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3w ago

U.S. Resumes Collections on Defaulted Student Loans, Impacting Millions

The Education Department will begin garnishing wages, tax refunds, and benefits starting May 5, following a five-year pause on collections.

Stock image/file photo: A mortarboard laid over U.S. Dollars.
A person walks on campus at Muhlenberg College in Allentown, Penn., on March 26, 2025.
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Overview

  • Over 5 million borrowers are in default, with an additional 4 million delinquent on federal student loans, according to the Education Department.
  • Defaults are projected to rise to nearly 10 million borrowers as delinquent accounts surpass 270 days of non-payment in the coming months.
  • Borrowers in default face wage garnishment, tax refund interception, and benefit withholding, with garnishments set to begin this summer.
  • The Education Department urges borrowers to contact the Default Resolution Group to explore options such as rehabilitation, consolidation, or income-driven repayment plans.
  • The restart of collections follows years of pauses and legal challenges to student debt relief, with no further mass forgiveness anticipated under current policies.