Major student loan policy changes are coming this May, and they could significantly impact millions of borrowers across the U.S. The Department of Education (DOE) is set to resume aggressive collection tactics for unpaid federal loans and reopen applications for income-driven repayment (IDR) plans designed to make monthly payments more affordable.
🔍 Why These Changes Matter
With over 40 million Americans carrying student loan debt, the stakes are high. The DOE reports:
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5 million borrowers are already in default
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4 million are at least 90 days delinquent
Without timely intervention, nearly 10 million borrowers could fall into default by mid-year. This would place one in four federal student loans into collection, a figure that highlights the urgency of the department’s upcoming moves.
🏛️ The Policy Shift: A Return to Collections
Paused since the onset of the COVID-19 pandemic in March 2020, student loan collections are officially resuming under the Trump administration. Education Secretary Linda McMahon emphasized a renewed focus on fiscal responsibility:
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.”
Starting May 5, 2025, the federal government will:
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Garnish wages (up to 15%) from borrowers in default
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Seize tax refunds and other federal benefits under the Treasury Offset Program
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Send official collection notices after a 30-day warning period
🧾 Repayment Relief: IDR Plan Applications Reopen
Good news for some: On May 10, 2025, the DOE will resume applications for income-driven repayment (IDR) plans. Key highlights:
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Payments are calculated based on income, not total debt
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Spousal income will be excluded from payment calculations, potentially lowering monthly payments for married borrowers
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Some plans offer loan forgiveness after consistent, long-term payments
⚠️ Are You in Default?
A federal student loan enters default status after 270 days of missed payments. Borrowers can check their loan status at StudentAid.gov and contact the Default Resolution Group for help.
📉 How Many Borrowers Are at Risk?
Less than 40% of federal student loan borrowers are currently making on-time payments. Millions are either in forbearance, deferment, or behind on payments. The restart of collections is expected to hit working-class borrowers the hardest.
🚨 What Happens If You’re in Default?
If your loan is in default:
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You’ll receive advance notice before collections begin
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Wages may be garnished
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Tax refunds and federal benefits may be withheld
👉 Take action now by applying for:
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Loan rehabilitation – remove the default from your record after 9 agreed-upon payments
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Loan consolidation – pay off the defaulted loan with a new one, restoring good standing immediately
More details are available at StudentAid.gov/end-default.
đź’ˇ Tips to Stay Ahead of the Changes
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Contact your loan servicer before May 5 to explore repayment or rehab options
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Use tools like the Loan Simulator and AI assistant Aiden at StudentAid.gov to calculate the best repayment plan
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Avoid scams – All legitimate loan assistance is free. Never pay someone to “help” with your student loan
❌ No Broad Forgiveness – What the DOE Is Saying
Education Secretary McMahon made it clear:
“There will not be any mass loan forgiveness. The focus is on restoring fairness and fiscal discipline.”
The administration aims to bring borrowers back into the repayment system—not erase their balances.
📅 What’s Next for Borrowers?
Expect to see:
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Email notifications and warnings starting late April to early May
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Wage garnishment notices to begin later this summer
Final Thought
The student loan landscape is shifting. Whether you’re current, delinquent, or in default—May 2025 is a turning point. Act now to protect your finances and stay informed about your options.
