8 September 2025
By Ariama C. Long
Contributing Writer
(New York Amsterdam News) — Federal student loan payments and forbearance plans began accruing interest on Aug. 1, but Black and Brown borrowers face some complications due to the nature of the loan system. Because of that, there is a long list that those at risk of falling behind on payments need to know about.
The U.S. Department of Education restarted the collection process for outstanding loans this month, even vowing to seize wages and tax refunds of nearly eight million student borrowers if they can’t keep up with payments. Interest changes should be reflected in accounts by Aug. 10, 2025.
“Instead of fixing the broken student loan system, [U.S. Secretary of Education Linda] McMahon is choosing to drown millions of people in unnecessary interest charges and blaming unrelated court cases for her own mismanagement,” said Student Borrower Protection Center (SBPC) Executive Director Mike Pierce in a statement.
Black and Brown students are already at a disadvantage because of disparities in the student loan system and the racial wealth gap in the U.S. The effects of the accruing interest on their loan payments could be detrimental to future finances, delay life goals like buying a home, or add to money-related stress.
About 60 percent of “still-indebted” Black student borrowers do not have savings accounts, and Latino borrowers were the most likely to delay getting married and having children due to student loan debt, reported the Education Data Initiative (EDI).
More Complicated Problems
The DOE initially paused federal student loan payments back in March 2020, due to the COVID pandemic. Then, former President Joe Biden implemented a one-year grace period and launched the Saving on a Valuable Education (SAVE) plan, which put eligible loans in forbearance with a 0 percent interest rate, in 2023. In 2024, a Republican-led effort to block the SAVE plan played out in the courts. Earlier this year, a second federal court injunction ended the 0 percent interest rate.
The American Federation of Teachers sued the DOE in March 2025 for effectively breaking the student loan system and denying borrowers’ access to Income-Driven Repayment (IDR) applications, in violation of federal law.
“Every day, we hear from borrowers waiting on hold with their servicer for hours, begging the government to let them out of this forbearance, and help them get back on track – instead, McMahon is choosing to jack up the cost of their student debt without giving them a way out,” said Pierce. “These are teachers, nurses, and retail workers who trusted the government’s word, only to get sucker-punched by bills that will now cost them hundreds more every month. McMahon is turning a lifeline into a trap and fueling one of the biggest wealth grabs from working families in modern history. It’s a betrayal.”
In the meantime, Senate Minority Leader Chuck Schumer (D-N.Y.) and other politicians sent a letter on July 14, urging McMahon to immediately reverse the decision.
Available Repayment Plans
The SBPC projects that a typical borrower will be on the hook to pay more than $3,500 per year or $300 per month in interest charges. It estimates that at least 423,000 New York student borrowers on SAVE will be affected by the policy change. According to the EDI, Black college graduates on average owe $25,000 more in student loan debt than white college graduates. They are also more likely to struggle financially with making student loan monthly payments of $258 or more.
The DOE’s Federal Student Aid Loan Simulator is a tool to help estimate monthly student loan payments or figure out loan repayment options on an individual basis.
“It was always going to restart at some point,” said Rodney Williams, founder of SoLo Funds, a Black-owned personal finance app that has seen a 12 percent increase this year in members requesting loans to help pay student loans. “This wasn’t a forever option.”
Williams had about $75,000 in loan payments that he started repaying at age 21. He said that whenever he couldn’t pay, he made sure to contact his loan servicer and defer payments so his credit was not affected.
The Trump administration is suggesting that borrowers apply for an Income-Driven Repayment (IDR) Plan request. Eligible borrowers may have remaining balances on their loans discharged after 20 or 25 years, according to the DOE.
On May 5, the DOE began involuntary collection through the Treasury Department, which means they can garnish wages, intercept tax refunds, and seize portions of Social Security checks of people whose loans are in default.
A student loan will be considered delinquent when there is no payment 90 days after its due date, which can affect a person’s credit score. Without a payment about nine months after its due date, the loan goes into default.
Borrowers Beware
The U.S DOE is warning borrowers of federal student aid scams. Fraudulent companies often try to contact borrowers by phone or email saying they will help get a loan discharged, forgiven, or canceled for a fee. Borrowers are encouraged to work only with the U.S. Education Department and approved loan servicers, and also to never reveal personal information or account passwords to anyone.
Official DOE emails to borrowers come from [email protected], [email protected], or [email protected]. You can report scam attempts to the Federal Trade Commission by calling 1-877-382-4357 or by visiting reportfraud.ftc.gov.
This article originally published in the September 8, 2025 print edition of The Louisiana Weekly newspaper.