Federal Student Loan Collections Resume May 5, 2025

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 during the COVID-19 pandemic. Approximately 5 million borrowers currently in default will be affected, and wage garnishment, as well as the seizure of tax refunds and Social Security payments, will be reinstated to recover debts. Officials warn that nearly 10 million borrowers could soon be in default due to growing delinquency rates, and less than 40% of borrowers are entirely current on their loans. The policy change, framed as restoring fiscal discipline, includes restarting the Treasury Offset Program which allows for collection without a court order. Additionally, the Department may resume applications for income-driven repayment plans that base monthly payments on borrowers' income and can provide paths to loan forgiveness. These changes come amid heightened scrutiny and debate over student debt relief policies.