The White House is seen in Washington, D.C.on September 09, 2025.
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The U.S. Department of Education may soon begin sharing information with students and families on “the benefits and risks” of federal student loans, the Trump administration recently announced.
The department’s Office of the Ombudsman will take “a proactive approach to improve financial literacy,” according to a Sept. 5 press release, so that students “are better equipped to make careful borrowing decisions.”
The agency said its effort comes as outstanding federal student debt nears $1.7 trillion, and “loan defaults and delinquencies remain at record highs.”
Elaine Rubin, director of corporate communications at Edvisors, said that “addressing financial literacy and college costs in the process of financial aid is never a bad thing.”
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Historically, the Ombudsman’s office dealt primarily with complaints from student loan borrowers. However, it’s unclear what the fate of that work will be after the Education Department’s sweeping layoffs in March.
Experts say the staff cuts also raise questions about how the Trump administration will be able to launch this new borrowing education effort.
“The real question is whether there’s anybody left in the Ombudsman’s office to do any of this,” said higher education expert Mark Kantrowitz.
Effort amid high delinquency rates
The U.S. Department of Education headquarters is seen on March 06, 2025 in Washington, DC.
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The Trump administration said more financial guidance is needed for borrowers amid the student loan portfolio’s “sobering statistics.”
More than 42 million Americans carry federal student loan debt. As of June, over 6 million borrowers were delinquent, and more than 5 million were in default, the Education Department said.
“By providing clearer guidance and support at the front end of the college journey, we believe students will make more informed decisions that lead to lower debt burdens, stronger repayment outcomes, and greater satisfaction with their educational investment,” said Undersecretary of Education Nicholas Kent, in a statement.
More pressing problems, consumer advocates say
Consumer advocates said the Education Department’s efforts could pull resources needed to address more pressing problems, including fixes for millions of borrowers who are unable to access affordable repayment options.
“By shifting focus to borrower education, it diverts attention from the urgent need to resolve consumer complaints and systemic servicing failures,” said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York.
As of the end of July, the Education Department had a backlog of more than 1.3 million applications from borrowers trying to get into an income-driven repayment, or IDR, plan, recent court documents show.
The pileup of applications is due, in part, to the end of President Joe Biden’s SAVE, or Saving on a Valuable Education, plan. That program was meant to significantly lower millions of borrowers’ bills but was met with Republican-led legal challenges and eventually repealed this summer in President Donald Trump’s “big beautiful bill.”
Many student loan borrowers now can’t afford the repayment plan options available to them, consumer advocates said. The monthly payments on SAVE were much lower than those offered under other plans, and recent legislation further narrows borrowers repayment choices.
“There is no amount of financial literacy that will solve the more than 1.3 million IDR application backlog or give answers to borrowers who have to wait on hold for several hours to find out the status of their loans,” said Persis Yu, deputy executive director and managing counsel at the Student Borrower Protection Center.