Student Loan Collections Resume May 5, Affecting 5.3 Million Borrowers

The U.S. Department of Education will resume collections on defaulted federal student loans starting May 5, 2025, ending a pause that began in March 2020 due to the pandemic. Over 5 million borrowers are in default and could face wage garnishment, tax refund seizures, or reductions in Social Security payments through the reinstated Treasury Offset Program. Only about 38% of borrowers are currently repaying their loans, and the government stresses this move is to protect taxpayers from covering unpaid debts. Borrowers in default will receive notifications over the next two weeks, urging them to contact the Default Resolution Group to arrange payments or enroll in income-driven repayment plans. The Department is also providing tools and resources, including online simulators and AI support, to help borrowers navigate repayment and avoid further penalties. Borrowers are encouraged to act promptly to avoid negative financial impacts.