The U.S. Department of Education is set to resume collections on federal student loans that have been in default, starting May 5, 2025, after a pause lasting more than three years due to the COVID-19 pandemic.
As of now, approximately 5.3 million borrowers are in default, with millions more facing late-stage delinquency, bringing the total number of at-risk borrowers to nearly 10 million. The resumption of collections means that the government will begin using the Treasury Offset Program to garnish tax refunds, Social Security benefits, and federal wages from those in default.
Borrowers who are in default will be contacted and informed of options available to help them avoid further penalties. These options include loan rehabilitation, which requires nine voluntary payments over a ten-month period.
This policy shift, which marks a return to aggressive student loan collection practices, ends earlier efforts to forgive loans under certain plans like the SAVE income-driven repayment plan. As the resumption of collections begins, affected borrowers are advised to explore alternative repayment plans or contact the Debt Resolution Group for assistance.
