After a five-year reprieve, the Trump administration will restart forced collections on federal student loans in default, which could include garnishing a portion of borrowers’ paychecks.
With collections in place, the last piece of the student loan machinery has been turned back on, officially ending pandemic-era relief, which began when President Trump paused federal student loan payments in March 2020.
The Biden administration extended the freeze several times, and payments resumed only in October 2023. But the rules were relaxed for the first year of repayment, and borrowers weren’t penalized for slipping behind until last fall.
Now that those penalties have begun to appear, borrowers who fell behind are beginning to see their credit scores plunge, including more than five million borrowers in default and many millions more projected to be on the precipice.
At the same time, the Biden-era repayment program known as SAVE — which ties a borrower’s loan payments to income and household size — has been frozen since August, with its eight million enrollees’ payments on hold. That plan is stuck in legal limbo, an evolving situation that threatens to upend the income-driven repayment plans that came before it.
Here’s where things stand for borrowers.
Where can I learn more about my loan status?
If you log in to your account on the federal website, StudentAid.gov, you’ll find your dashboard with details on how much you owe and the status of your loans — whether they are in repayment, for example, or default. If it’s the latter, you may also see a warning at the top.
Make sure your contact information is up to date both there and with your loan servicer, which is the company the government hired to administer your loans.
My loans are in default. What happens next?
The Education Department said it will begin forced collections on loans in default on May 5, which means any tax refunds and other federal payments can be withheld and applied toward your debt. (Seizures from recurring payments, like Social Security benefits, won’t start until early June.) This summer, the government said, it will send out required notices that pave the way for garnishing a portion of borrowers’ paychecks.
If you are among the five million borrowers in default, or those with loans 270 days or more overdue, you should expect to receive an email from the Federal Student Aid office in the next couple of weeks, urging you to get in touch with its Default Resolution Group. That unit can help get your loan situation sorted.
There are serious consequences if the loans remain in default, which means the balance becomes immediately due. The government can grab your entire tax refund (as long as it doesn’t exceed your debt amount) and up to 15 percent of monthly Social Security retirement and disability benefits and your paycheck. (The Treasury Offset program has a more comprehensive list of what’s eligible and what’s off limits.)
Besides collections, the default will damage your credit standing, which can make it more difficult to qualify for an apartment rental or impossible to obtain new loans.
How can I get out of default?
You can pay the loan in full, but that’s not an option for most people.
More feasible alternatives include consolidating the defaulted loans or rehabilitating the loan, which requires making nine out of 10 consecutive “reasonable” payments, determined by loan holders using a formula.
It’s usually easiest to consolidate the defaulted loan (as long as you have more than one loan) into one federal Direct Consolidation Loan, which pays off the old ones.
But there are drawbacks, especially for borrowers in income-driven repayment plans (which forgive any remaining debt after a period, generally 20 years, of payments tied to your income and household size). After consolidation, you lose any credit earned toward loan forgiveness.
I can’t afford my payments. What are my options?
Income-driven repayment plans, a decades-old safety net that ties the size of your monthly loan payments to your income level, is often a go-to option in times of financial distress.
But there are fewer income-driven options at the moment: The entire landscape was shaken up after two groups of Republican-led states challenged the Saving on a Valuable Education (SAVE) plan, the more affordable income-driven repayment plan introduced by President Biden. Given the high cost of the program, the states argued that Mr. Biden had overstepped his authority, and the courts temporarily froze SAVE while the merits of the case are decided.
Remaining programs include:
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The Pay as You Earn (PAYE) and Income-Based Repayment (I.B.R.) plans, where monthly payments are 10 percent of discretionary income for 20 years, at which time any remaining balance is forgiven* (or after 25 years for graduate borrowers in I.B.R.).
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The Income-Contingent Repayment (I.C.R.), a more expensive plan, where payments are 20 percent of discretionary income for 25 years, after which any remaining debt is wiped away.* (I.C.R. is the only income-driven plan available to federal parent PLUS loan borrowers.)
(*At the moment, loan forgiveness is on hold for all income-driven repayment plans with the exception of I.B.R. For more explanation on the complicated status of all income-driven plans right now, see the next question.)
Beyond the income-driven programs, there are repayment plans that can lower your monthly obligation: graduated repayment, where payments start lower and rise over time, and extended repayment, which lowers the monthly payment by lengthening the loan term.
The Education Department’s Loan Simulator can help borrowers evaluate and compare which type of repayment plan would work best for their situation.
Have the rules of income-driven plans changed?
Some have, at least temporarily.
A February court order upheld the temporary pause on the SAVE plan, but also expanded it by calling into question a longstanding feature of income-driven plans: loan forgiveness, which usually occurs after at least two decades of payments.
The U.S. Court of Appeals for the Eighth Circuit said the Education Department lacked the explicit authority to forgive loans as part of the Income-Contingent Repayment plans, a significant departure from how the statute governing the plan had been interpreted for about 30 years.
The litigation, which is ongoing, prompted the administration to pause forgiveness on the PAYE and I.C.R. plans since, like SAVE, they were created by the Education Department.
Borrowers in the I.B.R. plan, which Congress enacted, can continue to have their loans forgiven. (Payments on PAYE, SAVE and I.C.R. are counted toward I.B.R. plan forgiveness if the borrower enrolls in the I.B.R. program.)
Several other newer rules were changed or clarified, too. Separately, a married borrower in an income-driven plan who files a separate income tax return from their spouse will not have to include the spouse’s income in the calculation determining monthly payments, experts said, but the spouse can be included in family size.
Where did the counter showing my progress toward forgiveness go?
Starting in January, borrowers in income-driven repayment plans were able to see their progress toward loan forgiveness on their StudentAid.gov dashboard. But with the appellate court’s order temporarily banning the SAVE plan and parts of other income-driven plans, the Education Department said it had removed the payment counter for the time being.
Borrower advocates say it is still possible to find the counter once you’re logged in, however, and they suggest taking screenshots.
“This is important so that they know where they stand and how much longer they should expect to have student loan bills,” said Abby Shafroth, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, “and so they have evidence of their credit toward forgiveness in case there is an effort to quietly roll it back.”
Are loan servicers processing income-driven plan application requests?
The Education Department said it had not processed applications for enrollment in any income-driven repayment plans since August, but it is working with federal student loan servicers and expects processing to begin again in May.
Still, it could take a while, depending on your situation: Roughly 1.9 million applicants are in the queue.
I’m enrolled in an income-driven plan. Do I need to recertify my income?
Since income-driven plans base payments on earnings and family size, participants have been required to update — or recertify — their income each year (or face negative consequences).
If you were due to recertify on or after Feb. 21, 2025, your recertification date has been extended one year. (The Federal Student Aid office’s website has more specifics.)
The department said that recertification would eventually be automated, and that it would release more information this week.
What other ways can I get a reprieve — or lower monthly payments?
Borrowers can temporarily pause payments through deferments or forbearance. Review the terms carefully, because these programs have different eligibility requirements and consequences, largely because of the way interest is treated.
Simply consolidating your loans can also lower your monthly payments by extending the repayment period, but there are drawbacks. You may have a higher interest rate on all of your debt and end up paying more overall.
I’m in the SAVE plan. What’s the status?
The Saving on a Valuable Education plan is still winding its way through the courts, and enrollees have been in limbo since last summer. Their accounts are in forbearance, which in this case means payments are on hold and interest is not accruing.
Can I still make progress toward Public Service Loan Forgiveness?
The Public Service Loan Forgiveness program is still open to government and nonprofit employees such as public schoolteachers, librarians and public defenders. After 120 qualifying payments are made, any remaining balance is wiped out. But most borrowers need to be enrolled in an income-driven repayment plan to be eligible for loan cancellation.
Borrowers in SAVE are currently in an interest-free forbearance — and they cannot earn payment credits toward forgiveness. But the other available income-driven plans — I.B.R., I.C.R. and PAYE — are still compatible with Public Service Loan Forgiveness.
What if I’m in P.S.L.F. but I’m stuck in the SAVE plan?
You have a couple of options. You can switch to one of the other income-driven repayment plans, which will allow you to earn credit toward forgiveness.
Alternatively, you can ride out the SAVE forbearance and use what’s called a “buy back” to get credit for those months once you have completed 120 months of eligible employment, said Betsy Mayotte, president of the Institute of Student Loan Advisors, a group that provides free guidance to borrowers.
Using the buy back option, borrowers later make payments that are at least equal to what they would have owed under an eligible income-driven plan for the time they were paused in forbearance. (Be sure to document and keep copies or snapshots of everything, including your work history with your eligible employer as well as any qualifying payments and recertification applications.)
Trump wants to shut down the Education Department. What does this mean for my loans?
President Trump instructed Education Secretary Linda McMahon to begin to shut down the agency, but he cannot do so without congressional approval. He also announced that the student loan portfolio would move to the Small Business Administration, a change that would also require approval. But as my colleague Stacy Cowley reported, Congress has shown no interest in that idea.
For now, the loan portfolio remains at the Education Department.
Where can I get more help?
You can try the Institute of Student Loan Advisors, a group that provides free guidance to borrowers. The Student Debt Crisis Center has a resource center and holds workshops, and some states, like New York, may offer services to assist borrowers.
If you’re having trouble getting the help you need with your servicer, some states have student loan ombudsman offices that can help.
The Federal Student Aid office also has a list of frequently asked questions on its website.
