As 2025 approaches, now is the perfect time to take control of your student loans and get financially prepared for the new year. With changes in repayment plans, interest rates, and other factors that may impact your loans, getting ahead of your student debt can help ease stress and set you up for success. Whether you’re looking to pay off loans faster, refinance for better terms, or simply organize your repayment strategy, taking proactive steps now can make a significant difference in your financial future. By tackling your student loans before 2025 you can start the year with a clear plan and a stronger sense of financial security.
Student loans in the U.S: An overview
Student loans in the U.S. have become a significant financial burden for millions of borrowers, with over $1.7 trillion in outstanding student debt from federal loans. hese loans are typically used to cover the cost of higher education, including tuition, fees, and living expenses. Borrowers can access federal student loans, which offer more flexible repayment options and lower interest rates, or private loans, which may have stricter terms and higher rates. While student loans help make college more accessible, they also come with the challenge of repaying large amounts of debt, often starting shortly after graduation.
43 million Americans currently owe money on federal student loans. With rising tuition costs and increasing numbers of borrowers, the student loan crisis has become a growing concern, prompting calls for reform, including calls for student loan forgiveness and more affordable education options. However, 2023 saw the first time that federal student loan debt declined. The average federal student loan debt amounts to $38,000, however this can amount to be much higher depending on the university attended and program enrolled in.
Getting on top of your student loans before 2025
With the new year just a mere days away and the Trump administration set to take office in 2025 and make changes to student loan programs, it may seem overwhelming having to face another year of student loans. Given the strong possibility of funding cuts, a potential decline in borrower-focused communication, and a reduction in oversight of loan servicers and other federal contractors, borrowers may find themselves largely on their own when it comes to understanding their options and determining eligibility for student loan forgiveness and reduced payment programs.
Steps to take before the start of the new year
Borrowers working toward Public Service Loan Forgiveness (PSLF), which offers full federal student loan forgiveness in as little as 10 years for those employed in nonprofit or government-sector careers, can take proactive steps to strengthen their position. PSLF is a statutory program, and while the incoming Trump administration may implement changes, a complete repeal of the program would require action from Congress.
Review your PSLF payment count on StudentAid.gov to ensure accuracy, and file a dispute if needed through the PSLF Reconsideration portal. If it’s been a while since you certified your employment, submit a new PSLF Employment Certification using the digital PSLF Help Tool, and if you’re nearing 120 payments but stuck in forbearance, explore PSLF Buyback for potential forgiveness during the forbearance period.
Borrowers in the SAVE plan forbearance should start preparing for alternatives, such as the Income-Based Repayment (IBR) plan or the upcoming Pay-As-You-Earn and Income-Contingent Repayment plans, due to the strong possibility SAVE will be repealed once the Trump administration takes office. Many may face higher monthly payments, so it’s important to evaluate repayment options and budget accordingly.
New borrowers who have recently graduated should take steps to pay back their loans under the assumption that SAVE will no longer be an option. Current borrowers should start forming a budget plan with the expectation that monthly payments are expected to increase once Trump takes office. Further, make sure that you have your student loan balance out of default before the start of 2025.
