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Student loans have been looming in the background for more than five years, ever since payment requirements were suspended during the pandemic.

During that five-year period, borrowers had several opportunities to reorganize their debts, based on more generous income provisions, to lower the monthly payments. Many took advantage of those plans, and resumed their payments at a lower level.

But others simply ignored that huge cloud of debt, since it was not accruing interest during the suspension, until fall of 2023 when interest started accruing again. Of the nearly 43 million people who owe money, only about one-third have made regular payments, according to the Department of Education.

At least 5 million borrowers are considered to be in default — not having made a payment in nine months. Millions more are expected to fall into default in the coming months as they are made aware of the repayment restart.

Until now, the government did not institute collection procedures. But that grace period ended May 5. And the repayments are coming back with a vengeance.

The headline that has shocked many borrowers is the fact that the government is now using its power to grab any tax refunds and other federal benefits, or even Social Security benefits (in the case of co-signing parents).

Even more scary, the administration will start the process of garnishing wages on defaulted loans! And default will impact your credit score.

All delinquent borrowers should have received an email notifying them of their status. But it’s entirely possible that the Department of Education has lost track of your contact information — although not of your Social Security number! It’s up to you — the borrower — to make sure that your information is updated.

Do that at StudentAid.gov, where you will use your original FSA ID number to sign in. There you can find not only the status of your loans but also who your current servicer is. Most student loans have changed servicing companies at least once, if not several times, since you graduated and first made your repayment plans.

It is critical that you get in touch with the company servicing your loan to at least make sure they have your contact information.

The next steps depend on whether you can now afford to make the full required monthly payment. For most people that will be quite a chore. But there are still plans (though less generous than two years ago) to help you deal with those payments and create reductions — if you act promptly.

At StudentAid.gov you can learn about and apply for the remaining income-driven repayment plans for which you might qualify. Note that Parent Plus loans might also qualify for income-driven repayment plans, but only after the loans are consolidated.

The previous administration’s popular Saving for a Valuable Education (SAVE) plan is no longer available because of court challenges to its generous terms. But borrowers can still get into the PAYE (Pay as You Earn) plan, in which payments are capped at 10% of a borrower’s income. And if you’re able to pay more and want to pay down the loan faster, check out the Income-Contingent Repayment plan.

Since these income-based plans are calculated based on family size and your discretionary income, you must recertify each year. Thus, if you are currently on an income-driven plan, it might also be time to recertify at StudentAid.gov.

There are several other alternatives for dealing with your student loans. Forbearance is still a possibility to temporarily stop payments or make substantially lower ones. But that won’t make the problem go away — and interest continues to accrue. Graduated payment plans can help those whose incomes should rise in the future. And deferment is another possibility in case of extreme hardship. At StudentAid.gov/loan-simulator you can compare the impact of those plans over the long run.

And Public Service Loan Forgiveness remains in place, though the Trump administration is already limiting the jobs that are considered public service.

Congress is now considering substantial changes to the various student loan plans, including doing away with “subsidized” loans, which do not accrue interest while the student is still in school. Also on the potential chopping block are graduate student loans. In fact, the administration is even talking about ending or reorganizing the entire Department of Education.

But that’s not your immediate concern.

The real challenge now is figuring out a repayment plan for your current loans. It’s tempting to try to forget they exist. But the government is going to find you. And you’ll have a lot more options if you find them first — and make an attempt at repayment.

And that’s The Savage Truth.

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(Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” Terry responds to questions on her blog at TerrySavage.com.)

©2025 Terry Savage. Distributed by Tribune Content Agency, LLC.