Nearly 2 million federal student loan borrowers who’ve requested to be in an affordable repayment plan are stuck in a backlog of applications, waiting to be approved or denied, according to new data recently shared by the U.S. Department of Education.

The Education Department disclosed the information in a May 15 court filing in response to a legal challenge lodged by the American Federation of Teachers. The teachers’ union sued the Trump administration in March for shutting down access to income-driven repayment plan applications on the Education Department’s website.

IDR plans cap borrowers’ monthly bills at a share of their discretionary income with the aim of making their payments manageable.

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In late March, the Trump administration made the online applications available again, and said that it pulled the forms because it needed to make sure all repayment plans complied with a court order that blocked the Biden administration’s new IDR plan, known as SAVE, or the Saving on a Valuable Education plan.

Trump officials argued that the ruling had broader implications for other IDR plans, and it ended up removing the loan forgiveness component under some of the options.

The backlog complicates things for borrowers as the Trump administration restarts collection activity. The Education Department estimates that nearly 10 million people could be in default on their student loans within months.

Without access to an affordable repayment plan, student loan borrowers can be suspended on their timeline to loan forgiveness and at risk of falling behind and facing collection activity.

In recent months, the Trump administration has terminated around half of the Education Department’s staff, including many of the people who helped assist borrowers.

That is also likely one reason why so many of the applications haven’t been processed, said higher education expert Mark Kantrowitz.

“Perhaps the reduction in staff is affecting their ability to process the forms,” Kantrowitz said.

The Trump administration’s resumption of collection efforts on defaulted federal student loans has far-reaching consequences for delinquent borrowers.

For starters, borrowers who are in default may have wages, tax returns and Social Security payments garnished.

But involuntary collections could also have a “spillover effect,” which puts consumers at risk of falling behind on other debt repayments, according to a recent report from the Federal Reserve Bank of New York,

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The U.S. Department of Education’s crack down on student loan repayments could take billions of dollars out of consumers’ pockets, reports show. Monthly collections on defaulted loans may reduce disposable personal income between $3.1 billion to $8.5 billion a month, according to research by JPMorgan.

“Part of the reason that some people are adding to credit card debt is because they have student loan payments — that’s the spillover effect,” said Ted Rossman, senior industry analyst at Bankrate. “Something’s got to give.”

Until earlier this month, the Department of Education had not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That on-ramp officially ended on Sept. 30, 2024, and the Education Department restarted collection efforts on defaulted student loans on May 5.

Whether borrowers face garnishment, or opt to resume payments to get current on their loan, that’s likely to have a significant impact on their wallet.

“It’s just money that can’t go to other financial things,” said Matt Schulz, chief credit analyst at LendingTree. 

After the five-year pause ended and collections are resumed, the delinquency rate for student loan balances spiked, the New York Fed found. Nearly 8% of total student debt was reported as 90 days past due in the first quarter of 2025, compared to less than 1% in the previous quarter.

Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default, according to the Education Department. Another 4 million borrowers are in “late-stage delinquency,” or over 90 days past due on payments.

Among borrowers who are now required to make payments — not including those who are in deferment or forbearance or are currently enrolled in school — nearly one in four student loan borrowers are behind in their payments, the New York Fed found.  

As borrowers transition out of forbearance and into repayment, those borrowers may also face challenges making payments, according to a separate research note by Bank of America. “This transition will likely drive delinquencies and defaults on student loans higher and could have further knock-on effects for consumer finance companies,” Bank of America analyst Mihir Bhatia wrote to clients on May 15.

In a blog post, the New York Fed researchers noted that “it is unclear whether these penalties will spill over into payment difficulties in other credit products, but we will continue to monitor this space in the coming months.”

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In April, U.S. President Donald Trump enacted sweeping tariffs of varying rates affecting more than 180 countries and territories. Last week, the U.S. and China struck a deal to temporarily suspend most tariffs on each other’s goods. The U.S. also recently unveiled a trade agreement with the United Kingdom. 

Despite the recent trade agreements and deals, consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to a recent report by the Yale Budget Lab. 

James Lee, president of the Identity Theft Resource Center, said it’s not unusual for scammers to take a government action — whether that’s a new program or policy — and use it for the basis of a scam.

Scammers “will use the fact that people don’t know a lot about tariffs,” Lee said.

The PreCrime Labs team at BforeAI, a cybersecurity company, discovered about 300 domain registrations from cybercriminals related to tariffs in the first few months of the year. Some spread misinformation while others are financial scams aimed at businesses and consumers.

One site the company found was a newly registered phishing domain positioned to lead consumers to believe they are required to make payments to a legitimate governmental entity.

“Such payment requests are likely to be spread using email or messaging campaigns with a theme of urgent, pending payments, directing victims to the fraudulent site where their actions will result in financial losses,” researchers noted.

There are some cases where consumers might legitimately pay for products purchased from another country, namely, customs duties. Sometimes the U.S. Customs and Border Protection will charge consumers a processing fee in order to release an imported good. 

“That’s not common, but it’s also not unusual,” said Lee. “It really does depend on what it is, where it’s coming from.”

Some consumers have also recently reported receiving legitimate payment requests from carrier companies after a purchase in order to receive their shipments, the Washington Post reports.

Some carriers are acting as the importer of record, meaning they are responsible for any duties, taxes and fees that are applied to the delivery, said Bernie Hart, vice president of customs of Flexport, a logistics firm.

If the carrier did not collect those additional fees for the product up front, the carrier will charge the end consumer those additional costs through a follow-up bill, he said.

This tactic might not last, because it creates a lot of inconvenience for both companies and shoppers, Hart said: “It’s not good for anybody in this process to give somebody a surprise bill.”

If you receive a request to pay import fees or duties on a purchase, look for the form 7501, which is an official government document detailing the import, said Hart.