U.S. student loan borrowers face critical repayment deadlines

Federal student loan borrowers face several critical deadlines and transitions this month. One major development involves MOHELA, which recently issued false “severely past due” notices to approximately 6,000 borrowers who were actually current on their loans. Senator Elizabeth Warren and other lawmakers have demanded answers regarding the error and whether affected individuals will receive refunds.

Additionally, borrowers previously enrolled in the Biden-era SAVE Plan are being forced to transition to new repayment options. The first group of these borrowers must select a new plan by September 29. Failure to act within the 90-day notification window may result in an automatic transfer to a plan that could significantly increase monthly payments. Under new regulations, the Repayment Assistance Plan (RAP) and standard repayment are the primary options for loans disbursed after July 1.

Consumer advocates have expressed concern regarding the high cost of exiting the SAVE plan and the potential for increased default risks across the $1.7 trillion student loan portfolio. Currently, an estimated 9 million borrowers are in default and 3 million are delinquent.