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Department of Education Puts Colleges on Notice to Help Struggling Student Borrowers

Department of Education Puts Colleges on Notice to Help Struggling Student Borrowers

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 Welcome to Education Update, where we break down the latest developments from the Department of Education and what they mean for your community. This week’s headline: the Department is putting colleges and universities on notice—institutions that receive federal funds must step up efforts to help struggling student loan borrowers before June 30, 2025.

In a letter to higher education institutions, Secretary of Education Miguel Cardona urged schools to proactively contact all former students who owe federal student loans and aren’t in deferment or forbearance. The message: borrowers need to be reminded of their repayment responsibilities and get support if they’re falling behind. The Department is also making repayment data by institution more transparent, adding updated statistics this month to the Federal Aid Data Center. This move is expected to sharpen scrutiny and accountability—colleges with high rates of non-repayment could lose access to federal aid, including Pell Grants and student loans, if they don’t act now. For struggling borrowers, that means you should watch your inbox: the Department is requiring ongoing outreach and guidance from your alma mater, aiming to prevent defaults and protect access to education.

Meanwhile, about 195,000 defaulted borrowers will begin receiving Treasury Offset Program notices this week. These warn that federal benefits—like tax refunds or Social Security—may be garnished starting in early June. More than 5 million borrowers could face wage garnishment later this summer if delinquencies aren’t resolved. The Department says these measures are a last resort, emphasizing, as one official put it, “Our priority is to help borrowers avoid the severe consequences of default—not to punish them unnecessarily.”

On the policy front, the Department has released the updated Federal School Code List for the 2025–26 academic year, essential for students completing the FAFSA. This ensures aid goes to the right schools and keeps doors open for new applicants.

But uncertainty looms over the Department’s future. Following President Trump’s March executive order to “take all necessary steps” toward closing the Department, education policy remains in flux. While shutting down the Department requires congressional action—and there’s little support right now—advocacy groups warn that proposed grant and staff cuts could jeopardize vital programs like Pell Grants and IDEA special education funding.

So, what does this mean for you? If you’re a student or parent, stay alert for communications from your school. For businesses and local governments, expect greater data transparency and possible shifts in federal partnerships. And for educators and advocates, now’s the time to weigh in: the Department welcomes public comment on aid regulations and outreach practices.

Looking ahead, keep an eye on the Department’s release of non-repayment rates by school, which could reshape institutional eligibility for federal aid as early as next year. For more information or to share your feedback, visit the Department of Education’s website or contact your institution’s financial aid office. If you’ve got thoughts on student loan policies or federal educational support, now’s your chance to make your voice heard.
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