Millions at Risk: What Skipping Your Student Loan Payments Could Cost You in 2025

For a while, it felt like we had a little breathing room. With the pandemic forbearance programs in place, millions of Americans didn’t have to worry about making student loan payments. But now, that pause is officially over.

As of May 5, 2025, the Department of Education has resumed collecting on federal student loans that have fallen into default. If you still owe money and haven’t made payments in a while, you might be wondering — what happens next? And what can you do about it?

Let’s break it down clearly, so you know exactly where you stand.

If You Don’t Pay, Here’s What Could Happen

Ignoring your student loans isn’t just stressful — it can seriously impact your life in ways you might not expect.

• Smaller Paychecks: The government can start taking up to 15% of your wages through something called wage garnishment. And no, they don’t need to ask a judge first.

• Bye-Bye, Tax Refunds: Expecting a refund next year? If you’re in default, that money can be seized to cover your loans.

• Even Your Retirement Could Be Hit: For those collecting Social Security, up to 15% of your monthly check can also be taken.

• Damaged Credit: Falling into default doesn’t just hurt your finances — it can cause a serious drop in your credit score. That can make renting an apartment, buying a car, or even getting a cellphone plan harder and more expensive.

It’s a tough reality, but it’s better to know the risks now — and even better to know you still have options.

How Many People Are at Risk?

You’re not alone if you’re feeling overwhelmed. Right now, about 5.3 million Americans are already in default on their student loans. Another 4 million are dangerously close to default. That’s nearly 10 million people who could be facing serious financial consequences if they don’t act soon.

What You Can Do — Starting Today

The worst thing you can do is ignore the problem. Thankfully, there are several ways to get back on track:

• Loan Rehabilitation: You can agree to make nine affordable payments within ten months. If you succeed, your loan can be taken out of default, and that nasty mark could even come off your credit report.

• Loan Consolidation: Another path is rolling your existing loan into a new Direct Consolidation Loan. This can give you a fresh start, often with much more manageable payments.

• Income-Driven Repayment Plans: If money is tight, you could qualify for a plan that sets your monthly payment based on your income — some people even qualify for $0 payments.

The important thing? Reach out now. Contact your loan servicer, explore your options, and protect your future before the collections process digs in deeper.

Why Time Matters More Than Ever

Once collections kick into full gear, it gets harder to fix the damage. Your wages, your tax refunds, and even your Social Security can be tapped without much warning. Acting early gives you more choices — and more control.