As financial aid professionals prepare for another academic year, most offices are focused on the work immediately in front of them. Packaging awards, resolving verification issues, processing professional judgments, answering student questions, and supporting enrollment leave little time for broader strategic initiatives. August has always been one of the busiest months of the year.

Yet while institutions are understandably focused on helping students access financial aid, a troubling national trend deserves equal attention. Millions of former students are struggling to successfully repay the very loans that once helped them enroll.

A recent Los Angeles Times article, based on an Associated Press analysis, highlights the scope of the challenge. Approximately 9.5 million federal student loan borrowers are now in default, an increase of more than 4.2 million borrowers between April 2025 and March 2026. Hundreds of thousands of additional borrowers are already seriously delinquent, suggesting another wave of defaults could occur if intervention does not happen early.

The stories behind those statistics are striking. Borrowers describe navigating multiple loan servicer transfers, misunderstanding the impact of deferments and accrued interest, receiving inconsistent information about repayment options, and struggling to keep pace with changing federal repayment programs. Some believed bankruptcy had eliminated their student loans. Others expected decades of payments to result in forgiveness, only to learn they still owed tens of thousands of dollars.

These experiences should prompt an important question for financial aid leaders: What role should institutions play in preparing students not only to borrow, but also to repay successfully?

Debt Management Is a Student Success Strategy

Student loan repayment is often viewed as something that begins after graduation. In reality, successful repayment begins long before a borrower enters repayment.

Every borrowing decision contributes to a student’s long-term financial picture. The amount a student chooses to accept, the number of years required to complete a degree, enrollment patterns, and an understanding of repayment options all influence whether that borrower will experience manageable repayment or significant financial hardship.

Financial aid offices have always helped students access higher education. Increasingly, they are also positioned to help students make informed borrowing decisions that support long-term financial wellbeing.

This does not require creating entirely new programs. It requires integrating debt management into the conversations institutions are already having with students throughout their educational journey.

The Opportunity Begins Before Graduation

Federal regulations require entrance and exit counseling, but those touchpoints alone are unlikely to prepare borrowers for today’s increasingly complex repayment environment.

Borrowers need ongoing education throughout enrollment. They should understand how much they have borrowed, how interest affects their balance, what repayment options are available after graduation, and where to seek assistance if financial circumstances change.

Financial aid offices can reinforce these concepts through annual award notifications, loan acceptance communications, financial literacy programming, and regular reminders encouraging students to review their cumulative borrowing through StudentAid.gov.

These conversations become even more valuable as students progress toward graduation, allowing them to evaluate future borrowing decisions with a clearer understanding of their overall debt.

Financial Aid Offices Should Not Carry This Responsibility Alone

Preventing student loan default is not solely the responsibility of the financial aid office. Institutions are most successful when debt management becomes part of a broader student success strategy supported across campus.

Career services can help students understand employment opportunities and expected earnings within their chosen fields.

Academic advisors play an important role in keeping students on track toward timely graduation, reducing unnecessary borrowing associated with excess coursework or extended enrollment.

Financial wellness offices can provide budgeting assistance, debt management education, and personalized financial coaching that extends beyond loan counseling.

Student affairs professionals frequently identify students experiencing financial or personal challenges before those situations result in withdrawal or stop-out, creating opportunities for early intervention.

Admissions and enrollment teams also contribute by establishing realistic expectations about educational costs and responsible borrowing before students ever arrive on campus.

When these efforts are coordinated, students receive consistent messaging from multiple trusted offices rather than viewing debt management as a conversation that occurs only when accepting loans.

Communication Matters Throughout the Student Lifecycle

One of the most significant themes emerging from recent borrower experiences is confusion.

Many borrowers did not know who serviced their loans after transfers occurred. Others misunderstood deferment, repayment options, or the consequences of missing payments. Several described feeling overwhelmed by changing federal programs and simply stopped engaging with the repayment process altogether.

Financial aid offices can help reduce this uncertainty through intentional communication.

Prospective students should receive clear information about the long-term implications of borrowing and understand that loans represent an investment requiring thoughtful planning.

Current borrowers benefit from regular reminders to borrow only what is necessary, monitor cumulative debt, maintain current contact information with their loan servicer, and seek assistance before financial challenges become repayment problems.

Graduating students should leave campus knowing when repayment begins, how to identify their loan servicer, where to access official federal resources, and what options exist if they experience financial hardship.

Institutions also have an opportunity to maintain communication with alumni, periodically directing borrowers to trusted federal resources and reminding them that repayment difficulties are often easier to resolve when addressed early.

Supporting Borrowers Who Have Already Fallen Behind

The increase in defaults also serves as a reminder that institutions should continue to have relationships with former students after graduation.

Although financial aid offices cannot manage repayment on behalf of alumni, they can connect borrowers with accurate information and encourage them to take action before financial circumstances worsen.

Federal borrowers in default generally have established pathways to return to good standing, including loan rehabilitation and Direct Consolidation. Each option offers distinct benefits, and borrowers should understand those differences before deciding which path best fits their circumstances. Most importantly, borrowers should work directly with their federal loan holder or servicer rather than paying third-party companies that charge unnecessary fees for services available at no cost.

Helping alumni reconnect with trusted federal resources may be one of the most meaningful forms of outreach an institution can provide.

Looking Ahead

The recent increase in student loan defaults should serve as more than a national headline. It should encourage institutions to broaden the conversation about student financial success.

Helping students finance their education remains central to the mission of every financial aid office. Equally important is ensuring students understand the long-term responsibilities that accompany borrowing and know where to turn when financial circumstances change.

As campuses prepare for another demanding academic year, debt management deserves renewed attention. It is not simply a repayment issue or a federal compliance requirement. It is an extension of the student support mission that financial aid professionals have always embraced.

When institutions help students borrow responsibly, understand repayment, and access assistance before default occurs, they are doing more than protecting loan portfolios. They are equipping students and graduates with the knowledge and confidence to navigate one of the most significant financial commitments of their lives.

That is a conversation worth prioritizing, even in August.

At HEAG, we recognize that student loan repayment challenges are not simply a borrower issue; they are a student success issue. If your institution needs guidance on developing proactive debt management strategies, strengthening financial literacy initiatives, enhancing borrower communications, or creating campus-wide approaches to student loan default prevention, contact us at info@heag.us.