Overview
- The Department of Education reinstated collections on defaulted federal student loans on May 5, 2025, ending a five-year suspension initiated during the COVID-19 pandemic.
- Approximately 5.3 million borrowers are currently in default, with another 4 million at risk of default due to delinquency of 91 to 180 days.
- The Treasury Offset Program will withhold tax refunds, Social Security benefits, and federal salaries from borrowers in default, with wage garnishment notices set to begin later this summer.
- Borrowers in default can exit through loan rehabilitation, requiring nine consecutive payments, or by consolidating loans into a single Direct Consolidation Loan.
- The resumption occurs as delinquency rates hit record highs, with over 20% of borrowers at least 90 days past due on payments, reflecting broader financial strain.