After being on pause since 2020, federal student loan collections are officially back. The Department of Education restarted involuntary collections on defaulted student loans earlier this month: This includes wage garnishment, tax refund seizures, and Social Security offsets.¹

Roughly 5 million federal student borrowers could be affected by the restart.² For some, this will be the first time facing the full weight of federal debt collections. For others, it may come as a surprise, especially if they were not in contact with their loan servicer during the payment pause.

Despite the renewed pressure, the restart can mark a fresh financial start. Empower research shows that 1 in 3 households expect their monthly student loan payments to reach at least $1,000. Borrowers still have options to halt collections, resolve default, and reenter repayment with more options and support than some borrowers may realize.

Thawing out student loan repayments

The freeze on federal loan payments began in 2020 as part of pandemic relief.³ Although regular repayment resumed in late 2023, collections on defaulted loans remained paused — until now. Those protections have now expired, which means the government can collect on overdue federal student loans without a court order. These collection efforts may involve wage garnishment, withholding of tax funds, or reduced federal benefits.⁴

Borrowers are supposed to receive notice before collections resume.⁵ Communications are said to be inconsistent, however: Some borrowers say their loan servicers have put loans in forbearance straight into default by accident.⁶ Other borrowers may not be aware that they are in default, or that default triggers more persistent collection efforts than just being behind on student loan repayment. Getting in touch with servicers early may offer more information about a loan’s status, allowing borrowers to check that they are in the accurate stage of repayment. 

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Phys ed for student loan debt

There are several ways to get student loan debt back into shape. One of the most effective is default loan rehabilitation.⁷ Payments amounts are typically based on income and, if borrowers make 9 out of 10 monthly payments on time, they can get their loan back in good standing. The default is also wiped away from borrower’s credit history.

Loan rehabilitation can restore access to benefits, such as deferment, forbearance, and federal forgiveness loans. Borrowers can only use rehabilitation once per loan. Borrowers who have already completed rehabilitation, or who want faster resolution, may want to consider loan consolidation.

Consolidation allows a borrower to combine their defaulted loan into a new Direct Consolidation Loan. This process immediately removes the loan from default, although a default history usually stays on a report. Still, consolidation stops wage garnishment, restores eligibility for repayment programs, and may offer a cleaner slate in the future.

Office hours: Getting to know repayment programs

Borrowers can enroll in an income-driven repayment (IDR) plan once a defaulted loan has been resolved.⁸ These plans calculate monthly payments based on income and family size, which can make them more manageable than traditional fixed payment options.

A Saving on a Valuable Education (SAVE) Plan can offer flexible repayment terms.⁹ Payments may be reduced significantly for eligible borrowers: In some cases, they may even drop to $0 per month. The SAVE Plan also includes interest subsidies to prevent balances from growing when monthly payments are not high enough to cover monthly interest.¹⁰

Enrolling in an IDR plan could reduce the risk of future default and provide a clearer path to forgiveness over time. IDRs may also help borrowers budget with more confidence, since monthly payments are based on what they can reasonably afford.

Read more: The price of college admission

Study hall for student loan help

Borrowers who are unsure about their loan status can visit the Federal Student Aid website to find out more. This site demonstrates whether or not a loan is in default, names the loan servicer, and provides links to apply for consolidation or for IDRs. 

Free help is also available via certified nonprofit organizations, housing counseling agencies, and financial aid offices. Some borrowers may also find support through legal aid organizations or credit unions that offer financial coaching.

Applications and help are free through the Student Aid homepage. Borrowers may want to avoid companies that charge a fee to enroll in federal programs when free options are available.

Graduating from student loan debt

Defaulted loans can be a significant financial challenge, but they’re not the end of the story. Once a borrower resolves default, they can begin rebuilding their credit and regain eligibility for aid and financial support. This includes regaining the ability to apply for future federal loans or grants, access deferment in the event of hardship, and even becoming eligible for forgiveness programs in the future.

The transition back to repayments can also spark bigger financial changes. Many borrowers use this moment to revisit their budget, prioritize savings, and adjust or set long-term goals. Resolving default may restore access to financial tools and protections, making student loan debt more manageable over time.