Student loans have long been a hot topic in the United States, affecting millions of borrowers each year. Whether you're just starting college or already dealing with repayment, understanding how student loans work—especially federal loans, is key to managing your financial future.
The Foundation of College Financing
Federal student loans remain the most common type of financial aid for American students. Administered through the U.S. Department of Education, these loans typically offer lower interest rates and more flexible repayment options compared to private lenders. Borrowers usually begin repayment six months after graduating, dropping below half-time enrollment, or leaving school.
Two major federal loan servicers are MOHELA (Missouri Higher Education Loan Authority) and Nelnet, each managing accounts for millions of borrowers. They help process payments, track balances, and guide repayment plan changes. As of 2025, both servicers are still handling large volumes of accounts after the reshuffling of servicer contracts under the Department of Education.
Trump-Era Student Loan Policies: Are They Still Relevant?
During Donald Trump's presidency, several changes were proposed and implemented regarding student loans. While some reforms focused on streamlining repayment plans and cutting forgiveness programs, others never made it past Congress. In 2025, most of Trump’s proposed changes have either been rolled back or revised by subsequent administrations. However, understanding the policy shifts from that era is still helpful for historical context and comparing loan program evolution.
What Happens If You Default: Student Loan Debt Collection
If you fall behind on payments and your federal student loan goes into default, it can be sent to debt collection. This means you may be subject to wage garnishment, tax refund withholding, or even legal action. The federal government has extensive power to collect on defaulted loans, so staying on top of your payments or entering an income-driven repayment plan is critical.
MOHELA and Nelnet often work with borrowers to avoid default, offering deferment, forbearance, or affordable payment plans. Still, once a loan is in collection, getting back into good standing may require loan rehabilitation or consolidation.
Conclusion
Navigating student loans can feel overwhelming, but staying informed helps you make smarter decisions. From understanding your loan servicer—whether it's MOHELA or Nelnet—to keeping up with the latest policies and knowing the risks of debt collection, knowledge is your strongest asset.
If you're dealing with student loans in 2025, don't wait to review your options. Contact your loan servicer, explore federal repayment programs, and stay up to date with ongoing policy changes that could affect your debt and your future.
