If you are among the millions of borrowers who have not fully made federal student loan payments after the on-ramp period ended September 30, 2024, take action now. Otherwise, the loan may default to July or August.
If the borrower’s payment expires 270 days before the deadline, the student loan will default. That status can have serious consequences, including wage decorations, credit damage, and loss of access to affordable repayment plans.
For each Ministry of Education data, nearly 5.6 million borrowers were 180 days behind on payments as of March 31. This means they are at the risk of defaulting this summer soon. These are borrowers who were in good condition before the pandemic but have not returned to track since payments resumed.
Five million student loan borrowers have already faced default penalties in May. These borrowers were defaulted prior to the pandemic.
As a result, a total of 10 million borrowers (about 1 in 4) could default this summer, the education department says.
Kyra Taylor, a staff attorney focused on student debt at the National Center for Consumer Law, finds it difficult for many borrowers to resume student loan payments as critical costs rise and an increasingly complex repayment system. “Now, it’s deeply confusing for borrowers that they have the options they have.”
Good news: You have time to avoid defaults and get help. You could cut your monthly payments to just $0, or you could suspend your payments completely while finding a financial foothold.
If you are registered for a postponed, tolerance, or save plan, you may already be protected from default, but it is important to check your status with the loan servicer.
In this unstable time for borrowers, here is what you can do.
Check all student loan accounts
First Step: Log in to all federal student loan accounts. Start with your sudintsaid.gov account. This includes information about the loan history and the name of the student loan servicer. Your servicer may have changed since you last made your payment, or you may have multiple servicers, even for a loan taken in the same period.
A borrower with multiple servicers may be up to date with payments through one servicer, but by default with other servicers without knowing that, Taylor explains.
Once you have identified the servicer, log in to your servicer account. Here you can check your loan repayment status and when you last made your payment.
If you are in arrears, your servicer should also contact you directly, as long as your contact information is up to date with your account.
After missing a 30-day payment, servicers will start contacting delinquents by phone, email and mail, says Scott Buchanan, executive director of the Student Loan Service Alliance, an industry association for federal military personnel. By the time borrowers were 270 days late, they should have received dozens of servicer calls, he says.
Don’t know if these calls are coming from your servicer or from a student loan scammer? Hang up, find the official servicer’s phone number and call the servicer directly, advise Buchanan.
Learn options to avoid defaults
You need to act quickly to avoid defaults, but that doesn’t mean you need to start paying expensively right away. There are a variety of options to help you get your loan back in good condition, such as officially suspending payments or getting a low invoice based on your income.
Sign up for an income-driven or alternative repayment plan
There are three different income-driven repayment (IDR) plans to choose from. This limits monthly payments to a fixed percentage of income. If you are unemployed or earn very low income, your bill can be $0.
Each IDR plan has slightly different eligibility rules and repayment terms, but for many struggling borrowers, it reduces payments compared to standard repayment plans, says Taylor.
Use the Education Department Loan Simulator to measure your payments under different plans and apply them via sudentsaid.gov/idr or contact a federal student loan servicer. It may take some time for the IDR application to be processed. According to a court filing on May 15, there is a backlog of 2 million applications.
If you are applying for an IDR plan, make sure your servicer has you in a “tolerant processing” status. This prevents defaults from occurring while waiting for the application to be cleared, Buchanan says. Its status will also temporarily suspend payments until you are approved for your IDR plan.
In addition to the IDR, two other alternative repayment plans (an extension or graduation repayment plan) could also reduce payments. Alternatively, you can consolidate student loans to extend your repayment period and reduce monthly bills, Buchanan says. The servicer will help you navigate these options.
Get temporary relief with tolerance or postponement
For some borrowers, payments are too high under an income-driven repayment plan.
If you are in such a situation, call the servicer and explain why payments are out of hand. Taylor said it mentions medical debt, housing costs, childcare costs and other situations. You may qualify for tolerance or postponement.
The downside is that these loans continue to accrue on these loans during leniency or deferral, and ultimately increase the amount you owe.
But these options can prevent you from defaulting — and they “work to buy borrowers to rebuild their budgets, try to start paying tentatively again, and work to get over what has created hardships for them,” says Taylor.
Give shots to less likely options
If you can make temporary payments to keep up with your past bills, it could bring your loan back to good condition.
Or, check if you are eligible for a federal government loan and discharge program. These programs may apply if the school misunderstood or fraudulent you, or if it closes and cannot finish the degree program.
Another program, total disability discharge, may be related if you have physical or mental health conditions that prevent you from working.
Rescuing borrowers is not progressing smoothly to default
The 7.8 million borrowers who signed up for the SAVE Repayment Plan were not required to pay since last summer. That’s because while they’re placed in interest-free tolerance, the legal challenges against Save play.
Being generous can protect you from default, so saving a saved borrower is not in danger.
Still, we recommend calling the servicer to recheck your status. If you think you’re being tolerant, but don’t, you might be exposed to default risks without realizing it.
You don’t need to navigate this alone
The StudentAid.gov website has useful information about repayment plans and ongoing litigation that affect student loan borrowers, Taylor says. Also, researching options will help you feel confident when calling a student loan servicer and make sure the information you get is correct.
When you call a servicer, you will ask specific questions about your situation and ask them to look into your options and return to good condition. Borrowers can also use the servicer’s website to accomplish most common tasks, Buchanan says.
If you are having trouble getting help from a servicer, you can find student loan help elsewhere. Low-income borrowers can contact their local legal aid organization, but borrowers with more financial resources may consider contacting student loan attorneys, Taylor suggests. Some states also have student loan ombudsman offices that support residents.
Eliza Haverstock writes for Nald Wallet. Email: ehaversstock@nerdwallet.com. Twitter: @elizahaversstock.
Articles about student loan payments? Now, five million summer default looms take action as they have appeared in Nerdwallet.
Original issue: June 9, 2025, 1:39pm
