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.