Before the White House transition, borrowers should be aware of important information about student loans.

The new year marks a new chapter for federal student loan borrowers.

With the transition from President Joe Biden's administration to President-elect Donald Trump's, borrowers will experience some changes.

The second Trump administration may bring changes to education, and borrowers should monitor updates on the closure of the Education Department.

Here's what we know borrowers can expect in the coming year.

1. Credit impacts for missed payments and defaults are back

After the conclusion of Biden's repayment on-ramp in October 2024, student loan servicers have resumed reporting late and missed payments to credit agencies.

The Biden administration has extended the on-ramp for resuming collection activities on defaulted loans through wage garnishments until this month, despite the formal expiration in October, according to Politico.

If you miss a payment or can't pay your student loan in full, contact your servicer immediately to explore your options and avoid severe consequences.

If you miss a payment on your loan, it becomes delinquent the next day. After 90 days of nonpayment, your servicer will report the delinquency to the credit reporting agencies. If you don't pay for 270 days, your loan will enter default. At that point, the entire balance is due immediately and you could face wage garnishments or the seizure of your tax refund or other federal benefits.

Although broad debt forgiveness is not possible, certain paths remain accessible.

Those seeking a last-minute debt forgiveness act from Biden may have been disappointed to hear that it wouldn't be happening.

The Biden administration was close to finalizing rules to discharge loans for long-term borrowers and those facing financial difficulties. However, the team ultimately abandoned those plans in December. It was unlikely that the Trump administration would complete the process and enact loan forgiveness.

The Biden administration withdrew its proposals due to "implementation difficulties."

Despite the Biden administration's focus on debt forgiveness, several pre-existing programs, such as Public Service Loan Forgiveness and Teacher Loan Forgiveness, remain available to borrowers. However, only a small number of borrowers had their loans discharged under these programs during the first Trump administration due to technical issues and alleged mismanagement by ED.

The Biden administration improved the PSLF program by broadening the qualifying payment criteria, but it is uncertain whether eligible borrowers will have their loans forgiven under President Trump.

3. SAVE plan remains in limbo, other repayment plans available

Since its launch in late 2023, millions of borrowers have joined President Biden's Saving on a Valuable Education income-driven repayment plan. However, the plan, which aimed to reduce monthly payments and shorten the path to loan forgiveness, has been hindered by two multi-state lawsuits.

The repayment plan for borrowers has been put on hold due to administrative forbearance while the courts determine the legality of the program.

It's unlikely that President Trump will defend the Biden initiative in court, as the states that sued to block the plan are Republican-led. Additionally, it's unclear when borrowers may need to start making payments again.

Borrowers who are enrolled in SAVE or seeking another repayment option can now apply for income-driven repayment plans that were previously set to be discontinued. These plans include income-contingent repayment and Pay As You Earn.

Both plans calculate monthly payments as a percentage of a borrower's discretionary income or the money they make above the federal poverty line for ICR or 150% of the poverty threshold on PAYE.

The maximum monthly payments for borrowers on ICR or PAYE are 20% or 10% of their discretionary income, respectively. Borrowers on PAYE will not pay more than they would on the standard 10-year repayment plan, but their monthly payment may be higher on ICR. Both plans' payments are eligible for PSLF.

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