[UNITED STATES] With federal student loan collections ramping up under the Trump administration, anxious borrowers are being advised to ask a crucial question: Am I delinquent, or in default? The answer can determine the most effective path forward.
“We’ve had a surge of clients reaching out recently—many of them extremely anxious and, in some cases, panicked about their loan situation,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.
Borrower concerns have intensified as the Department of Education reactivates aggressive collection measures that were paused during the pandemic, including wage garnishments and tax refund seizures. Advocacy groups caution that many low-income borrowers may not fully understand their rights—or the critical distinctions between being delinquent and being in default.
Some borrowers mistakenly believe they’re at immediate risk of losing wages or retirement benefits, when in fact they’ve only missed a few payments and aren’t yet in default, Nierman explained.
“Delinquent borrowers still have time to act,” she said. “Even those already in default can take steps to avoid collections.” There are federal mechanisms to help borrowers bring their loans back into good standing, she added.
One of the newest tools is the Fresh Start program, introduced in 2024, which allows defaulted borrowers to quickly restore their loan status and regain access to income-driven repayment plans. However, advocates warn that awareness remains low.
Are You Delinquent or in Default?
Missing a student loan payment doesn’t automatically mean you’re in default.
According to the U.S. Department of Education, a loan is considered delinquent as soon as a payment is missed. If that delinquency stretches to 90 days, loan servicers report it to the national credit bureaus—often leading to a noticeable drop in credit scores.
A recent report from the New York Federal Reserve found that nearly 8% of student loan debt was 90 days past due in the first quarter of 2025—an increase from pre-pandemic levels. Economists point to lingering inflation and the expiration of COVID-era relief programs as key drivers of rising delinquency.
Credit damage can be substantial. In March, the Federal Reserve projected that borrowers with delinquencies could see their credit scores fall by as much as 171 points. That kind of drop can translate into higher interest rates on mortgages, car loans, and credit cards.
Borrowers are only classified as in default after failing to make scheduled payments for at least 270 days.
Default Triggers Federal Collection Powers
Once in default, borrowers face the full force of federal collection tools—including garnishments of wages, tax refunds, and even Social Security benefits. These penalties do not apply to delinquent borrowers.
Critics have called the government’s collection tactics unduly harsh, particularly for vulnerable populations. A 2025 analysis by the Student Borrower Protection Center found that nearly 40% of borrowers subject to garnishment were living below the poverty line, raising serious equity concerns.
Getting Out of Delinquency
Borrowers who are behind on payments should immediately contact their loan servicer, according to experts at the Education Debt Consumer Assistance Program. They may be eligible for a retroactive forbearance to cover missed payments, followed by a temporary forbearance until they can enroll in an affordable repayment plan.
Income-driven repayment plans can reduce monthly bills to as little as zero dollars for qualifying borrowers. Other relief options include deferments for economic hardship or unemployment.
Recovering from Default
More than 5.3 million student loan borrowers are currently in default, with projections suggesting that number could climb to 10 million within months, according to Department of Education estimates.
To resolve default status, borrowers can contact the government’s Default Resolution Group. Available options include income-driven repayment, loan rehabilitation, or loan consolidation.
Nierman cautions borrowers to avoid third-party companies that charge fees for services that are free through official federal channels. “There’s a growing number of scams promising to ‘erase’ your debt. Don’t fall for it,” she said.
Loan rehabilitation involves making nine “voluntary, reasonable, and affordable” monthly payments within 10 consecutive months, per the Education Department. Alternatively, consolidation may be available to borrowers who make three consecutive, voluntary full payments—after which they can roll their existing debt into a new loan.
Once out of default, it’s crucial to request a repayment plan that matches your financial situation to avoid falling behind again. Borrowers unsure of who services their loans can find that information at Studentaid.gov. “Take time to understand your status and explore your options,” Nierman urged. “That’s the first step to protecting yourself from aggressive collections.”
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