In March 2020, when the world went into quarantine, an unexpected relief gave hope to millions of Americans: the suspension of federal student loan payments. The pause was announced as an emergency measure, but for many, it sounded like the beginning of a deeper change — perhaps a rethink of the United States’ student debt system.
Five years have passed. Instead of forgiveness, came the end of the truce. Now, in 2025, the scenario is different — and brutal. Young people who dreamed of becoming doctors, lawyers, architects, and teachers are facing a harsh reality: the silent and aggressive resumption of federal collections.
The silent and aggressive resumption of collections
Since May 2024, the U.S. Department of Education has reactivated the compulsory collection of delinquent loans. The Department of Education announced that it would begin forced collections on defaulted loans on May 5, meaning that any tax refunds and other federal payments may be withheld and applied to the borrower’s debt. Seizures of recurring payments, such as Social Security benefits, will only begin in early June. The government also announced that it will send mandatory notifications that pave the way for the garnishment of a portion of borrowers’ paychecks.
Unlike the visibility that the suspension had in 2020, this resumption is happening almost invisibly. But its effects are already being felt: more than 5 million Americans are in default. Millions more are on the brink. And worse: many only find out when their credit score plummets or when they receive notice that part of their income will be confiscated.
If you are among the five million defaulted borrowers, or among those with loans overdue by 270 days or more, you should receive an email from the Federal Student Aid Office in the coming weeks, asking you to contact the Default Resolution Group.
SAVE: the relief plan that turned into uncertainty
Launched by former President Biden’s administration, the SAVE (Saving on a Valuable Education) plan promised to make payments fairer, calculating installments based on income and family size. The goal was simple: to prevent low-income people from being suffocated by unpayable debts.
But the plan is stalled — in fact, frozen — since August, with payments from its eight million enrollees suspended. This plan is stuck in a legal limbo, an evolving situation that threatens to topple the income-driven repayment plans that preceded it.
And it doesn’t stop there: the counter that showed progress toward loan forgiveness has been removed from the government website, further increasing borrowers’ sense of abandonment.
If you are in default, what to do?
The situation is complex, but there are some possible paths. Here are some practical guidelines that can help you:
- Access the StudentAid.gov website to check the status of your loans and update your contact information.
- Avoid garnishment by contacting the Default Resolution Group as soon as possible.
- Evaluate whether to rehabilitate (requires nine consecutive payments) or consolidate your loans (faster, but it may erase the time accumulated toward forgiveness).
- Consider alternative plans like PAYE, IBR, and ICR — although forgiveness is temporarily suspended for some of them.
What if I can’t pay?
In addition to collections, default can harm your credit situation, making it even harder to qualify for renting an apartment or impossible to obtain new loans.
Therefore, beyond income-based plans, there are options like the graduated repayment plan, where installments start smaller and increase over time, and the extended plan, which reduces the monthly payment by stretching the loan term.
Another way out is deferment or forbearance. But beware: interest continues to accumulate in most cases, which can worsen your debt over the long term.
The Department of Education’s Loan Simulator can help you understand which plan is more feasible for your case.
Some programs that can help
- The Pay As You Earn (PAYE) and Income-Based Repayment (IBR) plans, where monthly payments are 10% of discretionary income for 20 years, after which any remaining balance is forgiven* (or after 25 years for graduate loan borrowers under IBR).
- The Income-Contingent Repayment (ICR) plan, a more expensive plan, where payments are 20% of discretionary income for 25 years, after which any remaining debt is eliminated.* This plan is the only income-driven option available to federal PLUS loan borrowers for parents.
(*Currently, loan forgiveness is suspended for all income-driven repayment plans, except for IBR. For further explanation about the complicated status of all income-based plans, see the next section.)
Besides income-driven programs, there are repayment plans that can lower your monthly obligation: graduated repayment, where payments start lower and increase over time, and extended repayment, which lowers the monthly payment by lengthening the loan term.
The Department of Education’s Loan Simulator can help borrowers evaluate and compare which type of repayment plan would work best for their situation.
What does the future hold?
The scenario becomes even more uncertain with President Trump’s proposal to close the Department of Education and transfer the management of student loans to the Small Business Administration (SBA).
Although this change still depends on Congressional approval — and so far has not advanced — the mere possibility already brings insecurity to millions of borrowers.
You are not alone
If you are trapped in this student debt web, know that you are not alone. Millions of Americans share the same anguish. Although the paths are challenging, there are alternatives — and most importantly, there is help.
Organizations like the Institute of Student Loan Advisors and the Student Debt Crisis Center, for example, offer free support, workshops, and specialized guidance. Information is the first step to escaping the burden — and no one should face this journey alone.
