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5 Million Borrowers to Face Student Loan Collections Starting May 5
The U.S. Department of Education is restarting collections on federal student loans for more than 5 million borrowers starting May 5, 2025. These borrowers are in default, meaning they have missed payments for at least 270 days.
The collections had been paused for five years as part of emergency relief measures during the COVID-19 pandemic. Now, with that pause coming to an end, those who haven’t resolved their defaulted loans could face serious consequences.
What Happens When You’re in Default?
If your student loan is in default, the government can use several tools to collect what’s owed. This includes:
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Wage garnishment (taking money directly from your paycheck)
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Withholding federal tax refunds
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Reducing Social Security benefits
These actions are automatic and do not require a court order. They can continue until your debt is paid off or resolved through a repayment plan.
Why Collections Are Resuming Now
Education Secretary Miguel Cardona explained the decision, saying the department needs to protect taxpayers and ensure the loan program is financially responsible. He said resuming collections will help get borrowers back on track while giving them access to tools that can help.
Cardona also emphasized that this change doesn't mean the government is giving up on forgiveness or support for struggling borrowers. Instead, it's part of a broader effort to manage debt responsibly.
What Borrowers Can Do Now
If you’re one of the 5 million affected, you still have options to avoid aggressive collection actions. The Department of Education is urging borrowers to take the following steps:
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Contact your loan servicer to check your loan status
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Apply for loan rehabilitation to remove the default from your record
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Consider loan consolidation to move your defaulted loan into a new, manageable loan
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Sign up for an income-driven repayment plan, which adjusts your monthly payment based on income and family size
These programs can stop wage garnishment and help borrowers rebuild their credit.
Government Outreach Will Begin Soon
The Department of Education said it will soon start reaching out to affected borrowers through emails, phone calls, and social media. The goal is to make sure people know about the tools available to help them get out of default and stay out.
Student Loan Forgiveness Still in Progress
While collections are starting again, the Trump administration is still working on broader student debt relief. A new forgiveness plan is expected to be finalized later in 2025. That plan could help some borrowers eliminate part or all of their student debt.
For now, however, those in default must act quickly to avoid having their wages or benefits garnished.
