By Megan Walter, Senior Policy Analyst
Eric Hardy, program manager in Policy Implementation and Oversight (PIO) at Federal Student Aid (FSA), presented at NASFAA’s 2025 National Conference on Wednesday to discuss the status of the loan repayment programs, and news about the processing of income-driven repayment (IDR) applications and wage garnishment.
Hardy began by explaining the evolution of the Saving on a Valuable Education (SAVE) plan, which essentially repackaged and modified the existing Revised Pay As You Earn (REPAYE) plan with new calculation methods. However, legal challenges quickly emerged. The initial injunction in July 2024 was described as "very narrow," primarily targeting specific elements of the SAVE plan, but in February 2025, a revised injunction that Hardy characterized as "super broad" effectively suspended the entire regulatory package that SAVE was included in, affecting the forgiveness, married filing separately, and deferment/forbearance credit provisions. ED is actively taking actions to comply with the injunction, including updating the IDR application, which has caused some application processing issues.
In a significant immediate development, Hardy announced that ED will no longer process IDR applications where borrowers selected "enroll me in the lowest monthly payment amount" or specifically selected the SAVE plan. These borrowers will receive a soft denial and be prompted by their servicers to complete the application again.
The session highlighted serious concerns about borrower delinquency trends, with Hardy noting that many borrowers are "moving in the wrong direction." He emphasized the options available to avoid default, such as forbearance or deferment, while acknowledging they are not ideal long-term solutions.
To address this, ED initiated several email campaigns starting April 23, 2025, and completed outreach to borrowers with loans in default (360+ days) and those 60+ days delinquent but not yet defaulted. ED’s current and ongoing campaign is conducting outreach to borrowers in good standing.
In terms of upcoming campaigns, ED plans to conduct outreach to:
Borrowers currently enrolled in SAVE (outreach planned for July).
Borrowers who selected "lowest monthly payment" or "SAVE" on their applications (outreach planned for June). This latter group is notably the one for which MOHELA has already sent out "soft denial" emails, with servicers to follow up with more formal denials.
ED also mentioned its Dear Colleague Letter (DCL) published in May, which urges schools to contact their defaulted borrowers. Hardy said FSA expects to publish data on the most updated repayment rates very soon.
Additionally, borrowers were warned that ED plans to resume wage garnishments for defaulted loans starting in August 2025, after pausing their initial plan to begin in July 2025.
Hardy said that attendees would soon have access to additional presentation slides, which should be available on the NASFAA conference website starting Monday, June 30, 2025.
Publication Date: 6/26/2025
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