three-and-a-half year payment pause.
The payment pause on federal student loans – which began in March 2020 – formally ended in September 2023. At that time, interest began accruing on loans, and borrowers’ monthly loan payments officially resumed in October 2023, but a year-long “on-ramp” period offered borrowers protections for missing their initial payments. According to data from ED, as of January 2024, about half of student loan borrowers in repayment – 17.8 million – were current on their loan payments.
However, a report from GAO released earlier in August found that nearly 30% of borrowers – 9.7 million – were past due on their federal student loan payments accounting for $290 billion in outstanding loans. ED earlier in October confirmed that it will begin reporting late or missing payments for most federal student loan borrowers to national credit reporting agencies in January 2025.
In this new study from GAO, the office reported two key takeaways from ED’s communications with borrowers about the return of student loan repayment. The first noted that in July 2023, ED began communicating information to borrowers about resuming student loan payments and the availability of temporary relief options through emails, letters, text messages, social media posts, and the StudentAid.gov website.
The study noted that from July through October 2023, ED sent monthly emails to borrowers notifying them about the end of the payment pause and resumption of monthly payment requirements. Additionally, ED customized some of its email content to borrowers for a more targeted reach. That included borrowers considered “at risk” if they were late on loan payments before the payment pause began or entered repayment for the first time after the payment pause began.
GAO noted that ED introduced several options to help borrowers resume payments on their federal student loans, including the Saving on a Valuable Education (SAVE) repayment plan, which currently faces several legal challenges, along with the Fresh Start initiative and the “on-ramp” transition period.
Notably, the “on-ramp” transition period protected some borrowers from negative credit reporting stemming from missed, late, or partial payments. That program formally ended on September 30. The Fresh Start initiative was a one-time, temporary program from ED that offered special benefits for borrowers with defaulted federal student loans, including restoring access to federal student aid. Fresh Start ended in early October.
GAO noted its second takeaway from the study is that ED began communicating with borrowers about the end of both the “on-ramp” transition period and Fresh Start initiative in June this year.
Denise Carter, acting Chief Operating Officer for Federal Student Aid (FSA), wrote a letter in response to GAO’s findings, noting that FSA plans further communications to borrowers in the fall and winter “to continue to support and inform borrowers.”
Carter noted in her letter that while there are positive signs of ED’s communications with borrowers, significant challenges remain regarding the return of student loan repayment for both ED and borrowers.
“Communications can help borrowers navigate programs and processes in place,” Carter wrote. “But communications cannot fix the broken repayment system where many borrowers have loans they cannot afford and are unable to access the benefits of a federal student loan.”
NASFAA recently shared a list of best practices for institutions to help them inform borrowers of the recent changes and necessary steps to a satisfactory loan repayment history, and published a deep dive into the Biden administration's efforts on student debt relief.
Publication Date: 10/24/2024
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