Student Loan Payments Are Back – What You Need To Know
After a five-year pause, federal student loan payments have officially resumed as of May 5, 2025. This marks the end of the COVID-era relief that kept millions from paying their loans. Now, borrowers face a new reality, and it’s causing a lot of stress.
For those in default—meaning they’ve missed payments for 270 days or more—the consequences can be severe. The U.S. Department of Education has restarted debt collection efforts, which could lead to wage garnishment, tax refund seizures, and reductions in Social Security benefits. Approximately 5 million borrowers are currently in default, with another 4 million at risk of falling behind.
To help ease the transition, the government has introduced the Saving on a Valuable Education (SAVE) plan. This income-driven repayment plan is designed to reduce monthly payments and prevent loan balances from growing. For example, borrowers making under $32,805 annually may qualify for $0 payments. Additionally, a 12-month “on-ramp” period offers protections against negative credit reporting for missed payments, though interest will still accrue.
Despite these measures, many borrowers are feeling overwhelmed. A recent survey found that 50% of respondents reported high levels of stress about resuming payments, with some expressing concerns about affording both loan payments and everyday expenses.
It is crucial to take action if you are struggling. Consider enrolling in an income-driven repayment plan like SAVE, applying for loan rehabilitation or consolidation, or exploring the Fresh Start program to remove your loans from default status. Staying proactive can help you manage your debt and avoid severe financial consequences
