News Summary
The Virginia Department of Education has announced it will furlough 87% of its employees, heavily impacting the Federal Student Aid division. This decision comes during an ongoing government shutdown, although federal student loans will still be disbursed. The situation highlights ongoing issues with student loan debt in Virginia, where many graduates face substantial financial burdens. While former President Biden’s SAVE plan was introduced to alleviate some of this debt, upcoming financial policy changes threaten to limit its impact and exacerbate the financial struggles of borrowers across the state.
Virginia – The Department of Education has announced plans to furlough 87% of its employees, with a significant impact on the Federal Student Aid division, which will see around 85% of its staff furloughed during the ongoing government shutdown. This decision marks a shift from an earlier commitment made in March to reduce staffing levels by approximately 50%.
Despite the furloughs, federal student loans will continue to be disbursed, and borrowers are still obligated to make payments on their outstanding debts. The ongoing student loan debt crisis highlights the difficulties faced by borrowers, many of whom have expressed concerns regarding the government’s management of student loan forgiveness programs. Past initiatives have seen about 90% of borrowers disqualified before receiving promised relief.
In an effort to address this crisis, former President Joe Biden introduced the Saving on a Valuable Education (SAVE) plan. This plan aims to provide relief to borrowers through an income-driven repayment system that could potentially eliminate debt in as little as 10 years. The Biden administration initially expected that over 20 million people would benefit from the SAVE plan and encouraged broad participation. However, significant changes in financial policy are on the horizon, with the SAVE plan set to be eliminated entirely by 2028 under President Donald Trump’s budget reconciliation bill.
As part of the ongoing financial adjustment, interest on loans for those enrolled in the SAVE program resumed on August 1, 2025. This resumption means that debts will accumulate interest while borrowers seek new repayment plans, further complicating their financial situations.
Virginia has been identified as a leading state in terms of student loan debt, with 55% of college graduates carrying an average debt exceeding $40,000. The total federal student loan debt in Virginia stands at $44.9 billion, which is 1.5 times higher than the state’s annual education budget for K-12 and higher education combined. Additionally, borrowers in Virginia accrue approximately $2.8 billion annually in interest on their student loans.
Tuition rates for in-state colleges have also increased, with an average rise of 2% from 2024 to 2025. Certain universities, like Virginia Commonwealth University and Virginia State University, have noted tuition hikes of over 4%. These rising costs, coupled with high-interest rates on loans, severely impact borrowers’ financial stability, resulting in challenges such as delayed family planning and difficulties in purchasing homes and cars.
Student loan debt often takes precedence over mortgages, constraining discretionary spending and leading some individuals into a cycle of financial instability. The inability to discharge student loan debt through bankruptcy results in long-term financial burdens for borrowers. In Virginia, individuals over 35 years of age owe a combined $29 billion, nearly double the $16 billion owed by those under 35.
The ramifications of student loan debt extend to various professions, including healthcare, where even individuals in high-salary positions experience difficulties managing repayments. Additionally, student loan companies are often accused of monopolizing the higher education financing market, limiting options and support for borrowers.
The Trump administration was met with criticism for resuming collection activities after a five-year pause due to COVID-19, including actions such as garnishing tax refunds to offset loans without prior notification to borrowers. Founded in 2005, the grassroots organization Student Loan Justice advocates for the rights of student loan borrowers against such practices.
Nationwide, the total student loan debt reached approximately $1.8 trillion by 2025, illustrating the widespread nature of this crisis across the entire country. The actions taken by the Department of Education, particularly the mass furlough of its employees during a critical period, will only add to the complex challenges faced by borrowers navigating the current student loan landscape.
Deeper Dive: News & Info About This Topic
- Virginia Mercury: Virginia is No. 4 in Student Loan Debt
- Google Search: Virginia student loan debt
- WSLS: Virginia Ranks Fourth in Nation for Student Loan Debt
- Wikipedia: Student loan debt in the United States
- Richmond Free Press: Debt-Burdened Virginians in Limbo with New Payment Plans
- Encyclopedia Britannica: Student Loan
- Axios: Virginia Education Department Shutdown
- Google Scholar: student loan debt
- West Virginia Watch: Marshall President Brad Smith Donates $50M to Eliminate Student Debt
- Google News: student loan debt
Author: STAFF HERE WILLIAMSBURG WRITER
WILLIAMSBURG STAFF WRITER The WILLIAMSBURG STAFF WRITER represents the experienced team at HEREWilliamsburg.com, your go-to source for actionable local news and information in Williamsburg, James City County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Williamsburg Farmers Market, Yorktown Market Days, and Busch Gardens Food & Wine Festival. Our coverage extends to key organizations like the Greater Williamsburg Chamber of Commerce and Colonial Williamsburg Foundation, plus leading businesses in education and hospitality that power the local economy such as College of William & Mary, The Williamsburg Winery, and Sodexo. As part of the broader HERE network, including HEREVirginiaBeach.com, we provide comprehensive, credible insights into Virginia's dynamic landscape.
