WASHINGTON, D.C. — The U.S. Department of Education announced that it will resume collections on defaulted federal student loans starting Monday, May 5, marking the end of a collections pause that has been in place since March 2020.
The Office of Federal Student Aid (FSA) will begin efforts to collect on the defaulted portion of its loan portfolio, citing the need to protect taxpayers from absorbing the growing cost of unpaid loans. The move comes amid renewed focus on returning millions of Americans to repayment and addressing ballooning student debt.
Millions at Risk of Default
As of now, 42.7 million borrowers owe over $1.6 trillion in student loan debt. Of those, more than 5 million borrowers are in default and haven’t made a payment in over a year—some for more than seven years. An additional 4 million borrowers are in late-stage delinquency, putting nearly 10 million at risk of default in the coming months.
According to the Department, only 38% of federal borrowers are actively repaying their loans.
Key Collection Actions
To kickstart the process, the Department will reinstate the Treasury Offset Program, which allows the federal government to collect overdue debts by withholding tax refunds, Social Security benefits, or other federal payments. Wage garnishment notices are expected to follow later this summer.
Borrowers will begin receiving emails over the next two weeks from FSA, encouraging them to reach out to the Default Resolution Group to enroll in a repayment plan, including income-driven repayment or loan rehabilitation.
Additionally, guaranty agencies overseeing older Federal Family Education Loan (FFEL) Program loans will be authorized to restart collection activities.
Support for Struggling Borrowers
The Department emphasized it will pair the return to collections with a nationwide communications campaign aimed at informing borrowers of their options. Tools like the Loan Simulator, a new AI assistant named Aiden, and extended customer service hours are being promoted to help borrowers choose the best repayment path.
New efforts are also being made to simplify enrollment in income-driven repayment (IDR) plans, including eliminating the annual income recertification requirement.
A Shift in Tone
U.S. Secretary of Education Linda McMahon said the Department is taking a firmer approach after what she characterized as a “confusing limbo” created by the previous administration’s extended pause on collections.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” McMahon said. “Going forward, the Department will shepherd the student loan program responsibly and according to the law.”
The Department is also partnering with states, colleges, and financial aid groups to spread the message: student and parent borrowers—not taxpayers—must repay their loans.
For more details on how to get out of default or enroll in a repayment plan, visit: StudentAid.gov/end-default.
