More than 5 million Americans who are behind on student loan payments could face serious consequences by the end of this summer. On Monday, May 5, the Department of Education announced that about 195,000 borrowers received a notice saying they had defaulted on their student loans and giving them a 30-day notice that they risk facing consequences.
The department said that by the end of the summer, 5.3 million Americans will receive the same notice, stating that in 30 days, the government will subject them to wage garnishment and could seize their benefits, including Social Security retirement checks.
Why haven’t people been paying?
President Donald Trump first paused student loan payments during his first term because of the COVID-19 pandemic. Once President Joe Biden took office, his administration also issued several extensions on the pause and attempted to forgive many Americans’ loans.
However, the government ordered most borrowers to restart their payments in October 2023. According to the Education Department, many did not because “the Biden-Harris administration refused to lift the collections pause and kept borrowers in a confusing limbo.”
That was because President Biden’s plan to cancel student loan debt was being fought in court. Once he took office again, President Trump did away with that idea altogether.
On May 5, @usedgov will resume collections for student loans in default.
— Secretary Linda McMahon (@EDSecMcMahon) April 23, 2025
We will not allow taxpayers to take on debts that are not their own.
Please visit https://t.co/jzxyqF5Ikn to learn more about repayment options. pic.twitter.com/MdGoVd2HsS
“We will not force American taxpayers to take on the debts that are not theirs,” Education Secretary Linda McMahon said in a post on X in March. “There’s no such thing as forgiveness, just shifting the payment burden from one party to another. Borrowers should pay back the debts they take on.”
In February, a federal appeals court also blocked President Biden’s Saving on Valuable Education, or SAVE, plan. This plan would have lowered monthly payments for millions of people based on their income.
How many people are behind?
According to the Education Department, only 38% of federal student loan borrowers are caught up on their payments.
“The first day after you miss a student loan payment, your loan becomes past due, or delinquent. Your loan account remains delinquent until you repay the past due amount or make other arrangements, such as changing repayment plans or getting a deferment or forbearance.
“If you are delinquent on your student loan payment for 90 days or more, your loan servicer will report the delinquency to the national credit bureaus, which can negatively impact your credit rating. If you continue to be delinquent, you risk your loan going into default.”
According to the Trump administration, 42.7 million borrowers owe more than $1.6 trillion in student debt, and the 5.3 million people set to receive notices have not made a payment in more than 360 days.
What are the consequences of defaulting on federal student debt?
Not only do those who have defaulted face wage and benefits garnishment, but they also face other consequences, including damage to their credit score, loss of eligibility for future aid and potential legal action, among other things.
What options do defaulted borrowers have?
Americans who get notices saying they’ve defaulted can contact the government’s Default Resolution Group to pursue several avenues to get current on their loans. Some of the options borrowers have include enrolling in an income-driven repayment plan or signing up for loan rehabilitation.
Those who were enrolled in the SAVE Plan are also encouraged to look into other income-driven repayment options. Some borrowers may also be eligible for a deferment or a forbearance, which are different ways to pause their payments.
What about bankruptcy?
Unlike other debts, student loan debt is not automatically discharged when someone files for bankruptcy. In order for federal student loans to be discharged, the borrower must take an extra step to convince a court that the student loan debt presents an “undue burden” before the balance can be removed, according to the U.S. Department of Education.
If a court does rule that paying back the loan could cause an “undue burden,” there are a few options the judge could choose for the borrower. The first option is the loan may be fully discharged, meaning the borrower would not have to repay any portion of the loan. The second option is the loan could be partially discharged, meaning the borrower would have to pay back only a portion of the loan. Finally, the judge could require the borrower to repay the full loan but adjust the terms, like lowering the interest rate.
If I haven’t gotten a notice yet, how do I know if I’m in default?
To check if you have a loan in default, log in to your Financial Student Aid account or call the Federal Student Aid Information Center at 1-800-433-3243.
If accessing your account online, your Financial Student Aid dashboard will indicate if any loans are in default.
