Starting May 5, 2025, the U.S. Department of Education will recommence involuntary debt collections for federal student loan borrowers in default, ending a five-year pause initiated during the COVID-19 pandemic. This action will be executed through the Treasury Offset Program, which allows the government to withhold federal payments such as tax refunds, federal salaries, and Social Security benefits to recover delinquent debts.
Approximately 5.3 million borrowers are currently in default, with an additional 4 million in late stage delinquency, potentially bringing the total affected to nearly 10 million individuals. The Department of Education has indicated that wage garnishment will commence after a mandatory 30-day notice period, expected to begin later in the summer.
Borrowers will receive email communications within the next two weeks detailing their options to exit default status. These options include enrolling in income-driven repayment plans, such as the Saving on a Valuable Education (SAVE) plan, or initiating loan rehabilitation programs that require nine voluntary payments over ten months.
The resumption of collections has drawn criticism from advocacy groups, who argue that it may exacerbate financial hardships for struggling families. Critics have labeled the policy as “cruel,” expressing concerns over the potential for damaged credit scores and increased economic instability among affected borrowers.
In response to these concerns, the Department of Education has announced measures to support borrowers, including extended call center hours and the deployment of an AI assistant to help identify suitable repayment options. Education Secretary Linda McMahon emphasized the necessity of these measures to uphold financial accountability and ensure the sustainability of the federal student loan program.
