HOUSTON – For millions of Texans carrying student loan debt, ignoring the problem may seem easier than trying to navigate a rapidly changing repayment system.
But student loan expert Sonia Lewis says doing nothing could leave borrowers facing damaged credit, default, collections and potentially years of additional payments.
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“Ignorance is expensive in this season because of all of the parameters that will be imposed on you if you don’t want to go or can’t go into repayment, and you don’t communicate,” Lewis said.
Her warning comes as the federal student loan system undergoes major changes, creating different repayment and borrowing rules for existing and new borrowers.
And Texas has a lot at stake.
NEARLY 4 MILLION TEXANS HAVE STUDENT LOAN DEBT:
According to data published by the Alabama Gazette, Texas has 3,969,300 student loan borrowers, representing 12.69% of the state’s population.
The state has approximately $137.4 billion in outstanding student loan debt, with an average balance of $34,608 per borrower.
The burden varies significantly by age.
Texas borrowers have average balances of:
- $12,646 for borrowers 24 and younger
- $29,480 for borrowers ages 25 to 34
- $43,400 for borrowers ages 35 to 49
- $47,571 for borrowers ages 50 to 61
- $43,681 for borrowers 62 and older
That means student loan debt isn’t simply a problem facing people fresh out of college. Thousands of older Texans are carrying balances well into their 50s, 60s and beyond.
THE DANGER OF DOING NOTHING:
Lewis, who has spent years helping borrowers understand federal student loan repayment and forgiveness, said borrowers shouldn’t assume that ignoring their loans will make the problem go away.
“There may be some people watching like, ‘Girl, I’m not about to pay these loans,’” Lewis said. “That’s fine.”
But she said borrowers who stop communicating with their loan servicer can find themselves in a much more serious situation.
Their loans could already be in default or eventually go into default, she said.
For borrowers who are struggling to make payments, Lewis said the important thing is to communicate that financial hardship rather than simply stop paying.
“If you’re someone watching, like, ‘I can’t afford these payments,’ well, that has to be communicated on an income-driven repayment application,” Lewis said.
A MISSED PAYMENT CAN BECOME A BIGGER PROBLEM:
Lewis said borrowers should pay attention to their repayment status before a missed payment develops into a larger financial crisis.
“The main thing is I would tell borrowers to go into StudentAid.gov, log in, create your account or reset your account, and let’s just see what your dashboard says,” she said.
If the account shows the borrower is in repayment, Lewis said borrowers should take action rather than wait.
“We don’t want you to have a 100-point credit drop because you’re just 60 days late,” she said.
Lewis also warned that default can have even more serious consequences.
“If you’re 270 days due or late, they’re going to start the garnishment process,” she said, adding that the government can potentially take a portion of a borrower’s paycheck.
For someone already struggling financially, losing part of a paycheck could make it even harder to catch up.
STUDENT LOANS CAN HURT YOUR CREDIT:
Lewis said student loans can affect borrowers’ credit in two significant ways: delinquency and default.
“In this season, student loans can impact your credit in two ways,” Lewis said.
She said a borrower who becomes seriously delinquent could see a substantial drop in their credit score, while default could cause an even larger decline.
That matters because a damaged credit history can follow a borrower beyond the student loan itself, potentially affecting access to other forms of borrowing.
Lewis said borrowers who eventually complete a successful loan rehabilitation program may have their credit reports updated to remove the default notation.
But her larger message is that borrowers should try to address the problem before reaching that point.
“The goal is to stay on top of this before it hits late or default,” Lewis said.
A LOWER PAYMENT DOESN’T NECESSARILY MEAN A CHEAPER LOAN:
The federal student loan system is also changing, and Lewis said borrowers need to be careful when choosing a new repayment plan.
Existing borrowers may have to evaluate options including Income-Based Repayment, Pay As You Earn and Income-Contingent Repayment, as well as the newer Repayment Assistance Plan, or RAP.
Lewis said one of the biggest mistakes borrowers can make is looking only at the monthly payment.
“The challenge with that plan that most borrowers don’t know is that that plan will take your repayment from a 20-year mark to a 30-year mark,” she said.
In other words, a borrower could receive a more affordable monthly payment while potentially extending the amount of time they spend repaying the debt.
“So you may get an affordable payment, but you’re now having to pay an extra 10 years,” Lewis said.
For borrowers who may already be close to forgiveness under an existing repayment program, switching plans could also have important consequences.
Lewis said borrowers need to understand how a new repayment plan could affect their progress toward forgiveness before making a change.
BORROWERS SHOULDN’T ASSUME THEY CAN SIMPLY SWITCH BACK:
One of the issues Lewis highlighted is the importance of knowing how far a borrower is from potential forgiveness before changing repayment plans.
She said Congress required an income-driven repayment tracker to be available through StudentAid.gov so borrowers can see how close they are to forgiveness.
But Lewis warned that borrowers shouldn’t assume they can move into a new plan and later return to an older plan without consequences.
“The administration put a loophole in the One Big Beautiful Bill that said if you go into our new plan, RAP, you will not be able to switch back to an older plan and finish up forgiveness,” Lewis said.
For borrowers who may already have years of qualifying payments behind them, that could make understanding their individual loan history particularly important.
WHAT TEXAS BORROWERS SHOULD DO:
Lewis recommends that borrowers start by finding out exactly where they stand.
That means logging into StudentAid.gov and reviewing their loan information, repayment status and available options.
Borrowers who have experienced a change in income should make sure their current information is reflected when applying for an income-driven repayment option.
Lewis said borrowers sometimes fail to account for changes that could affect their payment calculation.
“Did my income change? Did it drop? Is it different? Did I do less overtime from last year to this year?” she said.
Household size and current income can also matter when determining eligibility and payments.
The biggest mistake, she said, is waiting.
‘IGNORANCE IS EXPENSIVE’:
With nearly 4 million Texans carrying student loan debt, the stakes are high.
For borrowers who cannot afford their current payment, ignoring the bill isn’t the same as solving the problem.
It can mean moving from repayment into delinquency, from delinquency into default and potentially into collections or other enforcement actions.
And even borrowers who can afford their payments need to understand whether their current repayment plan is still the best option as federal rules change.
Lewis’s advice is simple: Know what you owe, know what repayment plan you’re in and understand what changing plans could mean before making a decision.
“Ignorance is expensive in this season,” Lewis said.
For Texas borrowers, finding out what happens next could be far less costly than finding out the hard way.