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After a five year reprieve, the U.S. Department of Education (ED) is coming for defaulted federal student loans. The ED has not collected on defaulted loans since all payments on federal student loans were paused as part of the Covid-19 emergency relief effort in 2020. Student loan payments resumed on September 1, 2023 for all 42.7 million federal student loan borrowers. The majority of borrowers resumed monthly payments at that time and have loans in good standing. However, some 5 million borrowers have not made a payment for more than 270 days, meaning their loans are currently in default. The ED refrained from collecting on defaulted loans until earlier this week. Nearly 5 million more borrowers are currently delinquent, meaning they have missed at least one payment and owe a past due amount. If these borrowers dont repay the past due amount or otherwise make their federal loans current, we may see upwards of 10 million borrowersalmost one-quarter of all federal borrowersdefault on their federal student loans before the end of this year. Unfortunately, the government has called in the heavies to enforce collections on defaulted loans. The good news is that the Department of Education wont send a leg-breaker named Eyeball to shake down borrowers for missing payments. The bad news is that government collections garnish your paycheck or Treasury payments instead of menacing you in a dark alley. Whether youre in good standing, delinquent, or in default on your student loans, its important to understand what to expect from federal student loan collections. Heres what you need to know. Garnishment hasnt started yet If youve only seen the headlines about collections restarting for defaulted loans, you might assume that as of May 5, 2025, borrowers in default were already seeing money lifted from their paychecks and Treasury payments. But even though we have a WWE Secretary of Education, the ED cant pull a heel-turn without any warning. According to Adam Minsky, an attorney who focuses on helping student loan borrowers and their families, it was only the Treasury Offset Program (TOP) that began this week. In other words, as of May 5, TOP began the process of identifying borrowers in default so they can be notified of the governments intent to offset, aka garnish. As of Wednesday, May 7, TOP has sent initial notices to 195,000 federal student loan borrowers. But borrowers have a 65-day window to respond to the notices before any offset actually begins, Minsky says. This means any borrower in default still has time to avoid garnishment even if they have already received a notice. Challenges facing borrowers in default Although no one is facing an immediate threat of garnishment, it can still take time to go from default to good standing, especially considering the logistics of federal student loan repayment. To start, interest has been accruing on all defaulted loans since September 2023, increasing the total debt burden for borrowers in default. Additionally, many federal student loans have been transferred from one servicer to another, leaving many borrowers confused as to who they need to pay. Finally, Minsky also warns borrowers about Uncle Sams long memory. Unlike most other types of consumer debt, federal student loans do not have a statute of limitations, he says. That means they don’t expire, and the government can pursue defaulted federal student loan borrowers even if the loans are many years old. So maybe you should let go of your plan to grow a mustache and go on the lam instead of dealing with your defaulted loan. However, there are some concrete strategies borrowers can use to get out of default. Returning your loan to good standing Jenny Twomey, manager of external communications at private lending company Earnest, wants to reassure borrowers that they can take control of their defaulted student loans. She recommends following these steps to return their loans to good standing: Find your federal student loan servicer The first thing you should do is figure out exactly who your current loan servicer is. And if youre embarrassed that you dont know, Twomey wants to assure you that youre in good company. Its common for people to not know who is servicing their loan, she says. In addition to the giant game of hot potato that MOHELA, Aidvantage, and Nelnet seem to be playing with federal student loans, borrowers can lose touch with their loan servicer after moving, changing their email address, losing their password, or otherwise focusing on other stuff over the course of five tumultuous years. There are a couple of ways to find your loan servicer: Check your Federal Student Aid account. There should be a section called My Loan Servicers on your dashboard and that has your servicer information for you, Twomey says.To log into this account, you will need your email, phone number, or FSA ID username. If youve forgotten your login, the Federal Student Aid site offers several methods for accessing or recovering your account. Call or email the Federal Student Aid Information Center. You can contact this information center at customerservice@studentaid.gov or 1-800-4-FED-AID (1-800-433-3243) Refer to your original loan documents. Your original loan documents will have your servicers listed, says Twomey. That will tell you who your servicer was to begin with. Look at your credit report. Something thats not common knowledge is that your servicers are listed on your credit report as well, says Twomey. Youre entitled to a free copy of your annual credit report each year at AnnualCreditReport.com. Pulling up your credit report to find your servicers will let ou cross two financial tasks off your to-do list: find your servicer and review your credit report for errors. Check your federal student loan terms Once youve found your servicer, you will need to find all the details of your loan, including your current loan balance your interest rate the length of your repayment period the monthly payment These terms can come as a surprise to borrowers, even if they havent missed a payment. Twomey says that a recent Earnest survey found that graduates expect to pay off their student loans in an average of 6 years, but the actual average repayment period is 20 years. Knowing these terms allows you to make a plan for returning your loan to good standing. Explore your options with your servicer Minsky explains that loan servicers may offer a number of options for avoiding collections. You can contact your servicer to determine which of these potential strategies might work best for your financial situation. Just remember that each strategy has benefits and drawbacks, and not all of these options will work for every borrower. Switch to an income-driven repayment If your loan is delinquent, meaning your payment is less than 270 days past due, you may be able to ask your servicer to switch you to an income-driven repayment (IDR) plan. Your monthly payment on an IDR is based on your income and family size, meaning your payment may be as low as $0 per month. When you apply for IDR, your servicer may put your loan on administrative forbearance while your application is processed. Just remember that borrowers already in default cant apply for IDR. Student loan discharge: There are some specific situations where borrowers can have their loans discharged, meaning they are no longer obligated to repay the loan. If your school closed or lost its accreditation, if you have become totally and permanently disabled, or if you meet certain requirements when declaring bankruptcy, you may be eligible for loan discharge. Loan rehabilitation: Under this option, your loan servicer will set a monthly payment amount equal to either 10% or 15% of your annual discretionary income, divided by 12. You must make 9 payments of this amount within 20 days of the due date over 10 consecutive months, which will return your loan to good standing. You may only take advantage of loan rehabilitation once. Up to 20% of each payment may be applied to collection fees, but these fees are not capitalized if you complete the rehabilitation. Loan payoff: Paying off your loan in full will get you out of default, but most borrowers dont have 10s of thousands of dollars lying around for that purpose. That leaves two options for paying off a defaulted loan: consolidation and refinancing.Federal Direct Loan Consolidation allows you to combine multiple federal student loans into a single loan. While consolidation will not reduce your interest rate, it can potentially lower your monthly payments and it will make all of your federal loans current. You have to make three consecutive payments on a defaulted loan before you can apply for consolidation and you cant consolidate a defaulted loan that is already being collected through garnishment. This means any borrower who has already received a notice of garnishment from the ED has a limited window to qualify for consolidation. Private refinancing is when you borrow a new loan to pay off your federal student loan. While well-qualified borrowers may be able to get a private loan with low interest rates and favorable terms, borrowers with a defaulted federal loan are unlikely to be considered well-qualified. Applying with a co-signer may help a struggling borrower qualify for a low-cost private loan, but it can be difficult to find a willing co-signer. Additionally, refinancing your federal loans with a private loan means losing federal borrower protections. Take the heat off your defaulted student loans The federal government may have restarted involuntary collections of defaulted student loans, but that doesnt mean youre doomed to see your wages, tax refunds, and Social Security benefits garnished. To start, the Treasury Offset Program just started notifying borrowers of the intent to garnish this week. Borrowers have 65 days to respond before any money is withheld from their payments, meaning there is time to correct a defaulted loan. Even if you have lost or forgotten your servicer information, you can find it by logging onto studentaid.gov, contacting the federal student aid information center, checking your original loan documents, or even looking at your credit report. Once you have found your loan servicer, check your loan balance, interest rate, repayment term, and monthly payment. With that information in hand, contact your servicer to discuss what options are available for returning your loan to good standingincluding income driven repayment, loan discharge, loan rehabilitation, consolidation, or refinancing. The gears of federal student loan collections grind slowlywhich means you can get ahead of them before your wages or Treasury payments are at risk.
Category:
E-Commerce
For well over a decade now, consumers have been used to new iPhones coming out in the fall, like clockwork. However, according to a series of reports, Apple may be planning to change its iPhone release schedule drastically. The change could significantly impact when you can buy your next preferred model of the iPhone. It could also provide Apple with several key advantages in an increasingly competitive smartphone landscape. A staggered iPhone release Apple released the original iPhone on June 29, 2007. For the following three years, Apple released a new iPhone every June or July. But in 2011, Apple altered its iPhone release window, shifting to a fall launch date for the iPhone 4s. Since that date, Apples new family of latest and greatest iPhones has launched every fall, with the exception of the iPhone SE (which was historically not considered part of the latest iPhone family) and this years iPhone SE replacement, the iPhone 16e. Yet, according to two reports this weekone from The Information and one from respected TF International Securities analyst Ming-Chi Kuo2025 is the last year that Apple will launch an entirely new iPhone family of entry-level and premium phones in unison in the fall. Instead, beginning in 2026, Apple will move to a biannual iPhone release schedule, which will see the pricier premium iPhone models launch in the fall, and the cheaper entry-level and budget iPhone models in the first half of the following year. You can still expect to see Apple launch the new iPhone 17 family in full this fall: most likely the entry-level iPhone 17 and the premium iPhone 17 Slim/Air (the exact name of the new, thin iPhone is uncertain at this point), iPhone 17 Pro, and iPhone 17 Pro Max. But this will be the last year Apple releases entry-level and premium family members at the same time. (The budget iPhone 17e is expected to debut in Spring 2026 as is usual for the budget model). Starting in 2026, though, things will change. Apple will launch the premium iPhone 18 series models, including the iPhone 18 Pro, iPhone 18 Pro Max, and iPhone 18 Slim/Air, along with a new foldable iPhone 18 in the fall. However, the entry-level iPhone 18 and budget iPhone 18e wont be released until approximately six months later, in the spring of 2027. This new staggered release schedule is sure to irritate some consumers, particularly those who enjoy buying the entry-level new iPhone model every September. However, the change will benefit Apple in several ways. Chinese competition The Information was the first to report on Apples planned release schedule changes, followed a few days later by a report from TF International Securities analyst Ming-Chi Kuo. Kuo suggested that one of the main reasons Apple was shaking up the iPhone schedule was to give the company an advantage in China, which is Apples second-largest market after the U.S. According to Kuo, Apple is facing intense competition in China, and since many smartphone manufacturers now release phones in China in the first half of the year, this leaves Apple at a disadvantage. Traditionally, when competitors launch their new phones in the first half of the year, Apple is selling a phone that is already six months old. Thats not great optics from a marketing perspective. By moving the iPhones entry-level and budget e versions launch to the first half of the year, Apple can market new phones while its competitors are doing the same. This benefits Apple not only in China but also around the world. Springtime has historically been one of Apple’s slower sales periods because the company does not usually have a major new flagship iPhone product launch at that time. However, by launching the entry-level version of the latest flagship iPhone series in the spring, Apple can boost its sales during this period. Compelling consumers to buy pricier models Having a fresh new flagship phone on the market isnt the only advantage Apple can gain from staggering its newest iPhone family launch across two different points during the year. The strategy may also encourage consumers who desire the latest iPhone to upgrade to the premium model instead of waiting another six months for the entry-level model to be released. For example, someone who really wants a new iPhone 18 in 2026 will need to opt to purchase one of the premium iPhone 18 models, which is expected to include the iPhone 18 Pro, iPhone 18 Pro Max, iPhone 18 Slim/Air, and foldable iPhone 18. They wont have the option to buy the cheaper iPhone 18 or iPhone 18e until around six months later, in 2027. Delaying the less expensive models by six months may compel some consumers to opt for the pricier premium ones instead, ultimately benefiting Apples bottom line. Easing manufacturing bottlenecks Finally, Apple could also benefit from a manufacturing perspective if it shifts to a biannual iPhone release schedule, as The Information pointed out (via MacRumors). Currently, Apples manufacturing partners around the worldbut primarily in Chinamust bring on tens of thousands of workers every summer to assemble iPhones for the fall launch. Bottlenecks can easily occur in the manufacturing chain if enough workers aren’t available. However, if Apple staggers its iPhone rollout throughout the year, Chinese manufacturers may not need to staff up at the levels traditionally required. As a result, it is less likely that labor shortages will impact iPhone launch dates and availability. This may help Apple mitigate some manufacturing risk, which could otherwise delay product launches and thus hurt sales. 2025: The last year for a unified iPhone family launch? Of course, it should be noted that Apple hasnt confirmed plans to transition to a biannual iPhone release schedule in 2026and the company will likely not announce anything until it unveils the new premium models that fall. Still, the move does make a lot of sense for the company from both a marketing and financial perspective. Given that The Information and Kuo both have good track records when it comes to reporting on Apples supply chain plans, the change seems more likely than not. What that means for consumers is that 2025 is probably the last year that Apple will launch the full family of the newest iPhones simultaneously, marking the end of an era of sorts for the iPhone.
Category:
E-Commerce
Andrew Hoffman is a professor at the University of Michigans Ross School of Business. He has been writing and teaching about business and environmental issues for almost 30 years, having published 18 books and over 100 articles. His work has been covered by the New York Times, Scientific American, Time, The Wall Street Journal, The Atlantic, and NPR. Whats the big idea? We need to rethink business education. If we keep producing business graduates who care only about making their wallets fatter and exploiting a broken system, then were doomed. Its urgent that we reshape how we teach business in higher education so that we create a different kind of business leader. We can alter business for the better and fix the market by changing the graduates we produce that go on to run those businesses. Below, Andrew shares five key insights from his new book, Business School and the Noble Purpose of the Market: Correcting the Systemic Failures of Shareholder Capitalism. Listen to the audio versionread by Andrew himselfin the Next Big Idea App. 1. Shareholder capitalism is broken Todays version of capitalism is shareholder capitalism. It doesnt work anymore for the purposes for which it was designed. Im not saying we need to throw it out, but we must amend it. We need to fix it. There are many key concerns in the market, but two stand out in particular: climate change and income inequality. The market, as presently structured, is unable to address them. If we dont change course, we will not solve them. While some people conveniently call these problems externalities or unintended consequences, theyre actually products of the system. In its current design, the market creates these problems, and the consequences could be catastrophic. We already see the cost of climate change and rising home insurance rates nationwide. We watched in horror as the Los Angeles fires raged, and they have now led to insurance issues. The total cost of climate change could reach as high as $22 trillion by 2100 if we do not do something soon. Its best to think of climate change not as an environmental issue, but as a systems breakdown. To fix a systems breakdown, you must fix the system that caused it. That system is todays variant of capitalism. 2. Shareholder capitalism is failing business education Todays business schools were designed for a world that no longer exists: a world fixated on 50-year-old notions of shareholder primacy and a greed is good mentality. Outdated ideas and models about the world and society have been ossified into the standard curriculum. We need to change how we teach business. Simply adding an elective on climate change or income inequality while the curriculum remains focused on models that worsen these problems wont work. We must change the entire pedagogy, the entire curriculum. 3. Its time to rethink capitalism, business, and the market Surveys show that young people, Gen Z, and millennials are becoming increasingly disenfranchised with capitalism. Its not hard to understand why, considering the debt load they carry and the difficulty they have in getting financially on their feet. They worked hard to get their degrees, and now theyre struggling. But when I ask my business school students, What is capitalism? they either dont know or take it as given. We need to help students understand that capitalism is a set of human-made institutions. If it doesnt work, we need to amend it to serve the needs of present-day humans. We need to teach students how to be stewards of capitalism so that they recognize their role in making sure that the domain in which they practice their craft works properly. Shareholder capitalism is starting to groan, creak, and collapse under its own weight. Students are blown away when they learn about Nordic capitalism, which offers a massive social safety net. Unfortunately, all business students and almost all business faculty today are only familiar with one type of capitalism: todays shareholder capitalism, which arose in the 1970s and 1980s. They dont understand the capitalism that came before, in the 1940s, 50s, and 60s. Back then, it was managerial capitalism. Business education must help graduates find their voice to become part of a conversation about which capitalism will replace shareholder capitalism. We can teach people that there are multiple variants of capitalism around the world. I do this in one of my classes. Students are blown away when they learn about Nordic capitalism, which offers a massive social safety net. American capitalismshareholder capitalismis just one variant. Its very different from Nordic capitalism. Its very different from Chinese capitalism. Its important to understand what makes capitalism work. What is its essence? How do we keep that and improve it? What is the purpose of firms? I could walk up to any American and ask them to finish this sentence: The purpose of corporations is to? And their answer will be make money for the shareholder. Economically, that is true. Economists have clung to the idea that companies are there to make money for shareholders, but legally. this stands on shaky ground. If you want to sue a corporate executive because they didnt make shareholders more money, you will have to go through the Good Business Rule, which says that they acted in good faith with loyalty and due care. The American Law Institute says the company can be designed for any purpose. Even Sam Alito, a conservative Supreme Court justice in the Hobby Lobby decision, said the same thing. Companies can be designed to do other things besides making money for shareholders. If a company fixates on shareholder value, it forces them to fixate on short-term thinking. Look at what Boeing is going through right now. They used to be a company that made the finest quality airplanes in the world, but after their merger with McDonnell Douglas, they started focusing on quarterly returns instead of their craft. What if we go back to what Peter Drucker said in the mid-1900s? That the purpose of the corporation is to identify and serve a market. How much money it makes is a measure of how well it does so. That changes the order of things and makes for much healthier companies. 4. The relationship between business and government The question of governments relationship to the market today has boiled down to simplistic dualities: conservative versus liberal, socialism versus capitalism, more versus less. We need to start thinking about what the right level of government in the market is. Thats particularly true today as we see our country moving more and more into the land of industrial policy. In the Biden administration, we had the Inflation Reduction Act and CHIPS, which are very much the government trying to steer the market in a certain direction. Already in the Trump administration, we have a heavy relince on tariffs, which is also a form of industrial policy as it is an attempt to protect domestic industries. Too many of my students think that all lobbying is corrupt. We can also start thinking about the role of business in policymaking. Too many of my students think that all lobbying is corrupt, when in fact, business has a strong role to play in making good policy. Few business schools have a course on lobbying, and fewer still have a course on constructive lobbying, meaning lobbying for public good rather than individual gamesmanship. 5. The need for a new kind of business school We need to fundamentally rethink business school and what it teaches. We must stop teaching outdated models and ideas, such as that the firms purpose is to make money for shareholders. We must think about government less as an intrusion on the free market and more as an arbiter of it properly functioning. We must stop promoting the unrealistic idea that unlimited economic growth is possible. We must stop teaching that the environment is an unlimited source of materials and an unlimited sink for waste. We must stop teaching that efficiency is always good. I have a colleague who says that we worship at the altar of efficiency if it lowers costs. For example, we have auto plants here in Michigan and it may be efficient to move them to another country, but what about the people left behind? Why dont we factor that into equations as well? Classic business school teaches that people are inherently selfish. We teach that technology can solve all our problems. Just make a new product or widget, and well get rich, solve the climate crisis, and live happily ever after. It is not that simple. We must be much more imaginative to change our society beyond techno-solutions. Once we remove and replace outmoded ideas, we need to refill the curriculum with more attention to the whole student. We must be much more imaginative to change our society beyond techno-solutions. Research has shown that people who apply to business school typically score higher on the traits of narcissism, psychopathy, and Machiavellianism. Research also shows that a business school education amplifies these traits. Graduates tend to be more selfish and self-monitoring than when they enrolled. I see that every spring when graduation time is coming near, and people are looking at salary offers. They measure their worth by how much money they make as compared to everybody else. Its an awful way to imprint students, but there is also evidence that todays students are starting to ask questions. Theyre starting to push back on the curriculum and challenge the idea that business school is merely there to help them make more money, irrespective of who they are as a person. The challenge for business school is trying to take that mentality, cultivate it, and guide students to consider management as a calling. We need to move people away from the idea of their career as simply a pursuit for private personal gain and toward the vocation that is based on a higher professional and moral purpose. Then we can have an economy that serves everybody. Its a challenge to bring the entire student to the education process and teach not just the heads, but their hearts. To teach not just the how of business, but also why they are doing this. This involves cultivating the virtues of wisdom, character, and purpose. The market is the most powerful institution on Earth. Business is the most powerful entity within it. Business creates the buildings that we live and work in, the food we eat, the clothes we wear, the forms of mobility we enjoy, and the healthcare system that keeps us alive. All these things come from the market. The market has done wonderful things but it is starting to stutter. To adjust it, theres an urgent need to nurture a new breed of business leaders who view business not only as a means for profitability, but also as a vehicle to serve society. This article originally appeared in Next Big Idea Club magazine and is reprinted with permission.
Category:
E-Commerce
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