Pew Encourages Effective Communications With Federal Student Loan Borrowers

For the first time since before the COVID-19 pandemic, federal student loan borrowers who miss payments are once again vulnerable to delinquency and default. This follows the expiration of the U.S. Department of Education’s more than three-year payment pause and subsequent temporary reprieve from many of the usual consequences of nonpayment.

At the same time, a new income-driven repayment (IDR) plan, Saving on a Valuable Education (SAVE), was implemented and then blocked by court order, so borrowers were unable to enroll in what would be the most generous IDR version ever offered. As the repayment system attempts to return to the status quo, borrowers who struggle to afford payments face the prospect of delinquency if they do not successfully engage with the system. It is therefore more important than ever for borrowers to receive accurate, clear, consistent, and timely information about repayment options that can help them keep their loans in good standing.

In a letter sent to the Department of Education and its Office of Federal Student Aid (FSA), The Pew Charitable Trusts shares new data from a recent survey related to communications with borrowers. The survey found that:

• Vulnerable populations, including low-income borrowers and those who self-identify as financially insecure, are less likely to have heard of available protections and repayment plans that could help keep their loans in good standing.
• When those vulnerable groups are made aware of programs such as IDR, they take advantage of these opportunities at higher rates.
• Communications about these protections appear to be effective with borrowers. This correlates with higher application rates for programs like SAVE when borrowers hear about them directly from the department or loan servicer. Such official outreach from the department or servicer is cited as the most common influence on eventual enrollment.
• The department and servicers heavily utilize email for communications, which is well-matched with overall borrower preferences. Younger borrowers, however, are nearly twice as likely to prefer text messaging, and those not making payments show a preference for phone calls, texts, and mailed letters.

This data can help the department and FSA with ongoing outreach efforts in support of Pew’s goal of preventing borrowers most at risk of delinquency and default from falling behind.