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The U.S. Department of Education issued a stern reminder to colleges and universities that they a responsibility to help former students navigate loan repayment.
In a newly released "Dear Colleague Letter" (DCL), the Department reminded institutions of their shared obligation under Title IV of the Higher Education Act (HEA) to federal student loan borrowers-particularly as involuntary collections resume after a years-long pandemic pause.
The DCL, released on the same day the government began reactivating involuntary debt collection mechanisms, signals a new chapter in the student loan system.
These collections had been suspended since the early stages of the COVID-19 pandemic, giving borrowers a temporary reprieve.
But as the Department restarts collection efforts, it's also turning a critical eye toward higher education institutions, many of which continue to raise tuition while failing to ensure their degrees lead to economic mobility.
"As we begin to help defaulted borrowers back into repayment, we must also fix a broken higher education finance system that has put upward pressure on tuition rates without ensuring that colleges and universities are delivering a high-value degree to students," U.S. Secretary of Education Linda McMahon said.
"For too long, insufficient transparency and ability structures have allowed U.S. universities to saddle students with enormous debt loads without paying enough attention to whether their own graduates are truly prepared to succeed in the labor market."
The Department is now asking institutions to their former students and remind them of their repayment responsibilities before June 30, 2025.
This includes ensuring graduates know how to access their StudentAid.gov s and are aware of the tools available to manage their loans. Institutions that fail to keep their federal cohort default rates (CDR) within federal thresholds could lose eligibility for Pell Grants and other forms of federal aid.
New data to be published
In its letter, the Department also announced plans to publish new data through the Federal Aid Data Center, showing institution-level nonrepayment rates based on borrower data.
These statistics will be drawn from the same repayment metrics used in the College Scorecard and could influence future policy around aid eligibility.
To that end, colleges and universities are strongly encouraged to engage proactively with delinquent or defaulted borrowers.
Doing so may help institutions avoid the damaging consequences of a high CDR, including potential disqualification from offering federal loans and grants.