Overview

• As of May 5, 2025, the U.S. Department of Education has resumed collections on defaulted federal student loans, ending a pause instituted in March 2020 during the pandemic.
• Approximately 5.3 million borrowers are in default, with an additional 4 million in late-stage delinquency, risking wage garnishment, tax refund seizures, and benefit reductions under the Treasury Offset Program.
• Borrowers can exit default through loan rehabilitation, requiring nine consecutive payments, or by consolidating loans into a single direct loan under an income-driven repayment plan.
• Serious delinquency rates have hit a record 20.5%, with credit scores of affected borrowers potentially dropping by up to 175 points, according to TransUnion data.
• Advocates warn that the abrupt restart, coupled with limited borrower outreach and long wait times for assistance, could exacerbate financial strain and confusion for millions.