Federal Student Loan Collections Resume

The U.S. Department of Education has resumed collections on defaulted federal student loans as of May 5, ending a pause that had been in place since the onset of the COVID-19 pandemic in March 2020.

The Department’s Office of Federal Student Aid (FSA) restarted the Treasury Offset Program, allowing the federal government to recover unpaid loans by withholding tax refunds and Social Security payments. Over the summer, the Department will begin sending notices of administrative wage garnishment to borrowers who have not taken steps to address their loans.

More than 5 million borrowers are currently in default—many for over seven years—and another 4 million are in late-stage delinquency. The Department said collections are being reinstated to ensure fairness to taxpayers and restore fiscal accountability to the student loan program.

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said U.S. Secretary of Education Linda McMahon. “Our goal is to help borrowers return to repayment—for their own financial health and the nation’s economic stability.”

In conjunction with the return to collections, FSA has launched an extensive outreach and education campaign. Borrowers are receiving emails and digital communications encouraging them to contact the Default Resolution Group to explore their repayment options. These include enrolling in an income-driven repayment (IDR) plan, setting up monthly payments, or pursuing loan rehabilitation.

The Department is also streamlining IDR enrollment, eliminating the need for annual income recertification and enhancing the process through tools such as the Loan Simulator, new AI Assistant (Aiden), and extended call center hours.

As of now, only 38 percent of federal student loan borrowers are current on their payments. With nearly 10 million borrowers either in default or on the verge of it, the Department says proactive borrower engagement is essential.

Additionally, guaranty agencies have been authorized to begin involuntary collections on defaulted loans under the Federal Family Education Loan (FFEL) Program, in accordance with the Higher Education Act. All actions are being taken only after providing proper notice and legal opportunity to repay.

Borrowers who have not yet taken action are strongly encouraged to do so as soon as possible. Detailed guidance on how to exit default is available at StudentAid.gov/end-default.

For the official Department of Education announcement and updates, visit: https://www.ed.gov/about/news/press-release/us-department-of-education-begin-federal-student-loan-collections-other-actions-help-borrowers-get-back-repayment