US Student Loan Collections to Resume After Five Years

The U.S. Department of Education will resume collections on defaulted federal student loans starting May 5, concluding a five-year pause that began during the COVID-19 pandemic. Over 5 million borrowers in default will face involuntary measures including wage garnishment, tax refund offsets, and reductions in Social Security benefits. Delinquencies have surged, with February alone seeing 2.7 million borrowers' late payments newly reported and overall impacts on national credit scores. The restart occurs after significant staff reductions at the Department of Education and ongoing political debates over student debt relief. Advocacy groups warn of a potential borrower crisis due to reduced resources and limited support options as collections resume. The government plans a communications campaign to inform affected borrowers and provide assistance for repayment or rehabilitation.