News Student Loan Repayment: A Crisis of Confusion and Consequence By Deana Unger, Chief Operations Officer, Inceptia For millions of Americans, the return of student loan payments has been anything but smooth. After more than three years of paused payments, many borrowers are struggling to find their footing again – and the data paints a troubling picture. An analysis of government data by VantageScore reveals that a staggering 43% of borrowers have yet to resume making payments. The consequences are already impacting their financial lives, with credit scores dropping and access to essentials like mortgages, car loans, and credit cards slipping further out of reach. But beyond the numbers, there’s an even bigger issue: confusion. Many borrowers are unsure about what they owe, whether they qualify for repayment assistance, or if their loans may eventually be forgiven. Some even have expressed uncertainty about taking out their student loans in the first place. This time of ambiguity and change is making it harder for people to get back on track – pushing them deeper into financial distress just when they need stability the most. A Perfect Storm of Misinformation and Delinquency The root of this crisis lies in a perfect storm of rapid changes and inconsistencies in messaging. When federal student loan payments were first paused due to the pandemic, the relief felt like a lifeline. Over time, some assumed the pause would last indefinitely or that large-scale debt forgiveness would erase their balances. Even though the broad-based loan forgiveness has been ended, many still believe that relief is on the horizon. Simultaneously, loan servicers have struggled to reconnect with borrowers. Some individuals have not understood payments were resuming, as notifications from servicers didn’t reach them due to outdated contact information. In some cases, they did not respond to telephone and other attempts because they didn’t recognize the servicer. Others simply didn’t understand what they needed to do to restart payments. As recently reported in the Wall Street Journal article, Steep Drop in Credit Scores Hits Student-Loan Borrowers, Shiloh Garcia, a nurse in California, thought her payments were still on hold – only to discover that her credit score had taken a significant hit due to reported delinquencies. Stories like hers are becoming all too common, and without intervention, many more borrowers will be blindsided by financial consequences they didn’t anticipate. The Changing Landscape of Income-Based Repayment For those struggling to make payments, income-driven repayment (IDR) plans, including the newly introduced SAVE plan, were designed to provide relief. However, even these programs are now facing uncertainty. There is increasing concern that IDR programs could be weakened or completely eliminated. If that occurs, millions of borrowers who depend on these plans to manage their payments could find themselves with a higher payment amount, which could result in a rise in delinquencies. Inceptia Expertise As a nonprofit dedicated to helping borrowers successfully repay their student loans, Inceptia is deeply concerned about the current state of the industry. With delinquency rates for schools as high as 40%, there is a clear need to provide empathy and guidance to borrowers are struggling. Firsthand, we’ve encountered borrowers who are completely unaware of their repayment obligations – some mistakenly believed their loans were forgiven, while others didn’t even realize they had taken out a loan. This highlights a critical gap in borrower’s understanding of their student loan repayment options. Borrowers need clear guidance and from a caring and dedicated resource to help them navigate repayment and regain financial stability. At the same time, institutions need a trusted partner to safeguard their reputation and ensure their financial aid programs remain in good standing. Inceptia's Repayment Counseling Outreach program is designed to support borrowers during these difficult times. By helping each borrowers determine their best path forward through education and support, we help them succeed with long term and short-term solutions to their repayment issues, thereby reducing stress and preventing negative credit impacts. By providing personalized guidance, we help borrowers understand their repayment options, navigate income-driven plans, and resolve any confusion about their loans. With the right outreach and advocacy, we are making a tangible difference in the lives of borrowers and the institutions that serve them. What Comes Next? The solution isn’t a temporary fix – it’s proactive approach. By working with Inceptia, institutions can more effectively provide borrower outreach and clearer communication which will help implement sustainable solutions that genuinely assist borrowers in navigating repayment. Together we can and will do better in ensuring that borrowers understand where their loans are serviced, when they are due, how much they owe, and most importantly, how they can repay them in a manner consistent with their budget and responsibilities. Learn more about Inceptia tools to manage repayment counseling at Inceptia.org, TalkToUs@inceptia.org or 888.529.2028.