CENTRAL TEXAS — There is $1.6 trillion in federal student loan debt that’s owed by almost 43 million Americans, and starting this week the federal government is looking to collect on debt from borrowers in default. Challenges await them, including Central Texans, during trying economic times.
Dr. Pedro Reyes is a college professor in Central Texas and he is one of millions of student loan borrowers taking a harder look at their finances as the federal government resumes collections on default student loan debt on May 5, 2025.
He said, “My escrow just went up. My appraisal for next year’s taxes just went up. So my mortgage went up. So how’s all that gonna be factored into trying to figure out what I can really afford.”
25 News' Bobby Poitevint reached out and requested Dr. Reyes share his story and perspective as a federal student loan borrower about what he's going through to get answers on repayment options, which he said is tricky.
“Well, I know what I can’t do. It’s a question of what can I do so that I don’t go into default and so right now I’m just trying to get a hold of a real person, a live person, versus just trying to have a conversation by email," said the Baylor University professor.
He told us he owes a little over $400K, which helped him secure three degrees. But most of that debt is accrued interest, he said.
That debt also includes Parent PLUS loans.
He said, as of right now, he's looking at a repayment amount upwards of a thousand dollars a month.
Dr. Reyes said he takes responsibility for his loans and plans to repay them. The question he and millions of other borrowers are asking now is: how and how will it impact their livelihood?
“How am I gonna eat? How am I gonna save for retirement? How am I gonna save for an emergency" said Dr. Reyes “Honestly, I thought about going ahead — I’m at the age where I can start drawing social security but I’m gonna be penalized because I’m not 65 yet.”
He's not alone.
Dr. Billy J. Hensley, President and CEO of the National Endowment for Financial Education, told 25News' Bobby Poitevint that three-quarters of surveyed borrowers had to make changes to their monthly budget to accommodate for student loan repayments.
According to a Fall 2024 survey by NEFE, 28% of borrowers had to cut $500 out of their budget, 21% had to cut between $500-$1000, and 10% had to cut more than $1000.
Dr. Hensley responded to this data and said, "That's a pretty significant cut" that goes into groceries, utility bills along with social and vacation expenses. He said this is on top of inflation where 50-60% of the average American consumer lives paycheck to paycheck.
He said, "You add inflation on top of that and you've got some really stretched budgets."
NEFE also found 56% of borrowers continued to make payments even when there was a pause in repayment and around 46% of them made most or every payment.
Want to see step-by-step how to make a payment on your student loans?
Check out the video below.
During the pandemic in March of 2020, the Trump administration paused federal student loan repayments along with interest accruals as a temporary relief measure for borrowers. The pause covered roughly 90% of all outstanding student loans as reported by the Federal Reserve Bank of Boston.
The Department of Education reports they haven't collected on defaulted loans since that pause went into place but that is expected to change this May.
According to a January 2025 report by The Federal Reserve Bank of Boston, credit limits and balances grew faster for student loan holders than for individuals without student loans.
“Well supposedly during the pause, what I remember reading, was there was a zero interest pause. I’ve yet to see that" Dr. Reyes said.
Dr. Reyes told us he made many payments before the pause even while facing rising interest rates over the last few decades and federal student loan laws changing during different Presidential administrations.
“When the grace period ended in the Fall, the number of people who did not begin to make payments, those are the people who are gonna be most impacted, especially if they’ve not started payments by mid-May," said Dr. Hensley.
Dr. Hensley recommends that borrowers start with studentaid.gov to get answers especially if you received your federal student loans through FAFSA. He wants borrowers to keep in mind that collections can impact credit scores.
