Overview

• The Trump administration restarted collections on defaulted federal student loans in May after a pause since March 2020.
• TransUnion data show that nearly 2 million borrowers could face wage garnishment beginning in July, up from 1.2 million estimated last month.
• About 5.8 million borrowers were at least 90 days past due as of April, marking the highest delinquency rate on record.
• Federal rules allow automatic deductions of up to 15 percent of paychecks and the withholding of tax refunds and federal benefits for those in default.
• Borrowers in delinquency have suffered average credit score drops of 60 points, with another 1 million defaults expected by August and 2 million more by September.