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Federal Student Loan Collections to Resume After Five-Year Pause

Starting May 5, borrowers in default face financial consequences including wage garnishment and withheld federal benefits as the Department of Education ends pandemic-era relief.

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Overview

  • The Department of Education will restart collections on defaulted federal student loans on May 5, affecting over 5 million borrowers currently in default.
  • Borrowers in default may face garnishment of wages, federal tax refunds, and Social Security benefits, with wage garnishment beginning later this summer after a 30-day notice.
  • Officials emphasize this policy shift as a measure to protect taxpayers, stressing that no mass loan forgiveness will be offered under the current administration.
  • Borrowers have two weeks to contact the Default Resolution Group to explore repayment options such as income-driven plans or loan rehabilitation to avoid involuntary collections.
  • Women, who hold nearly two-thirds of the nation’s $1.6 trillion student debt, are expected to be disproportionately impacted by resumed collections.