Student loans are undergoing major servicer changes that are reshaping repayment, forgiveness, and everyday borrower rights. As of September 16, 2025, millions of borrowers are watching closely as new laws, repayment programs, and administrative updates transform how federal student debt will be managed moving forward.
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What’s New with Student Loan Servicing
Recent legal and legislative shifts are forcing major updates in how student loans are handled. These adjustments affect repayment plans, loan forgiveness, and how servicers communicate with borrowers.
Here are the most significant updates:
Expansion of the Office of the Ombudsman
The Department of Education has expanded its loan Ombudsman into a broader Office of Consumer Education and Ombudsman. Its mission now includes not only helping resolve borrower disputes but also providing proactive guidance before students take on debt.
This expansion comes with:
- Clearer repayment guidance for borrowers.
- Standardized manuals for servicers to follow.
- Stronger oversight on how servicers handle communication and collections.
Legislative Overhaul: The One Big Beautiful Bill (OBBB)
Passed in July 2025, OBBB introduced sweeping reforms that will permanently change how repayment and forgiveness work.
Key provisions include:
- Phase-out of current Income-Driven Repayment (IDR) plans such as SAVE, PAYE, and ICR for new borrowers beginning July 1, 2026. These will be replaced with a single new plan known as the Repayment Assistance Plan (RAP).
- Borrowing caps placed on Parent PLUS loans and graduate loans.
- Stricter forgiveness criteria, limiting the number of people who qualify for full debt relief.
SAVE Plan and Interest Resumption
The popular SAVE plan, designed to reduce monthly payments and accelerate forgiveness, faced setbacks in mid-2025. As a result, the Department of Education resumed interest accrual on SAVE loans beginning August 1, 2025, even though forbearance on payments continues through January 31, 2026.
Borrowers now face:
- Higher long-term repayment totals due to accruing interest.
- Confusion as applications for lower SAVE payments are increasingly denied.
- Potential transitions to alternative plans once RAP officially begins.
Public Service Loan Forgiveness (PSLF) Adjustments
Changes are also being proposed for the Public Service Loan Forgiveness (PSLF) program. Moving forward, some employers may no longer qualify if their primary activities involve prohibited or questionable practices. This could reduce the pool of eligible borrowers seeking PSLF credit.
Borrowers currently working in public service roles should remain alert, as new regulations are expected to finalize in the coming months.
Institutional Responsiveness and Delays
Borrowers are also reporting longer wait times and delays in processing applications. Issues include:
- Extended review periods for IDR applications.
- Backlogs for PSLF credits and Buyback requests.
- General delays in communication with Federal Student Aid.
This slowdown has created frustration, as borrowers struggle to receive timely updates about their repayment status.
What Borrowers Should Do Now
If you have federal student loans, the following steps can help you prepare:
- Review your repayment plan. Check if you are currently in SAVE, PAYE, ICR, or another plan, and how RAP might change your options in 2026.
- Keep records. Save all emails, statements, and application confirmations from your servicer. Documentation can protect you if disputes arise.
- Track notices carefully. Watch for changes to payment schedules, interest accrual, and forgiveness eligibility.
- Verify PSLF employment. Confirm your employer still qualifies for PSLF under updated rules and submit annual certifications.
- Stay informed. Monitor official Department of Education announcements for new repayment regulations.
Risks and Uncertainties
Although many details are set, some factors remain uncertain. Borrowers should be aware of:
- Court rulings. Parts of existing repayment programs could still be altered or blocked.
- Retroactive adjustments. Interest and forgiveness credits may shift depending on future regulations.
- Servicer errors. Inconsistent borrower communication could increase during this transition period.
- Implementation delays. Full rollout of RAP and other programs may take longer than scheduled.
What to Expect by 2026
The timeline of reforms points toward July 1, 2026, when the new Repayment Assistance Plan (RAP) becomes the primary option for new borrowers. Current plans will remain available to those already enrolled, but future students and graduates will enter under the updated structure.
Alongside RAP, the Department of Education is also working to implement a unified servicer manual that ensures consistency across all loan providers. Borrowers should expect standardized communication and servicing policies once this manual is fully in effect.
Frequently Asked Questions
Q: Will interest now apply to all SAVE borrowers immediately?
A: Yes. Interest on SAVE loans resumed August 1, 2025, even though payment forbearance lasts until January 31, 2026.
Q: What happens to denied SAVE applications for reduced payments?
A: Many borrowers are seeing applications denied due to plan restrictions. Affected individuals may need to transition to alternative repayment programs or prepare for RAP in 2026.
Q: How will the new servicer manual affect borrowers?
A: Servicers will be required to follow one standardized set of rules for communication, collections, and borrower education, creating more consistent experiences for all federal loan holders.
Student loans are entering one of their biggest periods of reform in decades. With interest resuming, repayment plans changing, and forgiveness rules shifting, the next year will be critical for borrowers to stay proactive. If you’ve been affected—or simply want to compare your experience with others—feel free to share your thoughts in the comments.
Disclaimer: This article is for informational purposes only. It does not constitute legal, financial, or professional advice. Always confirm details directly with the U.S. Department of Education or your loan servicer before making decisions about repayment.