Loan expert breaks down Department of Education's changes on repayment rules for student borrowers

Updated 2 hours ago
HOUSTON, Texas -- The Trump administration is working to shrink the Department of Education, and the impact goes beyond public schools. Student loan borrowers are dealing with a different set of rules for repayment now.

Federal courts have paused popular Biden-era programs. Those programs cut down the number of years it takes to reach forgiveness and capped monthly loan bills at 5% of a borrower's income.

RELATED: Department of Education lays off nearly 50% of its workforce

Now, the Department of Education has removed applications for these plans from its website, effectively locking borrowers out from adjusting their plans if they can't pay the standard rate.

A loan expert said anyone who is 91 days delinquent on April 1 will be reported to credit bureaus for the first time in five years.

READ MORE: What is the Department of Education? Here's a look at some of its key functions
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"If you're going to buy a car or get an apartment or a mortgage or another credit card, you will see your credit score drop precipitously," Jack Wallace said. "It's important not to ignore the notices you're getting."



If the department is eventually dismantled, student loans could land at the treasury, commerce, or the Small Business Administration.

You can watch that full interview in the video player above.

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