US EditionTrump administration restarts student loan collections for millions in default after years-long pause
- Starting May 5, 2025, the Education Department will resume referring defaulted federal student loans to collection agencies, impacting borrowers across the country who have fallen significantly behind on payments.
- This action follows the end of the pandemic payment pause in 2023 and applies to loans unpaid for about nine months, which are considered in default.
- Over 5 million borrowers are currently in default, with the department planning to contact them and provide information on repayment options such as loan rehabilitation and consolidation.
- According to Phil Wallace, collections may include wage garnishments, tax refund interceptions, and Social Security benefit seizures, with borrowers receiving at least 30 days’ notice beforehand.
- These measures could have significant financial impacts but taking prompt steps like contacting the default resolution group can help borrowers avoid involuntary collections.
79 Articles
79 Articles
Trump’s new plan for student loans, briefly explained
This story appeared in The Logoff, a daily newsletter that helps you stay informed about the Trump administration without letting political news take over your life. Subscribe here. Welcome to The Logoff: The Trump administration will begin sending student loans in default to debt collectors today and will soon seize wages for repayment, a decision with financial consequences for millions of Americans behind on their payments. What’s the context…
‘Devastating blow’: Trump admin uncorks new threat to colleges and universities
The Trump administration is once again turning up the heat on colleges and universities – this time as it threatens to cut off federal student loan funds to schools whose former students aren’t paying back what they owe.In a notice expected to be sent out Monday and obtained by the Wall Street Journ...
What Borrowers Need to Know About the Return of Student Loan Debt Collection
After a five-year pause, the Trump administration is bringing back financial penalties for the many millions of borrowers who are too far behind on their student loan payments. It’s led to confusion and financial uncertainty. At least 5 million people are in default, meaning they have failed to make payments on their loans for at least nine months — and millions more are projected to join… Source
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