Okay, let’s get real. If you’ve fallen behind on your federal student loans, there’s something important happening this May that you really need to know about: the government is officially restarting involuntary collections.
That means if your loans are in default, they can now legally start pulling money from your paycheck, tax refund, or even Social Security without asking. Sounds harsh? It kind of is — but let’s walk through what’s going on and how you can protect yourself.
What’s Actually Happening?
During the early days of COVID back in 2020, the government hit “pause” on a lot of things — including collecting on defaulted student loans. That pause lasted years, giving millions of borrowers a break.
But now, in May 2025, that break is over. If you haven’t made any moves to fix your loan situation and your loans are in default (meaning you haven’t made a payment in about 9 months or more), collections are back on the table.
So What Does “Involuntary Collection” Really Mean?
This is when the government doesn’t wait around for you to pay. They take action on their own. Here’s what that can look like:
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Wage garnishment — money comes straight out of your paycheck
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Tax refund offset — that refund you were counting on? Gone.
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Social Security reduction — yep, they can even take that
And no, they don’t need your permission or a court order to do it.
How Many People Are Affected?
More than 5 million borrowers are currently in default. If you’re one of them, this is your warning sign. If you don’t act soon, you could be losing money before you even see it hit your bank account.
What Can You Do About It?
Here’s the good news: you still have time to fix it, but you need to take action now. Here are a few options:
1. Apply for an Income-Driven Repayment Plan (IDR)
These plans adjust your monthly payments based on what you earn. If you’re not making much, your monthly payment could be as low as $0, and your loan stays in good standing. The SAVE Plan is a popular one right now.
2. Rehabilitate Your Loan
Make 9 small on-time payments over about 10 months, and boom — your loan is no longer in default, and the default even gets removed from your credit report.
3. Consolidate Your Loans
This rolls your defaulted loan into a brand-new loan and gives you a fresh start — just know you’ll need to commit to a repayment plan moving forward.
4. Call Your Loan Servicer
It might feel intimidating, but seriously — talking to them can help you figure out your best move. They’re there to help you get out of default, not trap you in it.
New Tools to Make Life Easier
The Department of Education knows this stuff is overwhelming, so they’ve put together a few helpful tools:
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A Loan Simulator that helps you figure out the best repayment plan
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A new AI Assistant to answer your questions
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Everything in one place at StudentAid.gov
Use them. They’re free, and they could save you a lot of stress.
Collections are back. If you’ve been ignoring your student loan situation, now’s the time to face it — before your next paycheck or tax refund suddenly shrinks.
