In April, the United States Department of Education (DOE) announced its intent to begin collection efforts on delinquent federal student loans. Among other things, the department’s collection efforts include an end to the temporary pause on reporting adverse borrower information to credit bureaus. It is a big deal. As reported by CBS News, an estimated 2.2 million student loan borrowers nationwide saw their credit score drop by more than 100 points following the announcement.  

All borrowers who have federal student loans should take a look at their credit report. It is crucial that you ensure that the information being reported by lenders is accurate. Any mistakes could cause serious harm to your credit score. Here, our credit report error lawyer provides a more detailed overview of where federal student loan collections stand, why it is so important to make sure your credit report is accurate, and your options if there is an error. 

Where Federal Student Loan Collections Stand as of July 2025

If you are a student loan borrower with questions about how exactly the federal student loan collection system is operating, you are certainly not alone. The federal student loan system has been in flux since the start of the COVID-19 pandemic in March 2020. There have been pauses in payments, attempts at reforms, ongoing litigation, and the gradual resumption of collection efforts. Even as we enter the Summer of 2025, there is still a lack of clarity on many key issues. Here is an overview of where federal student loan collections stand as of July 2025: 

• Reporting and Collection of Delinquent Federal Student Loans has Resumed: Federal student loan collections officially resumed in May of 2025. In doing so, the agency ended the multi‑year moratorium tied to the pandemic. As of June 2025, the Department of Education and the Treasury have restarted the Treasury Offset Program to reclaim defaulted balances via tax refund and Social Security offsets. Wage garnishments (up to 15% of a delinquent borrower’s disposable income) are set to begin later this summer. Notably, nearly 5 million borrowers are in default. TransUnion reports that 31% of borrowers are 90 (or more) days delinquent on their federal student loans. Reporting of student loan delinquencies has restarted as well. The restarting of federal collections has triggered credit score damage to more than 2.2 million people nationwide.  
• Many Student Loan Borrowers are Still in Forbearance (SAVE Plan Litigation): To be clear, there are currently many student loan borrowers who have no federal payments due. As of July 2025, millions of borrowers remain in forbearance because they are enrolled in the SAVE (Saving on a Valuable Education) repayment plan that was created by the Biden Administration. That repayment plan has not actually taken effect and almost certainly will not take effect. It is subject to ongoing litigation and is widely expected to be ruled illegal. Unlike collections against borrowers who are in default, these borrowers (SAVE enrolled) face no immediate garnishment. Instead, these borrowers are currently left in a state of limbo. If you are a borrower of federal student loans who is covered by the SAVE forbearance, you should carefully watch for any updates on when your payments will resume and under what specific terms. 
• GOP Lawmakers are Considering Major Reforms to Student Loan Repayment Plans: Republican lawmakers in both the House and Senate have proposed sweeping reforms. The proposed reforms have targeted repayment plans and federal borrowing limits. Key proposals include eliminating Grad PLUS and unsubsidized graduate loans, setting hard annual and lifetime caps ($20,500 per graduate year; $50,000 total for professional degrees), and limiting Parent PLUS borrowing. They also aim to consolidate multiple income-driven repayment plans into just two: a standard 10–25-year plan based on the principal borrowed, and a “Repayment Assistance Plan” or “RAP” tied to 1–10% of income, with a minimum payment of $10 and 30-year forgiveness. To be clear, it is still unclear if any of the GOP’s proposals for student loan reforms will become law. Changes could be made to the current proposal in the House bill and/or the Senate bill before they are passed. 

Student loan policies impact an enormous number of people and families. For reference, the Education Data Institute estimates that there are approximately 42.7 million Americans who have student loan debt. More than 15% of those borrowers are already in default as classified by the federal government. Many millions more are at serious risk of going into delinquency (and, potentially, default) in the coming months and years. 

As Reporting and Collection Resume, Serious Questions About Accuracy of Credit Reports

As federal student loan reporting and collections resume in 2025, borrowers are confronting serious issues with credit report accuracy. After years of paused payments and shifting policies, many servicers are now misreporting delinquency dates, payment statuses, or even incorrectly labeling accounts as in default. It is particularly concerning because inaccurate negative marks can drop credit scores by 100 points or more. Along with other things, that can adversely impact a person’s access to housing, car loans, favorable interest rates, and even jobs. An error on a person’s credit report is a big problem that requires immediate action. 

Consumer protection groups and credit bureaus report a spike in disputes, with the Consumer Financial Protection Bureau (CFPB) warning that loan servicers may be violating the Fair Credit Reporting Act (FCRA). Here is another big part of the problem: Millions of borrowers are unaware of what is being reported about their loans at all. For that reason, it is highly recommended that all student loan borrowers closely monitor their credit reports from all three major bureaus (Equifax, Experian, and TransUnion). If you find problems, you should promptly file a dispute. You have the right to challenge errors. Any mistakes could have long-lasting financial consequences. 

The FCRA Protects Consumers Against Credit Report Errors (Student Loans Count)

The Fair Credit Reporting Act (FCRA) is a very important consumer protection law. The FCRA provides much-needed protections to consumers facing credit report errors, including those related to federal student loans. Under the FCRA, credit reporting agencies and data furnishers, such as student loan servicers, are legally required to report accurate and complete information. If a borrower identifies an error, they have the right to dispute it. Some common examples of errors include a payment wrongly marked as late or a loan incorrectly listed in default. 

Once a dispute is filed, the credit bureau and the furnisher must investigate and correct any inaccuracies within 30 days. If they fail to do so, the consumer (student loan borrower) may be entitled to statutory damages and actual damages through legal action. With the resumption of federal student loan reporting in 2025, FCRA protections are more important than ever for those who have outstanding federal student loans. Borrowers should monitor their credit reports regularly and act quickly to challenge any mistakes that could unfairly damage their credit reports. 

Error Related to Student Loans on Your Credit Report? Know Your Rights and Options 

You pulled your credit report from the major credit reporting agencies, and you discovered that there is indeed a material error. If that error is causing any damage to your credit score, it is imperative that you take immediate action to correct it and protect your rights. The FCRA provides you with very important legal options. Here is an overview of key things to know about the law and what you need to do next: 

• You Have the Right to a Free Annual Credit Report: You are entitled to a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once every 12 months. That credit report can be obtained from AnnualCreditReport.com. Reviewing your credit report is the first step in catching student loan reporting errors and other issues. 
• You Have the Right to Dispute Inaccurate Information: Under the FCRA, you have the right to dispute any incorrect or outdated information. To be clear, that includes student loans that are misclassified as delinquent, in default, or that have the wrong balance. Once you file a dispute, the credit bureau must investigate and respond within 30 days.
• You Have the Right to an Accurate Investigation: Credit bureaus must conduct a “reasonable investigation” of your dispute. They are required to contact the student loan servicer (also known as the furnisher of the data) and verify the accuracy of the information. If the loan servicer fails to prove the information is correct, the credit bureau must remove/correct it. If they fail to do so, the credit bureau may bear liability. 
• You Have the Option to Dispute Errors Directly with a Loan Servicer: In addition to contacting the credit bureau, you can submit a written dispute directly to your loan servicer. Doing so is often a good strategy if you have supporting documents that demonstrate that there is an error on your credit file. That evidence may include payment records, approval of forbearance, or any relevant written communications. 
• You Have the Right to Sue for Damages: If inaccurate student loan information is not corrected and harms you financially, you may be able to file a lawsuit. The FCRA allows for statutory damages, actual damages, and in some cases, punitive damages. You may also recover attorney’s fees if the servicer or credit bureau acted willfully or negligently. Notably, you may be entitled to recover damages from the furnisher (lender, debt collector, etc), the credit reporting agency, or both. 
• You Have the Right to Add a Statement of Dispute: If a dispute does not resolve in your favor, you have the right to add a 100-word statement explaining the issue to your credit file. While this does not remove the negative mark, it gives future lenders or employers context when they review your report. That context can help when parties pull your credit report in the future.

Dealing with student loan credit errors can be deeply frustrating. It is normal to feel stressed out and overwhelmed. Here is the good news: You are not powerless. Know your rights, take prompt action, and do not hesitate to seek legal help if you are getting nowhere. Your credit score matters. Fixing errors now can protect your financial future. Our FCRA lawyer can help. 

How FCRA Attorney Richard H. Kim Can Help Student Loan Borrowers

An error on your credit report can cause you serious financial harm. If there is any type of inaccurate information about your student loans—whether it is a misstatement about how much you owe, false representations of missed payments, or other flaws—it is imperative that you take immediate action to correct the problem. The Fair Credit Reporting Act (FCRA) requires both furnishers of information and credit reporting agencies to ensure that they review, investigate, and correct any errors in a timely manner. They can be held legally responsible for their failure to do so. 

Richard H. Kim is a credit report error lawyer with extensive experience handling FCRA cases. A strong, aggressive advocate for consumer rights, Attorney Kim has the knowledge and legal expertise to protect the rights of student loan borrowers who have had incorrect information cause damage to their credit score. Attorney Kim also handles debt collector harassment cases. If you are a student loan borrower with any questions about your rights or options under the FCRA or another state or federal law, we encourage you to contact our office for a confidential initial case review. 

Contact Our Credit Report Error Attorney Today

At The Kim Law Firm, LLC, our credit report error lawyer has the knowledge, skills, and legal experience that you can rely on. If you are a student loan borrower with any questions about an error on your credit report, we are here to help. Contact us for a completely confidential, no-obligation initial consultation. We represent consumers in credit report error cases nationwide.