The reverberations of the Department of Education’s recent “Dear Colleague Letter” (GEN-25-19) are being felt across higher education institutions nationwide – and for good reason. This isn’t just another administrative update; it’s a clear call to action, urging colleges and universities to proactively engage former students about their federal loan repayment obligations before the situation escalates.
The statistics in the letter paint a stark picture: only 38% of Direct Loan and Department-held FFELP borrowers are current on their loans, while nearly 25% are in default or late-stage delinquency. Coupled with the resumption of collection activities like the Treasury Offset Program and Administrative Wage Garnishment, the pressure on borrowers – and by extension, institutions – is mounting.
The Department’s Urgent Plea: Proactive Outreach is Key
The Department explicitly “strongly urges all institutions to begin proactive and sustained outreach to former students who are delinquent or in default on their loans.” The reasoning is clear: to prevent defaults, protect borrowers, and, crucially, safeguard your institution’s future eligibility for federal student aid.
The letter outlines specific actions the Department wants institutions to take, and by June 30, 2025, no less:
- Remind borrowers of their repayment obligations.
- Direct them to valuable resources on StudentAid.gov regarding repayment options.
- Encourage them to update their contact information on StudentAid.gov to ensure they receive important updates.
Why This Matters to Your Institution – Beyond Compliance
While adhering to federal guidance is paramount, the implications of inaction extend far beyond simply ticking a box. The Department is clear: institutions with high Cohort Default Rates (CDRs) risk losing eligibility for federal student assistance, including Pell Grants and federal student loans. With CDRs published in 2026 factoring in borrowers who entered repayment in 2023, the time to influence those numbers is now (if not, 16 months ago).
Furthermore, the Department plans to increase transparency by publishing institutional loan non-payment rates. This public scrutiny will undoubtedly impact your institution’s reputation and potentially influence prospective students and their families.
The Challenge: Resources and Reach
Implementing a comprehensive default aversion strategy for all former students who ceased enrollment since January 1, 2020, can be a significant undertaking. Identifying the right individuals, crafting effective messaging, and managing the communication process requires time, resources, and expertise that your team may already be stretched thin on.
The Solution: Partner with ION for Proactive Success
This is where specialized solutions like ION’s Student Loan Default Aversion service become invaluable. ION is designed to shoulder the responsibility of this crucial outreach, providing:
- Efficient Data Integration: Seamlessly connect with your student data to identify the target audience.
- Personalized and Timely Communication: Craft and deliver tailored messages through various channels (phone, email, etc.).
- Expertise in Student Loan Repayment: Guide former students towards the resources and options they need.
- Comprehensive Reporting: Track outreach efforts and measure impact on potential default rates.
The Department of Education’s message is clear: proactive engagement is no longer optional; it’s essential. By taking action now, you can not only comply with federal guidance but also safeguard your institution’s financial health.
Don’t wait until June to begin this critical outreach. Partner with IonTuition to streamline the process, maximize your impact, and help you navigate this crucial period with confidence. Get started here: iontuition.com/default-aversion