Here’s When (and How) You’ll Need to Start Paying Off Your Student Loans

The Department of Education announced Monday that the FSA will finally resume collections on delinquent student loans beginning May 5, 2025, after a five-year pause that began during the COVID-19 pandemic.

This decision affects approximately 5.3 million borrowers who were in default before the pause. For these borrowers, the government could soon begin collecting payments through tax refunds, withholding Social Security benefits, and even wage increases (up to 15% of disposable income).

How do you know if you have already defaulted on your loans or are at risk of defaulting in the near future? Here’s what you need to know about the upcoming changes and how to prepare for them.

What does the end of the pause mean to you?

This change will primarily affect borrowers who were already in default before the pandemic relief began. That’s about 5.3 million, according to the Department of Education. In this case, “default” means that the borrower has not made a loan payment for at least 270 days (about nine months).

To determine if you are affected, log into your account at Studentaid.gov . (Note: This is not the portal you would typically use to make student loan payments, such as through a servicer like Sallie Mae.) Your dashboard should display the total amount you owe, the name or name of your loan servicer, the amount of your monthly payment, and most importantly, a warning message if you are in delinquency.

What to do if you’re in default on your student loan

Borrowers in default have three main options.

1. Pay off loans in full

I know, I know. Although technically possible, most defaulting borrowers are unable to repay the entire loan balance at once. However, this is the fastest and most effective way to deal with debt.

2. Consolidation

This process consolidates and simplifies your existing federal student loans into a new Direct Consolidation Loan . Consolidating may lower your monthly payment but increase the length of time you have to repay the loan, resulting in more payments and interest overall than if you had not consolidated. You can log into Studentaid.gov to access the Direct Consolidation Loan online application.

3. Credit rehabilitation

With consolidation, the fact that you were once in default remains on your credit report. With rehabilitation, you can remove default status from your credit history. To do this, you need to make a certain number (usually nine) of consecutive on-time payments. The exact amount of each payment usually depends on your income.

How to Choose the Right Student Loan Repayment Plan

Once you are out of default (or if you are at risk but have not yet reached default), you will need to select an appropriate repayment plan. The first step you can take is to figure out exactly how much you have to pay. At Studentaid.gov, select “My Help” from the drop-down menu under your name. Your credit organizations should appear in this section. By clicking on Loan Breakdown, you’ll see a list of the loans you’ve received, including loans you’ve paid off or combined into a new loan.

Once you’ve verified your credit card company, visit that service provider’s website and log into your account to make sure all your contact information is up to date and you won’t miss any notifications from them as you complete the next steps. (Do the same at Studentaid.gov —make sure your contact information, including your email and physical address, is up to date so you can receive all important communications.)

Remember that you can change your repayment plan as your circumstances change. For example, if you are experiencing financial hardship, several options may help lower your payments:

• Income-driven repayment plans , which limit payments based on your income

• Economic hardship deferral if you have recently lost your job

• Other Deferment or Forbearance Options for Temporary Debt Relief

What You Can Do About Your Defaulted Student Loans Right Now

The Department of Education must notify all borrowers of the default by May 5 via email and social media. They also said they would issue wage garnishment notices “later this summer.”

Whatever your status, don’t wait until fundraising resumes to take action. With not much time left this summer, it’s important to get your repayment plan in order as soon as possible.

If you are in Default mode, here are the immediate steps you can take:

1. Verify your status on StudentAid.gov and update your contact information so you don’t miss any messages.

2. Contact your loan officer to discuss repayment plans.

3. Consider seeking advice from a financial advisor if you need further guidance.

Even if you are not in danger of default today, it may happen soon. Student loans are weighing on millions of Americans, but you have a little time to put yourself in the best position to deal with your problem. By taking preventative measures now, you can avoid more serious consequences in the future.

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