Education Department Resumes Student Loan Collections Amid Default Crisis

The Trump administration has announced that it will resume collections on defaulted federal student loans starting May 5, 2025, ending more than four years of pandemic-related relief. This move will affect more than 5 million borrowers currently in default, allowing the government to restart wage garnishment, tax refund seizures, and the withholding of federal benefits. Department officials highlighted that fewer than 40% of borrowers are current on their loans, with millions more either delinquent or at risk of default. The administration argues that resuming collection is necessary for fiscal responsibility and to prevent further growth of the federal student loan portfolio. Borrowers will receive a 30-day notice and are encouraged to explore options such as income-driven repayment plans or loan rehabilitation to avoid collections. The Education Department plans a robust communication campaign and is working with Congress on potential reforms to the student loan repayment system.