A jarring transition for struggling borrowers
Millions of Americans who have defaulted on their federal student loans are about to face renewed collections starting in May, including the potential garnishment of wages, tax refunds, and federal benefits. This decision marks a major policy shift by the Education Department, which is ending a more than four-year hiatus on debt collection that began during the COVID-19 pandemic.
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According to officials, more than 5.3 million borrowers are currently in default, and another 4 million are delinquent-falling between 91 and 180 days behind on payments.
Defaulted borrowers have not faced collections since March 2020, when the Donald Trump administration implemented an emergency pause as part of a broader relief effort during the pandemic. That pause continued under the Biden administration through 2023, with a final grace period ending in October 2024.
Beginning May 5, the department will resume involuntary collections via the Treasury Offset Program, which can seize tax refunds, Social Security checks, and other federal payments to repay overdue loans. Wage garnishments will also restart following a 30-day notice period.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said.
The announcement has already stirred concern among advocates and borrowers, many of whom have struggled to navigate the volatile landscape of student loan policy in recent years. Mike Pierce, executive director of the Student Borrower Protection Center, blasted the move as harsh and poorly timed.
“This is cruel, unnecessary and will further fan the flames of economic chaos for working families across this country,” Pierce said.
The end of leniency comes amid continuing confusion over repayment programs. Earlier this year, a court ruling temporarily blocked Biden-era income-driven repayment plans such as the SAVE Plan, and applications for those plans were taken offline in February.
Although they were later restored, the back-and-forth has only added to the uncertainty. Some borrowers were automatically placed in forbearance, during which interest accrues even if payments are temporarily paused.
