The Department of Education, United States has confirmed that they are going to resume the collection of student loans from May 05, 2025. Borrowers must be ready for it as collections, which was paused due to COVID-19 pandemic, resume and key federal programs undergo legal and administrative shifts.
Collection of the Student Loan Payments from May 2025 may include taking money from your tax refund or paycheck, those who have enrolled under the Saving on a Valuable Education (SAVE) Plan may not have to make payment for now, because the program is on hold due to a court case, but it may change later this year.
| Resumption of Payments | Starts May 5, 2025. |
| SAVE Plan Protection | Temporarily paused due to court case. |
| Credit Score Impact | Missed payments can drop scores by up to 129 points. |
| Default Consequences | Wage garnishment, tax refund seizure, and Social Security reduction. |
| Loan Rehabilitation | 9 payments over 10 months can remove default status. |
| Loan Consolidation | 9 payments, income-based repayment plan. |
| Recommendations | Act now to avoid default and explore options. |
| Official Website | https://studentaid.gov/ |
It is important for borrowers to check their loan status, look at the payment options, and get help if they need it. Those who are behind on payments may face wage garnishment, Seizure of federal tax refunds, and reduction of Social Security benefits. Stay tuned to check all the details regarding it.
Student Loan Debt in 2025: Loan Collection
The Student Loan Payments collection was paused in March 2020, which protected the borrowers from collections like wage garnishment and credit damage; the repayment was also started in October 2023, then there was protection period (called the “on-ramp”) delayed credit damage and collections until late 2024.
In the January 2025, the missed payments start showing up on credit reports again, which affect the credit score drastically. Now, it is confirmed by the officials that they are going to start collecting the loan payment from May 05, 2025, all the borrowers considered in default, it usually happens when the repayment is not made for 270 days.
As the loans are going to be considered as default from May 05, 2025, the officials are likely to face wage garnishment, seizure of federal tax refunds for tax year 2024, and reduction of Social Security benefits such as Supplemental Security Income and others. Borrows with default loan may face a big consequences.
Student Loan Debt Crisis: Will it affect the Credit Score?
The VantageScore, credit scoring model, just like FICO, has indicated that roughly 9 million borrowers across the nation who are behind on payments could see a drop by as much as 129 points in their credit score. With a low credit it is very tough to get any loan or credit in further, borrowers are highly recommended to act before the loan collection begin.
It you want to avoid consequences of loan in default it is highly recommended to act now, to save your credit and be protected from the wage garnishment, seizure of federal tax refunds, and reduction of Social Security benefits one may have to options: Loan Rehabilitation and Loan Consolidation.
Note:
- The Loan Rehabilitation requires nine voluntary payments over ten months, basically it removes default from one’s credit report, and which make their loans to no longer be considered in default.
- The other option, Loan Consolidation, help you set up a reasonable payment plan based on your income, in this also you have to make 9 consecutive monthly payments, but the repayment amount quite lower than the standard payment.
How to check if you are in Student Loan Default?
There are multiple ways to check that your student loans is in default or not, you may check it by tracking your loan status on the Federal Student Aid website, contacting your Loan Servicer, looking at warning signs in your mail or email and check your Credit Report.
The step-by-step instructions to check the student loan default status is available below, go through the listed points to check that your loan is in default or not.
- Go to the official website of the Federal Student Aid website, which is accessible at https://studentaid.gov/.
- Lookout for an option that reads ‘Log In’ in the header menu-bar, tap on it and get redirected to next page.
- Now, you will be asked to enter your Email, Phone, or FSA ID Username and Password, and hit the Submit button.
- After the successful login, you need to find an option that My Aid and click on it to check the details.