The US Department of Education is preparing to resume collection efforts on defaulted federal student loans starting May 5, 2025, marking the end of over four years of pandemic-era relief. This decision impacts approximately 5.3 million borrowers currently in default, with officials warning that the number could grow significantly in the coming months. The collections will include wage garnishment and the withholding of tax refunds, federal salaries, and other government payments through the Treasury Department’s offset program.
This policy shift follows the expiration of the student loan payment pause and interest relief measures that began in March 2020 under the first Trump administration and continued through a final grace period in October 2024. Under current regulations, borrowers who miss payments for nine consecutive months fall into default, which can severely damage credit scores and trigger aggressive collections.
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The Trump administration, which is overseeing the return to pre-pandemic enforcement, argues that resuming collections is essential for maintaining fiscal responsibility and controlling the ballooning federal student loan portfolio. Officials noted that fewer than 40% of borrowers are currently up to date on their payments, with an additional 4 million borrowers significantly delinquent or at risk of default.
“The result has been that the federal government student loan portfolio has continued to grow, and we’ve got a record number of borrowers that are at risk of or in delinquency and default,” a senior education department official told reporters. “The Trump administration, [the] current administration, believes that American taxpayers can no longer serve as collateral for student loans,” the senior department official said. “Student loan debt must be paid back.”
To ease the transition, the Education Department has committed to a robust communication campaign aimed at educating borrowers about their options. Those at risk of collections will receive a 30-day notice and are encouraged to explore alternatives such as income-driven repayment plans or loan rehabilitation to avoid further penalties.
The move comes after several failed attempts by the Biden administration to implement widespread student debt forgiveness, many of which were blocked by court rulings. While supporters argue that restarting collections is a necessary step to stabilize the loan system and protect taxpayers, critics warn that it could exacerbate financial hardships for millions of Americans still recovering from the economic impacts of the pandemic.
The end of the collection pause represents a major turning point for federal student loan borrowers, many of whom have been in repayment limbo since early 2020.
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