Starting May 5, 2025, the U.S. Department of Education will officially resume collecting federal student loans in default, ending a pause that began in March 2020 during the COVID-19 pandemic. This move affects millions of borrowers across the country and could have serious financial implications.
Who Is Affected?
- Over 5.3 million borrowers are currently in default.
- An additional 4 million borrowers are delinquent and at risk of default.
What’s Changing?
Beginning in May, the federal government will restart involuntary debt collection efforts, including:
- Wage garnishments
- Seizure of tax refunds
- Offset of Social Security benefits
These measures will be conducted through the Treasury Offset Program, a system used by the government to collect overdue debts.
Why Now?
The Education Department says the return to collections is meant to ensure accountability and protect taxpayer dollars. However, consumer advocacy groups warn that many borrowers are still struggling and that renewed collections could lead to financial hardship.
What Can Borrowers Do?
If you’re behind on your student loan payments or in default, you still have options to avoid collections:
1. Loan Rehabilitation
- Make nine on-time monthly payments to restore your loan to good standing.
- Once complete, the default is removed from your credit report.
2. Income-Driven Repayment Plans (IDR)
- Monthly payments are based on your income and family size.
- In some cases, payments could be as low as $0 per month.
3. Temporary Forbearance
- Pause your payments for up to 12 months, but interest will continue to accrue.
What’s Next?
The Office of Federal Student Aid will begin contacting borrowers in default by email in the coming weeks. Borrowers will be provided with information about their loan status and steps to avoid collections.
How to Check Your Loan Status
- Visit the official Federal Student Aid website.
- Log in to your account to see your loan status and servicer details.
- Contact your loan servicer or the Default Resolution Group for help.
Take Action Now
If you’re in default or worried about upcoming collections, don’t wait. Reach out to your loan servicer or the Department of Education today to learn about repayment options and how to get your loans back on track.