For the first time in five years, the Trump administration will resume collections on defaulted student loans beginning May 5th, impacting millions of borrowers across the United States. The Department of Education announced that it will once again start seizing tax refunds, garnishing wages, and withholding Social Security benefits from individuals who have fallen into default on their federal student loans.
Education Secretary Linda McMahon confirmed the move in a statement, asserting that returning the student loan portfolio to repayment status will benefit borrowers and taxpayers. She explained that these actions will move the federal student loan portfolio back into repayment, which benefits borrowers and taxpayers alike.
The decision marks the end of a pandemic-era pause introduced in March 2020. Under that measure, collections on defaulted loans were halted to ease financial pressure during the economic downturn triggered by COVID-19. Though federal student loan payments resumed in October 2023, the collections process for those in default remained on hold—until now.
According to data from the Department of Education, approximately 2.9 million borrowers are currently 61 to 90 days delinquent on their loans. An additional 4 million have entered late-stage delinquency and are nearing default. The department is urging borrowers to take action before collections begin.
Borrowers in default will receive formal notices, including potential wage garnishment letters later this summer. The Education Department recommends that affected individuals consider enrolling in income-driven repayment plans or beginning monthly payments to avoid collections.
Betsy Mayotte, president of the Institute of Student Loan Advisors, noted that the return to collections was expected. She said that they were always going to start collecting these defaulted loans again—it was just a matter of when the switch was going to get flipped.
Experts also clarified that federal student loans do not have a statute of limitations, meaning the government can collect indefinitely. Borrowers concerned about their status can check their loan accounts on StudentAid.gov to confirm whether they are in default and explore their options.
