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3w ago

Student Loan Collections Resume After Five-Year Pause

The Education Department has begun seizing tax refunds and benefits from over 5 million defaulted borrowers, with wage garnishment notices set to follow.

Graduates of Colorado Mountain College wait to receive their diploma during the Commencement of the Class of 2022 Friday, May 6, in Beaver Creek, Colorado.
A person holds a sign reading "STOP THE GOP STUDENT DEBT RELIEF STEAL"
President Donald Trump hugs Education Secretary Linda McMahon after handing her the executive order to dismantle the Department of Education he just signed with during an event in the East Room of the White House in Washington, D.C. on March 20, 2025.

Overview

  • As of May 5, 2025, the Treasury Offset Program has resumed, targeting tax refunds, Social Security, and other federal benefits of borrowers in default.
  • Approximately 5.3 million borrowers are in default, and an additional 4 million are severely delinquent and at risk of defaulting soon.
  • Borrowers in default face options to exit default through loan rehabilitation, consolidation, or income-driven repayment plans, though these processes require proactive action.
  • The resumption follows the end of pandemic-era relief measures, with Education Secretary Linda McMahon emphasizing taxpayer protection as a key rationale.
  • Delinquency rates have reached record highs, with over 20% of borrowers at least 90 days past due, exacerbating financial strain for millions.