• Nearly 2 million student-loan borrowers are still waiting for their income-driven repayment applications to be processed.
• Trump temporarily removed the online forms in March, saying it was in compliance with a court order blocking SAVE.
• An Education Department spokesperson told BI the department hopes to clear the backlog in a few months.

Millions of student-loan borrowers are still waiting for cheaper monthly payments.

President Donald Trump's Department of Education wrote in a legal filing on May 15 that, as of April 30, nearly 2 million student-loan borrowers' income-driven repayment applications were still pending. The department said just over 79,000 applications were processed during the month of April.

This data is the first glimpse into the Department of Education's work to process income-driven repayment applications since the department initially removed online access to the forms for a couple of weeks beginning in late February.

The department said at the time that it took down the applications to comply with a federal court's preliminary injunction on SAVE, one type of income-driven repayment plan created by former President Joe Biden. The court did not explicitly direct the department to remove the online forms.

An Education Department spokesperson told Business Insider that Biden's administration caused the backlog.

"The Trump Administration is actively working with federal student loan servicers and hopes to clear the Biden backlog over the next few months," the spokesperson said.

In the meantime, some borrowers have been placed on processing forbearance, during which servicers recalculate their monthly payments, and interest still accrues. In contrast, borrowers enrolled in the SAVE plan are in a forbearance during which interest will not accrue, and they will not receive credit toward loan forgiveness.

It is possible that the backlog began last summer when a federal court blocked implementation of Biden's SAVE plan, which was intended to give borrowers cheaper monthly payments and a shorter timeline to loan forgiveness. The ruling also blocked income-driven repayment plan processing, and while Biden's Department of Education said in December that processing had resumed for some repayment plans, it would take time for servicers to work through the applications.

The American Federation of Teachers filed a lawsuit against the Department of Education for initially removing online access to income-driven repayment applications. These applications allow borrowers to receive more affordable monthly payments that count toward Public Service Loan Forgiveness.

As part of the ongoing litigation, the department is required to provide updates on the number of applications it processes every 30 days. AFT President Randi Weingarten said in a statement that the backlog is "outrageous and unacceptable."

"It is all the more concerning that until their applications are processed, these borrowers are being denied credit toward debt cancellation under the PSLF program," Weingarten said.

This data came just 10 days after the Trump administration restarted collections on defaulted student loans after a five-year pause that began under Trump and was continued under Biden. The department already sent notices to nearly 200,000 borrowers that their federal benefits are at risk of garnishment in early June, and 5 million defaulted borrowers could see wage garnishment later this summer.

Are you a student-loan borrower with a story to share? Reach out to this reporter at [email protected].

• This summer, millions of defaulted student-loan borrowers could face wage and federal benefits garnishment.
• They have options to avoid those consequences, but some routes can take longer than others.
• Options include loan consolidation, loan rehabilitation, and bankruptcy.

This summer, millions of student-loan borrowers could lose some of their wages and federal benefits if they don't start making payments.

They have options to avoid those consequences — but it won't be easy.

After President Donald Trump's administration restarted collections on defaulted student loans on May 5, his Education Department said it sent notices to 195,000 defaulted borrowers that some of their federal benefits, like Social Security, may start being withheld in early June.

"Later this summer, all 5.3 million defaulted borrowers will receive a notice from Treasury that their earnings will be subject to administrative wage garnishment," the department said. Most federal borrowers enter default when they have not made a payment in over 270 days.

Business Insider has spoken to student-loan borrowers behind on payments and worried about how they'll budget th restart and navigate wage garnishment. Millions have been free of benefits garnishment and negative credit reporting for the past five years under a pandemic pause that began under Trump and continued under former President Joe Biden. Now that collections have restarted, borrowers in default can tap into three different options to evade long-term consequences: loan rehabilitation, loan consolidation, or bankruptcy.

Rae Kaplan, a student-loan attorney based in Chicago, told Business Insider that while default consequences were standard before the pandemic, the five-year pause brings extra stress to the collections restart because "a lot of people took this out of their budget," adding that "five years is a long time" to get used to not paying.

"So I think this period where they start ramping up collection activities is going to cause a lot of panic out there for borrowers," Kaplan said. Some borrowers in default previously told BI that they're not confident they'll be able to avoid garnishment.

Here are some options that defaulted student-loan borrowers have to avoid having some of their wages and federal benefits seized.

Loan rehabilitation

Loan rehabilitation can take months, but it has several benefits, including eventual removal of the borrower's default status from their credit reports.

To rehabilitate a defaulted loan, the borrower needs to contact their student loan holder and sign an agreement to make nine payments within 20 days of the due date during a period of 10 consecutive months.

The payment amount is intended to be affordable; according to Federal Student Aid, the payment will be equal to up to 15% of the borrower's discretionary income divided by 12. Kaplan said that it's helpful to hire an attorney or an advocate to negotiate low payments, and it's possible that borrowers can end up with payments as low as $5 a month through this route.

Notably, wage and benefits garnishment will continue during part of the loan rehabilitation process, and the benefits that are seized would be in addition to the agreed-upon rehabilitation payments. Garnishment will continue until the borrower has made at least five rehabilitation payments or the loan is no longer in default.

Additionally, borrowers can only rehabilitate a defaulted student loan once; if the loan defaults again, rehabilitation will not be an option.

"Once we get you rehabilitated, then your credit score will go up," Kaplan said. "So it's a nice feature that you can both get back to current and in good standing, get your loans back into good status, and get that negative credit removed from your credit report."

Loan consolidation

Consolidating a defaulted student loan is quicker than rehabilitation, but the record of the default will remain on the borrower's credit history.

Borrowers can apply with Federal Student Aid to consolidate their defaulted student loans into a federal direct consolidation loan. To be approved for consolidation, the borrower must agree to pay off the consolidated loan under an income-driven repayment plan or make three consecutive, on-time, full monthly payments before consolidating.

After the loan is consolidated, the borrower can make use of all federal student-loan benefits, including deferments, forbearances, and loan forgiveness.

Bankruptcy

If a defaulted borrower does not think that consolidation or rehabilitation is feasible, they can file for bankruptcy.

Dustin Baker, an Iowa bankruptcy attorney, told BI that filing for bankruptcy is "a very efficient way" to stop wage and benefits garnishment because once a bankruptcy petition is filed, creditors are no longer allowed to contact and collect from the borrower.

"If nothing else, it's kind of a four or five-month break to figure out what to do," Baker said, adding that he's already received an increase in requests from borrowers worried about collections on defaulted student loans.

Prior to 2022, student-loan borrowers had to clear a high and burdensome threshold to discharge their loans in bankruptcy. However, Biden issued new guidance in November 2022 to streamline the process, and Baker said he's had much greater success discharging borrowers' student loans in recent years.

"It seems like it's moving more quickly now," Baker said. "They've allocated the appropriate resources, and it's not a partisan thing. Biden started this process, Trump reaffirmed it, and it sounds like the administration at least is providing the appropriate resources to make it happen."

• The New York Federal Reserve found that the share of delinquent student-loan borrowers surged.
• In the first quarter of 2025, 8.04% of borrowers transitioned to serious delinquency, up from 0.8% a year prior.
• It's largely a result of the end of the five-year pause on credit reporting for borrowers behind on payments.

Millions of student-loan borrowers are behind on payments, and it's putting them at greater risk of wage garnishment and seizure of federal benefits.

On Tuesday, the New York Federal Reserve released its quarterly household debt and credit report — and student-loan borrowers were a red flag in the new data.

In the first quarter of 2024, 0.8% of student-loan borrowers moved into serious delinquency, or being at least 90 days behind on payments. The New York Fed's Monday report found that in the first quarter of 2025, that number surged to 8.04%.

New York Fed researchers told reporters on a Tuesday press call that an increase in delinquencies was expected. For the past five years, student-loan borrowers behind on payments have not faced collections or consequences for defaulting or delinquency, including having those lapses affect their credit scores. The moratorium on credit reporting ended in October 2024, so the researchers said it made sense that reported delinquencies would rise — it was the extent of the surge that was unexpected.

The New York Fed also found that many newly delinquent borrowers — those who were current on their loans in the fourth quarter of 2025 but have at least one loan 90 or more days past due in the first quarter of 2025 — have seen drops in their credit scores. The data showed that 2.2 million of those borrowers saw their credit scores drop more than 100 points, and 1 million of those borrowers saw at least a 150-point drop.

The New York Fed's blog post on student-loan delinquencies said that those credit score drops "will increase borrowing costs or seriously limit their access to credit like mortgages and auto loans."

The New York Fed also said that while the surge in delinquencies was drastic following the five-year pause on payments, the rates are now at the "pre-pandemic 'normal,' with more than 10 percent of balances and roughly six million borrowers either past due or in default."

"The ramifications of student loan delinquency are severe," the blog post said. President Donald Trump restarted collections on defaulted student loans on May 5 and sent notices to nearly 200,000 borrowers in default that they will begin to face garnishment of federal benefits in 30 days if they don't begin making payments.

New York Fed researchers said that there is still time for borrowers who contributed to the surge in delinquencies to bring themselves back to good standing. For example, the researchers said, many of them might not have been aware that payments and credit reporting were resuming, and they might have had the capabilities to make payments had they known.

Still, some borrowers in default previously told Business Insider that they're aware that credit reporting restarted, and they cannot afford to make payments, so they're expecting to face garnishment of federal benefits, and eventually, wages.

"They're going to have to come and take it from me, and then I've got to figure out somehow how to live past that point," a defaulted student-loan borrower said.

Do you have a story to share about your student loans? Are you in default, or concerned about defaulting? Reach out to this reporter at [email protected].

• Sen. Elizabeth Warren invited Education Sec. Linda McMahon to defend her education policies in front of Congress.
• Warren said that Trump's plans to dismantle the Education Department will put student-loan borrowers at risk.
• McMahon has previously said that she intends to work with lawmakers to overhaul the department.

Sen. Elizabeth Warren wants President Donald Trump's top education chief to answer for her policies that impact millions of student-loan borrowers.

Warren is holding a forum on May 14 to examine the Trump administration's education policies and how Republicans' plans for education, including a recent bill that would eliminate affordable monthly student-loan payment plans, will impact borrowers and America's students.

A letter exclusively viewed by Business Insider and sent on Wednesday from Warren to Education Secretary Linda McMahon outlined the issues Warren plans to examine at the forum. It included an invitation for McMahon to attend and defend her policies to students and lawmakers.

"Your appearance will provide you with an opportunity to defend the Trump administration's policies, offer context for your actions to dismantle the Department of Education, and share your vision for ensuring that the American Dream becomes more attainable for all," Warren wrote.

Even before Trump signed an executive order in March directing McMahon to begin dismantling the Department of Education, the administration terminated half of its staff in an effort to reduce waste.

Warren wrote in the letter that gutting the agency would put its core responsibilities, like facilitating student loans and Pell Grants, at risk, leaving student-loan borrowers without the necessary resources to effectively make payments and get help managing their debt.

Additionally, Republicans on the House education committee unveiled a spending bill that would eliminate former President Joe Biden's SAVE income-driven repayment plan, intended to give borrowers cheaper monthly payments. It also proposed eliminating PLUS student loans, which allow parents and graduate students to borrow up to the full cost of attendance for themselves and their kids' educations.

"These changes will make education less affordable and accessible for students from working families, single moms who hope to advance their careers, veterans and other public servants, and anyone who does not have the money or ability to pay out of pocket to attend school," Warren wrote.

Eliminating the Department of Education requires congressional approval, and McMahon has repeatedly said that she intends to work with lawmakers to facilitate the department's shutdown. She even made an impromptu appearance at a press conference held by Democratic lawmakers last month, saying that "what I believe is one of the most important things that we can have a discussion on or action on in our country, and that is the education of our young people."

This letter comes amid an uncertain time for student-loan borrowers. On Monday, Trump restarted collections on defaulted student loans after a five-year pause, and 195,000 borrowers received notices that in 30 days, they could face garnishment of federal benefits if they don't start making payments.

Following the restart of collections, the Department of Education sent a letter to universities asking them to remind student-loan borrowers of their repayment options and offer them resources to avoid default. McMahon said in a statement that the department will ensure that "colleges and universities are delivering a high-value degree to students."

Still, the collections restart has some defaulted borrowers on edge.

"I'm barely scraping by just to make ends meet," Matthew Green, a student-loan borrower behind on payments, previously told BI. "I'm going paycheck to paycheck, and this is going to kill me."

Have a tip or a story to share? Contact this reporter via email at [email protected] or Signal at asheffey.97. Use a personal email address and a nonwork device; here's our guide to sharing information securely.

• Trump restarted collections on defaulted student loans on May 5.
• The Education Department said 195,000 student-loan borrowers have 30 days before their federal benefits might be seized.
• Later in the summer, over 5 million defaulted student loan borrowers could face wage garnishment.

Thousands of student-loan borrowers in default could begin losing some of their federal benefits this summer.

On Monday, President Donald Trump's administration officially restarted involuntary collections on defaulted student-loan borrowers' debt.

After a five-year pause that began during the early COVID-19 pandemic in Trump's first term and continued under former President Joe Biden, borrowers in default are once again subject to the harshest consequences of failing to make their payments, which include a seizure of federal benefits like tax refunds and Social Security checks, and eventual wage garnishment.

The Department of Education said that starting on Monday, 195,000 defaulted student-loan borrowers began receiving 30-day notices from the Treasury Department that their federal benefits are subject to withholding through the Treasury Offset Program.

"The first monthly benefit checks subject to offset are those scheduled for early June," the department said. "Later this summer, all 5.3 million defaulted borrowers will receive a notice from Treasury that their earnings will be subject to administrative wage garnishment."

Most federal student-loan borrowers enter default when they have not made a payment in over 270 days. The Education Department recommended that borrowers in default contact the Default Resolution Group to make a payment plan or sign up for loan rehabilitation: a lengthy process that requires nine consecutive monthly payments at an amount determined by the servicer.

Preston Cooper, a senior fellow at the conservative think tank American Enterprise Institute, previously told Business Insider that some borrowers might not see the consequences of defaulting right off the bat because the government has to locate them first, which could take time.

"For a lot of those 5 million borrowers, even though the collection system is technically turning back on, they might not see any consequences immediately because the government has to find them first, and it also has to find some income or wages to garnish," Cooper said.

Some student-loan borrowers in default told BI that they cannot afford the payment restart. James Southern, a 63-year-old borrower, is in default on his student loans and said the projected $1,500 monthly payment is not feasible.

"If they are steadfast on this $1,500 a month, then again, there's no way I can pay that," Southern said. "So they're going to have to come and take it from me, and then I've got to figure out somehow how to live past that point."

The Department of Education also sent a letter to universities on Monday, asking them to help student-loan borrowers and remind students of their resources to pay off debt and avoid default.

"As we begin to help defaulted borrowers back into repayment, we must also fix a broken higher education finance system that has put upward pressure on tuition rates without ensuring that colleges and universities are delivering a high-value degree to students," Education Secretary Linda McMahon said in a statement.

Are you a student-loan borrower in default or concerned about falling behind? Contact this reporter via email at [email protected] or Signal at asheffey.97. Use a personal email address and a nonwork device; here's our guide to sharing information securely.

• Trump is restarting collections on defaulted student loans after a five-year pause.
• Five million borrowers are in default, and millions more are set to enter that phase in the summer.
• Those borrowers could face wage and federal benefit garnishment if they don't make payments.

The five-year relief period is over, and defaulted student-loan borrowers are left with two options: pay up or face the consequences.

On May 5, President Donald Trump's administration officially restarted the process to collect defaulted borrowers' student loans. It marks the end of a yearslong pause that started under Trump in 2020 and continued under former President Joe Biden, during which borrowers who were behind on their student-loan payments did not face any penalties.

The Department of Education announced two weeks ago that the pause will end, and borrowers who don't make payments could eventually face seizure of federal benefits like Social Security, eventual wage garnishment, and hits to their credit scores.

"Restarting collections is something that was going to have to happen eventually," Preston Cooper, a senior fellow at the conservative think-tank American Enterprise Institute, told Business Insider. "It was a matter of when, not a matter of if."

Five million student-loan borrowers are currently in default, and millions more are expected to enter default by the summer. The department said it would begin sending emails to defaulted borrowers notifying them of the collections restart. While Cooper said it's unlikely borrowers would start seeing their federal benefits and salaries withheld immediately, the consequences could start trickling in.

Linda McMahon, Trump's education secretary, said it's necessary to restart the collections system following Biden's years of relief.

"Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment—both for the sake of their own financial health and our nation's economic outlook," McMahon said in a statement.

What's next for borrowers behind on payments

There are two buckets of student-loan borrowers who could face the consequences of Trump's collections restart: those who are currently in default, meaning they have been behind on payments for more than 270 days, and those who are delinquent, meaning they have been behind on payments for less than 270 days.

Borrowers in the default category will be the first to experience the Treasury Offset Program, which is responsible for withholding certain government benefits, like tax refunds or a portion of the borrower's Social Security check.

Cooper said that the consequences will likely not be immediately felt. Since tax refunds come once a year, some borrowers might not notice that their refunds were seized.

Wage garnishment, in which the government collects a portion of a borrower's paycheck to apply toward their defaulted student loan, would be much more acutely felt. The Treasury is required to notify borrowers 60 days in advance of its intent to withhold benefits or salary, which is why the Department of Education said it would begin sending notices of wage garnishment "later this summer."

However, borrowers currently in default have been in default for years, and Cooper said it would be difficult for the government to locate them and seize their benefits.

"They may not even be working. They might not have any income," Cooper said. "So, for a lot of those 5 million borrowers, even though the collection system is technically turning back on, they might not see any consequences immediately, because the government has to find them first, and it also has to find some income or wages to garnish."

To get out of default, borrowers can rehabilitate their loan, which would require making nine consecutive payments at an amount determined by the loan servicer. That process is lengthier than the other option — loan consolidation — in which borrowers with multiple defaulted loans can consolidate them into one direct federal loan. Doing so would allow the borrower to enroll in an income-driven repayment plan to make monthly payments.

Impact of the abrupt restart

Along with the 5 million borrowers in default, the Department of Education said that another 4 million borrowers are in late-stage delinquency — behind on payments for 91 to 180 days — meaning that by the summer, almost 10 million borrowers will be in default.

The short notice of the collections restart will cause significant hardship for those already struggling to pay off their student loans, Sara Partridge, associate director of higher education at the left-leaning think tank Center for American Progress, told BI.

"The consequences can include garnishing a borrower's wages, their tax refund, and even their Social Security benefit. It can also damage their credit score and force them to pay more for an auto or home loan, or prevent them from receiving one altogether," Partridge said.

Another concern with the collections restart is that delinquent borrowers just might not be aware that they have to restart payments. Cooper said that many borrowers were taking advantage of the relief under Biden and the potential for student-loan forgiveness, and borrowers did not receive any guidance during that time on how to prepare for eventual payments.

"There was no real concerted effort to raise awareness among borrowers that payments were going to be due again," Cooper said.

More broadly, the collections restart comes amid a period of uncertainty for student-loan borrowers. The Department of Education paused processing of income-driven repayment applications, and millions of borrowers are in forbearance due to ongoing legal challenges to Biden's SAVE income-driven repayment plan.

At the same time, the Trump administration is attempting to dismantle the Department of Education altogether.

"There really are very urgent material challenges that borrowers are facing that the Department of Education should work proactively to address, to prevent harm from happening, and not take an action such as restarting this program at a time of such chaos that will harm borrowers who are already struggling to navigate the system through no fault of their own," Partridge said.

Are you a student-loan borrower in default or concerned about falling behind? Contact this reporter via email at [email protected] or Signal at asheffey.97. Use a personal email address and a nonwork device; here's our guide to sharing information securely.

To celebrate my father's 80th birthday, my family rented a lovely farmhouse in Tuscany and spent a week gorging ourselves on epic meals and fine Italian wines. It was a fitting cap to my father's already pretty great retirement.

As octogenarians, my parents have more disposable income than they've ever had. My dad spends his days reading up on theoretical physics, a topic that's always interested him, and learning foreign languages in preparation for the amazing vacations he and my mother take each year. Their jobs didn't make them rich — my father was a civil servant, and my mother still works as a university professor. But they were diligent about saving, and they got lucky with their timing: Their retirement accounts soared during a historic period of economic growth, and their house in the DC suburbs has quintupled in value since they bought it in 1984.

I had a wonderful time on the Italy trip, and I'm glad my parents are doing so well. But for me, it was bittersweet. I felt like I was catching a glimpse of an old age I'll never get to experience for myself.

As elder millennials, my husband and I have diligently followed the best practices for a secure retirement. We've been tucking away money since our early 20s. We bought our home in Brooklyn during the pandemic, just before interest rates shot up. Our financial planner says there's a 76% chance we'll wind up with enough money to retire the way my parents have — way better odds than those facing most Americans, about half of whom have no retirement savings at all.

So why am I so skeptical that I'll be able to retire in comfort? The reason is in the fine print.

The model used by our financial planner relies on a lot of assumptions. It assumes we've correctly estimated our expenses thirty years from now. It assumes the economy will continue to grow over the rest of my lifetime, just as it did for my boomer parents. It assumes that our investments will enjoy an average annual return of 7%. It assumes that half of our income in retirement will come from Social Security. It assumes that my husband and I will continue to save at our current rate, with no interruption to our jobs and no decrease in our salaries. And it assumes that the impacts of climate change won't wreak havoc on the economy, upend governments, and subject vast swaths of the planet to natural disasters and hellish heat waves.

It assumes, in other words, that all of the external factors that can affect retirement plans — the stock market, the housing market, the job market, the services and financial support provided by the government — will continue to grow and thrive, just as they have over the past half century.

And that, given the current state of the world, feels highly unlikely, to put it mildly. The chaos that is roiling almost every aspect of our lives — and calling into question our far-from-certain future — has thrown my generation into a state I've come to think of as Millennial Retirement Panic. If I'm counting on my 401(k) to fund my golden years, how do I retire during an apocalypse?

For me, it was the climate crisis — and how little we're factoring its long-term effects into our economic planning — that first triggered my retirement panic.

Back in 2018, the Intergovernmental Panel on Climate Change projected 2040 — the year I turn 60 — as the moment the world will likely warm by 1.5 degrees Celsius, the threshold at which the effects of global warming will become irreversibly catastrophic. The following summer, I caught a panel during London's Climate Week that shook me even more. Economists who advise major insurance companies and pension funds presented findings from a model about what climate change will do to the world economy. At the highest projected temperatures, they estimated, GDPs would plummet by 30% by 2080 in every country they modeled, including the United States.

After the panel, I asked one of the presenters, Willemijn Verdegaal, what I should do to prepare for retirement, assuming the Earth stays on its current warming trajectory. "In all honesty," she told me, "there's very little point in you saving anything anymore."

Others have echoed that pessimism. Günther Thallinger, the CEO of Allianz, one of the world's largest insurance companies, recently wrote on LinkedIn that without urgent action to curtail climate change, the insurance industry could collapse. If homes aren't insured, banks would stop issuing mortgages, and markets would go into free fall. "Capitalism as we know it ceases to be viable," Thallinger warned.

That scared the hell out of me. What's the point in planning for a retirement that may never happen?

We know, of course, that no economic model can fully account for all the unknowns about climate accurately enough to put a firm number on its financial impact. And if the world invests dramatically in reducing emissions, the economy could escape some of the most dire forecasts. But you don't have to believe in any single prediction to conclude that climate change will make retirement look way different for millennials than it has for boomers.

"Any number is false precision, false accuracy, or worse," Gernot Wagner, a climate economist at Columbia University, says. "What I know is, it is less certain that I'm going to have a stable retirement."

We millennials started off our adulthoods at a retirement disadvantage. While my parents and their friends benefited from one of the longest periods of economic growth in American history, my generation has experienced one upheaval after another. I graduated from college right into the dot-com bust. The Great Recession of 2008 came just as I finished graduate school. We're the best-educated generation, but that distinction means that many millennials are saddled with crushing student debt.

In 2019, a study by the Center for Retirement Research at Boston College found that millennials were "well behind" Gen Xers and baby boomers at the same point in their working lives. Millennials in their late 30s were three times more likely to be paying off student loans than boomers were at the same age, and twice more likely than Gen Xers. All told, millennials had accumulated about 15% less wealth than boomers — and 36% less than Gen Xers.

Millennials got a break during the pandemic, thanks partly to the Biden administration's pause on student loan payments. By 2022, the Center for Retirement Research found that millennials had not only caught up to the wealth trajectories of previous generations but had actually surpassed them.

But the reprieve was short-lived. Since taking office for the second time, Donald Trump has rescinded the Biden-era break on student loans. And the market plunge in early April brought back memories of the economic shocks we've experienced at earlier stages of our careers. "Another major downturn could vanish whatever progress we have made," Nilufer Gok, a coauthor of the Boston College report, says.

And recent events have called into question our retirement assumptions in ways that are even more alarming. Economists warn that Trump's tariffs could lead to a permanent realignment of the world economy, making daily life far more expensive. I worry that both my husband and I could see our wages fall as artificial intelligence devalues the kind of work we do. And Social Security, the cornerstone of America's retirement system, is projected to face a shortfall that will force benefit cuts unless Congress takes action before 2033. Millennials, having already lived through a staggering period of technological and economic change, now face the prospect of even greater upheaval in the decades to come.

As my Millennial Retirement Panic mounted, I asked my financial advisor — then in his 70s — what I could do to better prepare for an ominous future. "It doesn't make a lot of sense to live your life like there'll be a disaster at the end of it," he told me.

Other financial planners and climate forecasters offered me the same advice. There's not a whole lot that any of us can do as individuals to protect our finances from the kind of massive, macroeconomic shifts we're facing. "You can certainly create a hedge against risks within the portfolio composition, but that only goes so far," Jesse Keenan, a climate change researcher and professor at Tulane University, says. "It's very difficult, I think, to do it at an individual level."

I know they're right — but I also wanted to take some sort of action, to increase my chances of enjoying a secure and comfortable retirement in the face of looming disaster. When COVID-19 shut down New York, my husband and I decided to move to Michigan, a state we chose because scientists predict it would emerge relatively unscathed by warming temperatures.

Ironically, not long after we arrived, the neighborhood we selected as a safe haven from extreme weather was flooded by unusually heavy rains and was ultimately declared a federal disaster area. There wasn't much of a job market for me in Michigan, which sapped my earnings and made saving harder. I also didn't have a social network that could help me find a better job. We eventually returned to New York, feeling as helpless about old age as we did when we left.

So, where does that leave us? For now, we're staying on our retirement savings track as best we can, mainly because we don't know what else to do. Regardless of what the future brings, we know that any savings are better than none. But the more I think about retirement, the more convinced I am that our current assumptions about it are just plain wrong. The ways our parents built wealth for retirement may not work for us.

Whatever lies ahead, I know it won't help to panic. But we also need to be clear-eyed about the external risks to our individual retirement plans. Our investments and our homes and our jobs don't exist in a bubble — and the projections we make about them need to take into account all the external factors that threaten to disrupt them in all sorts of new and unprecedented ways. It's necessary to make assumptions about our retirement. But our old ones don't feel up to what's coming.

J. Lester Feder is a freelance writer based in Brooklyn.

• Trump is restarting collections on defaulted student loans on May 5.
• Student-loan borrowers in default told BI they're not able to afford a payment restart.
• Trump's administration said the restart is necessary following Biden's nearly five-year collection pause.

James Southern, 63, decided to go to business school in the early 2000s to further his career.

"I loved the learning atmosphere, I loved the other students, I loved everything about it," he told Business Insider. "But at the end, once I attained what I was reaching for, the rewards have never transpired."

Southern said he made every effort to get a well-paid job that would help him pay off his student loans. He recalls sending in over 50 job applications, without success. During that time, he wasn't able to afford his student-loan payments, and the unpaid interest surged his balance as he fell further behind.

When President Donald Trump's Department of Education paused collections on defaulted student-loan debt at the start of the pandemic, it was a big relief to Southern. Five years later, that relief is coming to an end, and he still can't afford to make payments.

"They're looking at me paying $1,500 a month, and I told them, that's just impossible," Southern said. "I can't do that and function and pay bills and do what I need to do on a monthly basis with that kind of debt structure. I can't do it."

The department gave borrowers two weeks to prepare. Starting May 5, the consequences of default could include wage garnishment and seizure of federal benefits, like a portion of a Social Security check.

BI heard from dozens of student-loan borrowers who are either in default or concerned they will soon default. They said they're fearful of the looming collections and their ability to afford extra payments. While some of them said they want to fulfill their obligations, the sudden announcement leaves them with a short timeframe to make financial preparations.

That's the case for Southern, who now earns a five-figure salary at a security company. While he doesn't regret pursuing an education, all he has is a six-figure defaulted student-debt load to show for it. He's unsure what to do next, and he anticipates the worst-case scenario: The department will take his money, whether he likes it or not.

"If they are steadfast on this $1,500 a month, then again, there's no way I can pay that," Southern said. "So they're going to have to come and take it from me, and then I've got to figure out somehow how to live past that point."

An unfulfilled student-loan forgiveness promise

Holly Bechard, 42, is past due on her federal student loans but not yet in default, according to documents reviewed by BI. She's worried she'll soon enter that phase, and she said that she was hoping for student-loan forgiveness under Biden and is disappointed that that promise was never fulfilled.

Biden announced his first broad student-loan forgiveness plan in August 2022, but the Supreme Court later struck it down following a series of lawsuits challenging the relief's constitutionality. While Biden made a second attempt at relief, it was also met with legal challenges, and his administration was unable to carry it through before his term was up.

"I feel like it's just been very hard to motivate myself to pay them when there was so much talk about forgiving them," Bechard said.

Linda McMahon, Trump's education secretary, wrote in an opinion piece in The Wall Street Journal that the collections restart is intended to restore accountability for student-loan borrowers.

"For political gain, he dangled the carrot of loan forgiveness in front of young voters, among other things by keeping in place a temporary Covid-era deferment program," McMahon wrote. "Thus the Education Department allowed students to rack up a massive debt that is now long past due."

The Department of Education said it would start sending notices to defaulted student-loan borrowers before May 5, notifying them of their default status and urging them to contact their servicers to make preparations to restart payments.

Bechard isn't feeling confident.

"I'm never going to pay them off," she said. "I don't have any problem paying back what I borrowed, but I do have a problem with the lack of transparency and all of the false promises that I feel like the federal government has made to me over the years."

'I'm barely scraping by'

A student-loan borrower enters default once they've been behind on payments for more than 270 days. Biden instituted a one-year on-ramp period that ended in October 2024, during which borrowers who missed payments would be free of credit report hits. That means that this summer, there will likely be a wave of defaults as more borrowers reach the 270-day mark after the on-ramp ended.

Data from the Department of Education said that over 5 million borrowers have not made a monthly payment in over 360 days and are in default, and 4 million borrowers are in late-stage delinquency, having been behind on payments for 91 to 180 days

"As a result, there could be almost 10 million borrowers in default in a few months," the department said. "When this happens, almost 25 percent of the federal student loan portfolio will be in default."

Matthew Green, 36, said defaulting is inevitable. He worked two jobs in college to finance most of his education, but he still had to take out student loans to pay the remainder. After joining the Peace Corps post-graduation, Green developed medical issues and was unable to work, so he fell behind on his student-loan payments.

He now works as a high school custodian, and student-loan payments are not feasible alongside his other monthly expenses.

"I'm barely scraping by just to make ends meet. I'm going paycheck to paycheck, and this is going to kill me," Green said.

He added that he's not "against paying back loans, and it's not the government's fault or the school's fault. That's the way the cards fell. But I don't know what I'm going to do, having to pay back these loans right away. I'm just getting caught up with the bills I hadn't been able to pay in the previous years. So it's pretty scary."

Are you a student-loan borrower in default or concerned about falling behind? Contact this reporter via email at [email protected] or Signal at asheffey.97. Use a personal email address and a nonwork device; here's our guide to sharing information securely.