Why This Matters
Student loan changes are happening fast—and borrowers who don’t act quickly could face credit damage, collections, or garnished wages. Here’s a clear breakdown of what’s changed, what’s coming, and what your clients need to know.

Transition Out of CARES Act Forbearance
From March 2020 through August 2023, most federal student loans were in automatic forbearance:

• No required payments

• 0% interest

• No negative credit reporting

But that era is officially over.

As of September 2023:

• Interest resumed

• Missed payments are reported as deferred (not delinquent—for now)

Starting September 2024:

• First missed payment (30 days late): No credit impact

• Second missed payment (60 days late): Still no credit impact

• Third missed payment (90 days late): Reported as 90-day late — which can significantly harm a credit score

This means some borrowers may think they're still safe, but the clock is ticking. A 90-day late payment can drop a credit score by 100+ points.

Source: https://studentaid.gov/announcements-events/payment-pause-end

Collections Resume May 2025 for Defaulted Loans
If a borrower’s loan is already in default, the Department of Education will restart collections on May 5, 2025.

This includes:

• Wage garnishments

• Seizure of tax refunds

• Withholding of Social Security payments

Source: https://studentaid.gov/announcements-events/default-restart

What Borrowers Should Do Now

1. Check loan status at studentaid.gov

2. Explore income-driven repayment (IDR) options

3. Consider loan rehabilitation if in default

4. Stay current to protect their credit

Need Help?
Our team at My Credit Guy is staying up to date on these changes and can help borrowers understand how student loans affect their credit and financial plans.

For the latest info and free borrower resources, visit:
www.mcgsupport.com