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4w ago

Federal Student Loan Collections to Resume After Five-Year Pause

The U.S. Department of Education will restart collections on defaulted loans beginning May 5, targeting over 9 million borrowers with no plans for broad debt forgiveness.

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Overview

  • The Department of Education confirmed that involuntary collections, including wage garnishment and tax refund offsets, will restart for defaulted federal student loans on May 5, 2025.
  • More than 5 million borrowers are currently in default, with an additional 4 million in late-stage delinquency, representing nearly 25% of the federal student loan portfolio.
  • The Trump administration has ruled out broad student loan forgiveness, emphasizing borrower accountability and protecting taxpayers from bearing the financial burden.
  • Borrowers in default will receive notifications and outreach from the Education Department, outlining repayment options such as income-driven plans and loan rehabilitation.
  • The resumption of collections follows a five-year pause initiated during the COVID-19 pandemic, marking a significant policy shift from the Biden administration's lenient approach.