More than 42 million Americans currently hold federal student loan debt, representing a collective balance of over $1.7 trillion, with nearly a quarter of borrowers in delinquency or default. For those Americans, this delinquent debt represents increased financial hardship and a broken promise that postsecondary education would lead to improved economic mobility. For the nation, this represents a series of policy failures that, in addition to the human cost, will constrain consumer spending and negatively impact economic growth.
The One Big Beautiful Bill (OBBBA) made significant changes to the student loan repayment landscape, creating a new set of challenges for borrowers to navigate. To better understand how this will impact borrowers and to identify opportunities for improvement, the Bipartisan Policy Center (BPC) and the National Endowment for Financial Education (NEFE) convened a roundtable of experts from across the student loan ecosystem in early 2026. The discussion highlighted the need to continue addressing inadequate communication and education for borrowers, outdated systems, and fragmented coordination to prevent widespread default, reduce complexity, and build a more navigable federal student loan system.
A Complex System in Transition
For many, the decision to borrow to pay for education is one of the largest financial decisions they will ever make, yet the system governing those loans remains complicated, opaque, and difficult to navigate. In recent years, borrowers have experienced historic disruptions, including a prolonged COVID-era repayment pause, shifting repayment rules, and ongoing uncertainty surrounding the future of income-driven repayment options like the Saving on a Valuable Education (SAVE) plan.
The passage of the OBBBA in 2025 represents the most significant structural change to the federal student loan system in years. The legislation eliminated existing repayment options and replaced them with just two plans: a Standard plan and a new Repayment Assistance Plan (RAP). While simplification is often a policy goal, these changes introduce meaningful transitions and trade-offs that will affect new and existing borrowers differently depending on where they are in their repayment journey.
These changes are unfolding within a federal student loan system that has historically been challenged by ineffective borrower education, inconsistent or unclear communication from the government and servicers, under-resourced loan servicing, and systems that place the burden of navigation squarely on borrowers themselves. The result has been widespread confusion, disengagement, delinquency, and default, all of which negatively impact borrowers, their families, and the broader economy. With millions of borrowers currently in default or at risk of falling behind on their payments, the need for coordinated, borrower-centered reform has never been more urgent.
Key Insights on What Comes Next for Student Loan Repayment
To inform understanding of how OBBBA’s policy changes will impact borrowers, BPC and NEFE brought together representatives from the Department of Education, Congress, student loan servicers, institutions of higher education, borrower advocacy organizations, think tanks, and financial education leaders. The discussion focused on how recent policy changes interact with long-standing issues affecting borrowers, and on practical steps to improve borrower education, reduce friction between borrowers and servicers, and promote successful repayment outcomes during this period of transition and beyond. A summary of the roundtable discussion is presented below.
- Policy Complexity Is the Core Problem: Despite recent administrative and legislative efforts to simplify repayment options and processes, student loan policy remains extremely complex. Borrowers are expected to understand repayment plan rules, annual income recertification requirements, and default and rehabilitation processes, often with limited guidance or during periods of extreme financial stress. The system places too much responsibility on borrowers to make sense of shifting rules, even as those rules change through regulation, legislation, and litigation.
While OBBBA reduces the number of repayment plans, complexity persists through eligibility requirements, transitions for existing borrowers, and differences across loan types. Future legislative, regulatory, and administrative action will be necessary to meaningfully simplify the rules themselves, not just the options available.
- Borrowers Need Foundational Education: Borrower education today is poorly timed, inconsistently delivered, and rarely evaluated for effectiveness. Entrance and exit counseling, the primary federally-required education interventions, often occur when borrowers are overwhelmed and lack sufficient financial context. Borrower education programs often fail to follow e-learning best practices, making the content less accessible and less effective.
Borrowers need timely, relevant education before they decide to take out a loan, and ongoing education throughout the life of the loan, particularly at key milestones such as entering repayment, recertifying income data, or seeking to rehabilitate a defaulted loan. In addition to effective loan counseling and communication, foundational financial knowledge is essential for borrowers to interpret loan terms, assess trade-offs, and engage productively with the system. Institutions, servicers, advocates, and the government all play a role in delivering and sustaining this education.
- Communication Must Be Clear, Consistent, and Timely: Borrowers regularly receive confusing, inconsistent, or poorly timed communications about their loans. Messaging varies across servicers in both content and tone, making it difficult for borrowers to understand their obligations or compare information. These failures are most acute when a borrower defaults and their loan is transferred between servicers, often resulting in long periods without communication, missed notices, and lost opportunities to re-engage.
Improved communication practices across servicers, clearer guidance from the federal government, and targeted outreach to borrowers most at risk at key milestones are all necessary solutions to address these challenges. Communications should be actionable, in plain language, and delivered through channels borrowers actually use.
- Modernization and Funding Are Necessary: Compared with other financial products, federal student loans lack basic borrower tools. Many borrowers cannot easily view all of their loans in one place, manage payments through intuitive portals, or enroll seamlessly in automatic payments. Outdated systems and interfaces make even simple tasks difficult.
Meaningful modernization will require aligned incentives and sufficient servicer resources and capacity. Investment in technology, data sharing, and user-centered design can help to enable good borrower behavior and reduce administrative friction.
- Trust Is Foundational: Over the years, the issues outlined above have eroded borrower trust in the student loan system. Many borrowers, particularly those who have been in long-term forbearance or find themselves in default, no longer believe that engaging with the system will lead to fair or predictable outcomes.
Rebuilding trust is critical, especially as borrowers transition back into repayment and navigate new rules. Transparency, consistency, and follow-through must be prioritized to restore confidence and encourage re-engagement.
- Multi-Actor Coordination Is Essential: No single entity can fix the student loan system. Institutions of higher education, servicers, policymakers, employers, third-party advocates, and other stakeholders must coordinate their efforts. Coordinated strategies rooted in shared goals and clear roles will be necessary to achieve long-term improvements in the system. Unbiased and nonpartisan organizations can support convenings and coordination among all stakeholders.
- The Upcoming Transition Period Is High Risk: The next two years are a particularly risky period for existing borrowers as they transition to new repayment plans under OBBBA. Intentional, targeted interventions are needed to avoid the worst of the “default cliff” that could see millions of additional borrowers default on their loans. While this transition demands immediate attention, it is equally important to recognize that many systemic challenges will persist even after the transition ends.
Moving Forward
The resumption of repayment and the changes enacted by OBBBA present both risks and opportunities. This moment can either deepen existing harms or serve as a turning point toward a more navigable and effective student loan system. To build that new and improved system, stakeholders must work together to improve borrower education and communication, invest in modern tools and systems, and reduce unnecessary complexity.
These efforts are critical not only during the current transition but also for years to come as future generations rely on federal student loans to finance their higher education journeys. Getting this right matters—for borrowers, families, and the economy as a whole.
About the Bipartisan Policy Center:
The Bipartisan Policy Center and its advocacy affiliate, BPC Action, demonstrate that impactful results are possible when both parties work together. Operating across the full political spectrum on domestic policy issues, BPC develops solutions that lower the everyday cost of living for families, expand opportunity, and strengthen the economy, while BPC Action works directly with lawmakers to advance those solutions in Congress.
For more than 20 years, BPC and BPC Action have consistently achieved results on complex issues, demonstrating that working together across the political spectrum is not only possible but essential.
