How to Manage Student Loan Debt

3 Min. Read

After a multi-year payment pause, many borrowers with federal student loans are now being prompted to repay. Today, nearly 43 million borrowers hold more than $1.6 trillion in student debt and millions are delinquent or in default. In fact, only 38% of borrowers are current on their student loan payments.

With administrative wage garnishment and collection actions set to begin in the summer of 2025, you may be wondering what comes next for your federal student loans. It’s normal to feel anxious, but you don’t have to face this alone.

Here, we’ll walk you through the steps and resources—from income-driven plans to loan rehabilitation—to help you make a plan for student loan repayment or support.

1. Start with Your Loan Servicer

Your student loan servicer should be your first point of contact for help. For federal loans, you can locate your servicer by logging in to your MyFederalStudentAid account. For private loans, contact your original lender.

Your loan servicer may be able to assist by:

• Enrolling you in an income-driven repayment (IDR) plan to cap payments at a percentage of your income (even $0 if you have no earnings). After 10–25 years of payments, you can receive forgiveness on the remaining balance. These plans are free to apply for on studentaid.gov.
• Granting a deferment or forbearance that will help you pay less temporarily. You may qualify for deferment or forbearance if you are enrolled in school, experiencing economic hardship, or serving in specific military or government positions.
• Helping you apply for Public Service Loan Forgiveness or other cancellation programs. The qualification guidelines for these programs vary, and the U.S. Department of Education will review your application to confirm eligibility.

2. Use Federal Tools & Resources

The government provides paths to recovery through student loan rehabilitation in the event that you default on your student loans. Resources they provide include:

Loan Simulator & AI Assistant: The Office of Federal Student Aid (FSA) offers online tools that let you compare repayment plans and simulate payoff timelines.

Enhanced IDR process: The Department has pledged to create faster, more user-friendly enrollment in income-driven repayment plans through the Default Resolution Group.

3. Explore Non-profit Counseling

You can get a personalized action plan from a non-profit credit counselor or a non-profit organization like the National Foundation for Credit Counseling (NFCC) and The Institute of Student Loan Advisors Corporation (TISLA). They can help you map your income, expenses, and loan obligations to choose the best repayment strategy. These organizations provide counsel on student loans at no cost.

4. Address Defaults Proactively

If your federal loan is already in default, you’ve been transferred to the government’s Default Resolution Group. It’s important to contact them immediately to:

• Make a payment to cure the default
• Enroll in an IDR plan
• Sign up for loan rehabilitation to remove your default status after nine on-time payments

Note that failing to act may trigger wage garnishment, tax refund offsets, or other actions as the agency prepares to ramp up its collection efforts.

5. Beware of Student-Loan Scams

As you search for student loan help, watch out for for-profit debt-relief companies that offer to consolidate your loans, enroll you in repayment plans, or grant you debt forgiveness for a fee. These claims are almost always a scam. Only work through your loan servicer or reputable non-profit organizations.

Watch for these red flags: Up-front fees, promises of instant forgiveness, and pressure tactics.

6. Consider Private-Loan Strategies

It’s possible to transfer your federal student loan debt by seeking private refinancing. A fixed-rate, private lender consolidation loan may lower your interest, but it also comes with consequences. Moving to a private lender means that you’ll lose access to federal protections like IDR, deferment, or forgiveness.

Also, unpaid federal student loans go into default after nine months but the timeline is shorter for private loans. Landing in default will damage your credit, and that negative mark will stay on your credit report for seven years.

If you already have private student loans that have fallen into default, you may be facing legal action by the lender. If a private lender sues, consult the National Association of Consumer Advocates for a specialized attorney who can help.

How to Take the Next Step with Student Loans

Repaying your student loans can feel overwhelming, but there are clear ways forward. Whether you choose to pursue an income-driven plan, a temporary deferment, or non-profit counseling, even one small step can prevent collection efforts and set you on a path toward financial freedom.

Here’s how to get started now:

• Contact your servicer to inquire about enrolling in an IDR plan or request deferment/forbearance.
• Leverage federal tools like the Loan Simulator to compare repayment options side by side.
• Connect with a non-profit counselor (such as the NFCC or TISLA) for a free, personalized budget review and action plan.
• If you’re in default, reach out to the Default Resolution Group to cure the default or begin loan rehabilitation and avoid garnishment.
• Review your repayment plan annually, as your financial situation and your repayment options may change.

Taking proactive steps now will put you on the best path to regain control over your student loan debt and protect your financial future.