Gen Xers and future retirees to see expanded 401(k) choices soon

The rules of the student-loan game got rewritten—again. After a five-year lull, the Education Department restarted default collections on May 5, 2025, turning the lights back on for offsets and other enforcement tools while borrowers were still recalibrating their budgets. The part that matters for your wallet is simple: if you’ve been in default, the government has flipped the switch back on for grabbing money you would otherwise receive, and the notices are real. That’s not a scare tactic; it’s a status update straight from the source. The Department’s own press materials confirm the Treasury Offset Program restart on May 5, which is what allows the government to keep tax refunds and similar federal payments to cover defaulted loans.

At the same time, there’s one big caveat for older borrowers who depend on Social Security benefits. In early June, the Department of Education said it had not offset any Social Security checks since collections resumed and that future Social Security offsets are paused. That’s a relief if you were bracing for an immediate haircut to your monthly benefit, but it’s not a forever promise. The pause was announced—not codified as a permanent change—so it can be lifted later. Multiple outlets documented the announcement and the exact phrasing that the Department “put a pause on any future Social Security offsets,” which is a bureaucratic way of saying “not now, maybe later.”

If you’re still earning a paycheck and remain in default, there’s another lever the government can pull: wage garnishment. Federal law lets loan holders take up to 15% of your disposable (after-tax) pay without suing you first, and the Department has signaled those notices would roll out “this summer.” The mechanics here are not rumor; they’re spelled out by financial-aid groups and mainstream personal-finance references, which all cite the 15% cap embedded in federal rules. In short, if you hear from your employer or a collections letter about “administrative wage garnishment,” it’s a known pathway—not a scam—and you need a plan.

So where does that leave you on repayment options? This year’s biggest structural change is the law that will eventually phase out several income-driven repayment (IDR) plans and bring in a new regime. The headlines you’ve seen are essentially right: the Trump administration’s tax-and-spending package modifies the menu going forward. Reporting based on Associated Press copy notes that ICR, PAYE and SAVE are slated to sunset as the new Repayment Assistance Plan (RAP) arrives for new loans beginning July 1, 2026, while legacy Income-Based Repayment (IBR) continues for existing borrowers with forgiveness after twenty or twenty-five years, depending on the version. Policy groups tracking the reconciliation bill say the broad design is to simplify the options for future cohorts, even as the forgiveness clock under RAP stretches to thirty years. Translation: if you already have loans and you qualify for IBR, that door remains open; if you borrow later, your choices will look different.

Let’s talk about IBR in the real world. Income-Based Repayment 2025 isn’t a shiny new app—it’s the reliable, sometimes-overlooked plan that pegs your monthly bill to your income and family size. It won’t erase your balance overnight, but it’s built to keep your payment tethered to your actual cash flow, which is the whole point if your budget is tight or volatile. If you’re juggling rent, groceries, and an unpredictable gig schedule, IBR is the boring friend you actually want around on a bad day. The quickest way to sanity-check whether IBR beats your current payment is the Education Department’s Loan Simulator. Plug in your income, dependents, and loan details, and it will show you side-by-side monthly amounts and projected totals without making you commit on the spot. It’s a legit government tool, not clickbait, and it’s updated as plans change. When you’re ready to apply or recertify, the IDR application lives on the same federal portal, and you can file the whole thing online.Now the messy part: pauses. “Forbearance” and “deferment” both sound like a timeout, but they don’t play the same in your wallet. Forbearance is the easy button that often comes with a quiet penalty—interest continues to run on all Direct Loan types while you’re not paying, which means your balance can swell if you leave it alone. Deferment can be gentler, especially if you hold subsidized loans where interest may not accrue during the approved period, but unsubsidized balances can still grow. Government pages make this distinction crystal clear, and they also warn that time spent in deferment or forbearance generally doesn’t count toward forgiveness. So yes, a pause can buy you breathing room for a month or three, but the meter doesn’t stop for free. If you’re trying to keep your future balance from inflating, a low payment under IBR usually beats a full stop under forbearance.

If you’re already in default, you still have options that do more than delay the problem. The Department’s communications point borrowers to the Default Resolution Group because the fastest way to turn the lights back on is to enter an income-based arrangement and start making affordable payments—or, in some cases, to rehabilitate or consolidate your loans to exit default altogether. Rehabilitation is the “prove it” route: you make a series of on-time payments calculated to be affordable, your default status is removed once you finish, and collections actions can stop. Consolidation is the “reset” route: you roll your defaulted loans into a new Direct Consolidation Loan and commit to an income-driven plan immediately. The right choice depends on your goals—credit cleanup, speed, and how quickly you need to end garnishment—but either beats hoping the offset or wage deduction just goes away on its own. The Department’s press brief and the debt-resolution portal both exist to funnel you into one of these structured exits.

Older borrowers, here’s the part that matters for your benefits. That June pause on Social Security offsets means the government isn’t taking from your check right now, but they have not published a permanent rule that prevents future offsets. Advocacy groups and policy outlets spelled this out the night the pause was announced: the Department stated no offsets had occurred since May 5 and that future offsets were paused—full stop. If you rely on Social Security and you’re in default, treat this window as a chance to get out of the penalty box rather than a signal to relax. Pick a resolution path, get your status back to “in repayment,” and you’ll be far less exposed if the switch flips again later in the year.

Let’s also be honest about the shifting ground under everyone’s feet. If you were counting on SAVE features or planning around PAYE eligibility, you’ve probably seen stories about those plans being phased out for future borrowers under the new law. Again, that’s forward-looking: it affects loans disbursed in upcoming cycles, not everything that exists today. What you can do now is lock in something stable for your current loans. If you qualify for IBR, claim it and keep your documentation current so your servicer doesn’t bump you to a higher payment by default. If you don’t know which box you fit into, run your numbers through the Loan Simulator before you pick a path; it’s the fastest way to see the trade-offs without committing.

What if your income just dropped or you’re between contracts? IDR plans aren’t a once-a-year thing; you can recertify early when your income meaningfully changes. That matters for freelancers and gig workers whose last tax return doesn’t match today’s reality. A fresh certification can legitimize a lower payment quickly and keep you off the forbearance button. If you truly need a short pause, pick the option with the least damage: if you have subsidized loans and you qualify for an economic-hardship deferment, that can slow the interest clock on those specific balances; otherwise, expect forbearance to let interest pile up on everything. Federal guidance repeats that principle in plain English, and it’s the difference between a band-aid and a bruise you’ll be paying down in two years.

Here’s the Tyler-style bottom line: Income-Based Repayment 2025 is not sexy, but it’s still one of the most practical ways to make student debt livable while everything else is in flux. The government restarted default collections on May 5, paused Social Security offsets in June, and is gearing up wage garnishments up to 15% for those who stay in default. At the same time, the roadmap for new borrowers is changing, with legacy IDR options phasing out in favor of a new plan for future cohorts. You can’t control the policy cycle, but you can pick the payment lane that gives you the least volatility. If the choice is between a predictable, income-based bill and a pause that lets interest stack and the collection machine warm up, pick the bill you can actually pay, file the paperwork online, and get your status clean before the next switch flips. The tools are free, the rules are public, and the fastest way to keep your money is still to beat the system at its own game—by giving it a payment plan before it takes one from you.