If you’ve got federal student loans, there’s a deadline coming you can’t afford to ignore. Starting May 5, 2025, the U.S. Department of Education will officially resume collections on defaulted student loans—something that’s been paused since the early days of the pandemic in 2020.
For more than five million borrowers, that could mean a serious hit to their wallets. Think: wage garnishment, losing your tax refund, or even having your Social Security benefits reduced. If you’re not sure whether you’re in default—or even what that really means—you’re not alone. Here’s a clear breakdown of what’s going on and what you can do about it.
Wait, What Does “Default” Actually Mean?
In the world of student loans, “default” isn’t just missing a payment or two. If you haven’t made a payment on your federal loan for more than 270 days (that’s about nine months), it officially goes into default.
Being in default doesn’t just impact your loan balance. It can hurt your credit score, make you ineligible for future aid, and open the door to collections—and that’s exactly what’s starting up again in May.
How to Check Your Loan Status (It’s Easier Than You Think)
The fastest way to find out if you’re in default is to log into your account on website. Once you’re in:
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Head to your dashboard
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Look for the loan summary
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Check the status of each loan
If any say “in default” or “collections,” you’ll need to take action. You can also see who your loan servicer is—someone you’ll want to get in touch with if you have questions or need help sorting things out.
Make sure your contact information is up to date, too. You don’t want to miss an important letter or email from the Department of Education or your loan servicer about what’s coming.
What Happens If You’re in Default?
If you are in default when collections resume, you could face some real consequences:
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Wage Garnishment – Part of your paycheck could be automatically withheld.
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Tax Refund Seizure – The IRS could redirect your tax refund to pay off your loans.
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Social Security Offsets – Yes, even your benefits could be reduced.
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Credit Damage – Your score could drop by up to 200 points, making it harder to get a car loan, rent an apartment, or even pass a background check.
It’s serious stuff—but it’s not irreversible.
Here’s What You Can Do Right Now
The good news? If you act now, you may be able to get out of default and avoid collections altogether. Here are a few options:
1. Loan Rehabilitation
This is a one-time opportunity to “fix” a default. You’ll need to make nine on-time payments in a 10-month period. Once you complete the rehab process, the default is removed from your credit history. It’s not instant, but it can give you a fresh start.
2. Loan Consolidation
You can also consolidate your defaulted loan into a new Direct Consolidation Loan—but only if you agree to repay it under an income-driven repayment plan. This gets you out of default fast and can lower your monthly payment.
3. Talk to Your Loan Servicer
They’re your best resource for figuring out what’s available based on your income and situation. It might feel overwhelming, but having a conversation with them is often the quickest way to understand your options.Final Thought: Don’t Wait Until You’re in a Bind
Life is busy, and student loans can be easy to ignore—especially after a years-long pause. But now is the time to check your status and make a plan if you’re in default.
By acting before May 5, you can avoid the headaches and financial setbacks that come with collections. Whether it’s logging into your loan account, making a phone call, or setting up a payment plan, taking just a few steps now could save you a lot of stress later.
Student loan debt may feel like it’s in the background—but starting this May, it’s coming back to the front. Make sure you’re ready.
