The U.S. Department of Education has announced that it will resume collections on defaulted federal student loans starting May 5, 2025, ending a pause that began in March 2020 due to the COVID-19 pandemic. This move affects approximately 5.3 million borrowers currently in default, with an additional 4 million borrowers who are delinquent on their payments.
The Department will initiate involuntary collection measures through the Treasury Offset Program, which allows for the withholding of government payments such as tax refunds, federal salaries, and Social Security benefits from individuals with past-due debts. Additionally, wage garnishment is expected to commence later this summer, following a required 30-day notice to affected borrowers.
Education Secretary Linda McMahon stated, “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” emphasizing the Department’s commitment to managing the loan program responsibly and according to the law.
Borrowers in default are encouraged to explore options to return to good standing, such as enrolling in income-driven repayment plans or participating in loan rehabilitation programs. The Department’s Office of Federal Student Aid will be reaching out to affected individuals over the next two weeks to provide information and assistance.
Critics of the decision argue that resuming collections during a period of economic uncertainty may exacerbate financial hardships for many Americans. Advocacy groups have expressed concern over the potential impact on vulnerable populations, including seniors and individuals with disabilities who rely on Social Security benefits.
For more information and resources, borrowers can visit the Department of Education’s official website at StudentAid.gov
