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Update for Student Loan Borrowers: April 2025

What student loan borrowers need to know about headlines in April 2025. Brought to you by SavvyFi Consultant, Jason DiLorenzo.

Picture of Jason DiLorenzo

Jason DiLorenzo

As an employer consultant and student loan borrower advocate, Jason has taught best practices at top U.S. schools and hospitals.​

Organizations have managed over $5 billion in federal student debt since 2010, under Jason's leadership.

It’s been a minute since we’ve updated you on what’s happening with IDR plans and PSLF, and recent headlines may have caused unnecessary alarm (particularly for married borrowers). Also, this week the DOE announced plans to resume student loan collections. Here’s a quick summary:

 

1️⃣ May 5th – Federal Student Loan Collections Resume

 The Department of Education announced this month that it will resume wage garnishments, tax refund seizures, and other involuntary collections for borrowers in default. Federal student loan collections resume on May 5th – for the first time over 5 years.

Here’s the reality employers should note:

🔹 1 in 4 borrowers—that’s nearly 10 million people—could soon be in default.
🔹 Over 5 million borrowers haven’t made a payment in the past year.
🔹 Just 38% are current on their loans (yes, barely a third).
🔹 Close to 2 million borrowers are stuck waiting for help, thanks to processing delays.

For employers, this isn’t just a borrower problem—it’s a payroll and productivity problem. Wage garnishments hit morale, cause HR headaches, and can easily be avoided with the right guidance and benefits.

2️⃣ SAVE Plan Update

A court decision on the SAVE plan is expected as early as next month. Borrowers currently in SAVE’s administrative forbearance may be allowed to stay in forbearance through early 2026—but keep in mind: those months don’t count toward PSLF. Once the ruling is final and applications reopen, most PSLF-eligible borrowers should plan to move into IBR or PAYE (depending on eligibility) to keep progress going.

3️⃣ The Spouse Income Confusion (and Resolution)

You may also have seen headlines last week suggesting that all IDR plans would now require spousal income to be included—even when filing taxes separately. This caused major panic for borrowers  – and frankly, us too – but the Dept. of Ed quickly retracted this week, indicating their understanding that spousal income is not required under the IBR statute.
 
Lesson learned? Sometimes, don’t believe the hype. The rules (and the laws behind them) still matter—and they serve to protect you.
 

4️⃣ Open Now: A Rare Chance to Shape the Rules That Shape Your Repayment

On April 29th, the Department of Education begins their Negotiated Rulemaking process (aka “Neg Reg”) to revise key regulations affecting federal student loans. It’s a big deal—and a chance for you to have a say. While Neg Reg seeks to update regulations around all borrowing and Title IV eligibility, for those of you in repayment we’re most concerned with:
  • How future IDR plans are structured
  • The tax treatment and availability of IDR-based loan forgiveness after 20-25 years of repayment
  • The potential narrowing of the definition of public service for PSLF
To this end, one of the key components of the Neg Reg process is the consideration of public comments, and here’s the site to offer yours. If the availability of PSLF has impacted career decisions for you or your staff, it’s important to voice your concerns.
 
We’ll continue to keep you updated, and if you’re in line for forgiveness, don’t sit this one out. You have more power than you think!
 

How employers can help:  

1. Provide Student Loan Repayment Benefits

Employers can use tax-efficient strategies to alleviate the burden of student loans. 

  • Section 127: Provides up to $5,250 annually in tax-free educational assistance. 

Click here to read more about how SavvyFi can help you provide this benefit.

2. Offer Tools and Resources for Loan Management

Platforms like SavvyFi make it easy for employers to support their employees:

  • Streamlined Administration: SavvyFi integrates directly with loan servicers, simplifying employer contributions and ensuring compliance.
  • Education and Transparency: Employees can access clear, actionable information about repayment options, forgiveness programs, and tax benefits.
  • Comprehensive Support: From automating PSLF certifications to tracking progress under IDR plans, SavvyFi empowers employees to navigate the complexities of student loans.

3. Educate Employees About Repayment Options

Provide workshops or webinars on:

  • Avoiding default through rehabilitation and consolidation.
  • Transitioning to new repayment plans if SAVE is discontinued.
  • Making informed decisions about refinancing.

4. Integrate Financial Wellness Into Your Benefits Package

Pair student loan repayment assistance with other financial wellness programs, such as retirement planning, to create a comprehensive support system.

How SavvyFi Can Make a Difference

SavvyFi is more than a student loan management tool; it’s a bridge to financial wellness for both employees and employers. By partnering with SavvyFi, your organization can:

  • Enhance Recruitment: Attract talent by showcasing loan repayment benefits as part of your compensation package.
  • Boost Retention: Reduce turnover by easing financial stress for employees with significant student debt.
  • Streamline Processes: Simplify the administration of complex programs like PSLF and IDR plans, saving time for HR teams.

2025 will be a challenging year for borrowers as they navigate the resumption of loan collections, legal uncertainties around repayment plans, and a potential increase in defaults. Employers have a unique opportunity to step in and provide meaningful support that can transform the financial and emotional well-being of their workforce.

Ready to talk through your options and invest in your team?

About SavvyFi: SavvyFi is a user-friendly fintech platform that makes it easy for employers to provide college savings and student loan benefits to their employees. Because the company’s platform is “zero-touch” to HR — without any complicated systems, integrations, or paperwork — SavvyFi unlocks education financing capabilities to even the smallest employers that would not otherwise be able to offer these benefits.

Disclosure: Third-party quotes shown may not be representative of the experience of all SavvyFi customers and do not represent a guarantee of future performance or success.

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