The Latest Personal Finance News for May 2025

Education Department to Resume Collections on Defaulted Student Loans

The U.S. Department of Education announced that it will resume collections on defaulted federal student loans. On May 5, the federal agency will resume the Treasury Offset program, which may withhold federal tax refunds and Social Security payments to pay the debt.

The Education Department also plans to send email notices to all borrowers in default explaining the development and urging them to restart monthly payments, enroll in an income-driven repayment plan or register for loan rehabilitation.

Later this summer, the Office of Federal Student Aid will start sending the required notices to begin wage garnishments. If you're affected, your employer may withhold up to 15% of your disposable pay.

Why It Matters

According to the Department of Education, more than 5 million borrowers are in default, with 4 million more in late-stage delinquency (91 to 180 days past due). The federal agency hasn't collected on defaulted loans since March 2020, when the CARES Act was passed.

In addition to costly fees and interest charges, borrowers in default may face garnished wages and federal benefits. That said, it won't occur immediately. Once you receive the notice for the Treasury Offset program, you have 65 days to avoid a federal benefit offset by getting on an approved repayment plan, paying the debt in full or making a valid objection.

If you've received a notice of wage garnishment, you have 30 days to negotiate a repayment plan with your loan servicer and send the first payment. Alternatively, you can request a hearing to object to the garnishment.

What You Can Do

• Learn more about what happens when you default on federal student loans.
• Find out if you can settle student loan debt.
• Evaluate your options for getting out of student loan default.
• Monitor your credit score.

Key Inflation Number Hit a Four-Year Low in March

The consumer price index (CPI) came in lower than expected in March. Overall, prices increased by 2.4% from a year ago and fell 0.1% from February.

More important, the core CPI, which excludes volatile food and energy prices, came in at 2.8%, the lowest level since March 2021.

Why It Matters

The latest inflation numbers are encouraging, but they don't include tariffs announced by the Trump administration at the beginning of April. While it's not certain the import taxes will remain in effect for an extended period, full implementation could cause price levels to increase by another 1% to 2%, according to Morningstar.

What You Can Do

• Learn more about inflation and how it can impact you.
• Look for the next inflation report on May 13.
• Read up on ways you can fight inflation.
• Look for ways to reduce your risks when borrowing money.

Consumer Sentiment Reaches Second-Lowest Level Since 1952

Consumer sentiment has fallen for the fourth straight month, plummeting 11% in preliminary results for April to 50.8, according to the University of Michigan. That's the second-lowest reading since 1952—the lowest was in June 2022, when inflation peaked at 9.1%.

What's more, the share of consumers expecting rising unemployment hit its highest point since 2009, while year-ahead inflation expectations surged to 6.7%.

Why It Matters

The preliminary survey was completed before the Trump administration's partial tariff reversal on April 9 and before the news that the economy contracted in the first quarter of 2025. However, it's a good indicator that both economists and consumers are concerned about the broader economic impact of tariff policy.

While it's unclear how long the import taxes will remain in place, it's a good idea to prepare your finances for a potential recession.

What You Can Do

• Create a budget and look for opportunities to cut your expenses.
• Take steps to tackle your debt.
• Boost your emergency fund.
• Learn how to prepare for a potential recession.

Good Credit Can Contribute to a Healthy Financial Plan

While there are aspects of your financial situation that are outside of your control, building and maintaining a good credit score can help you weather challenges and save money in the long run.

With Experian's free credit monitoring service, you'll get access to your FICO^® Score^☉ and your Experian credit report. With this information in hand, you can gauge your credit health and target areas of your credit profile that you can improve over time. And with real-time alerts whenever your report is updated, you can spot potential issues and fraud and address them quickly.