What’s New: Critical Updates for Borrowers

As we hit the midpoint of 2025, several important developments are shaping the student loan landscape—and borrowers need to stay alert. From growing delinquency rates to major policy changes in Congress, here’s what you need to know this month:

Delinquency Is on the Rise – And So Is the Risk of Default

Federal data continues to show a sharp increase in borrowers falling behind on payments. In fact, delinquency rates have hit their highest levels since the end of the payment pause. Missed payments not only affect your credit and financial standing, but can also put you on a fast track toward default if left unaddressed.

SDS Tip: If you're struggling to make payments, log into your SDS account and explore options to pause or reduce payments before falling behind. Delinquency can be prevented with proactive steps.

IDR Processing Backlog – But New Form Could Help

Over 2 million applications for Income-Driven Repayment (IDR) plans remain pending—and only 80,000 were processed in April. Many borrowers are stuck in limbo, waiting for servicers to finalize their repayment plan calculations.

However, a new version of the IDR application was recently released. This updated form removes the checkboxes for “SAVE” and “lowest monthly payment,” which had previously caused delays in processing.

SDS Tip: If you applied using the older form, consider submitting the new version. It may help your servicer validate your income faster and avoid unnecessary delays in setting up your monthly payment.

Don’t Let Processing Delays Turn into Default

With slow processing and increased delinquency, the risk of loans entering default status is very real. Once a loan defaults, it can take months (or years) to recover—and borrowers lose access to helpful programs like IDR, deferment, and forgiveness.

SDS Tip: Check your servicer account regularly, monitor for errors or unprocessed documents, and contact support if something seems off. SDS is here to help you take early action.

Repayment Reform is Moving in Congress

The Student Loan Success and Taxpayer Savings Plan has advanced to the Senate. While the Senate version proposes some changes, one major feature remains intact: the creation of a streamlined Repayment Assistance Plan that would collapse multiple IDR plans into two simplified choices:

1. Income-Based Repayment (IBR)

2. A new version of IDR with adjusted payment formulas

This signals a potential overhaul in how repayment options will be structured for borrowers in the near future. Though the law isn’t final, the momentum is building—and SDS will keep you informed of every change as it becomes clearer.

What Borrowers Should Do Right Now

• Review your repayment plan and resubmit using the new IDR form if needed

• Act quickly if you’ve missed payments—don’t wait for delinquency to turn into default

• Follow legislative changes with SDS—we’ll help you understand how they affect your repayment path

• Use SDS tools to stay ahead of servicer delays and optimize your repayment strategy

At Student Debt Solutions, we’re actively monitoring these developments and will keep you informed as new information becomes available.