Millions of student-loan borrowers in the U.S. are about to face serious consequences if they do not take immediate action. Starting May 5, the Trump administration will resume collections on defaulted federal student loans for the first time in five years. This move could result in wage garnishments and the loss of federal benefits, such as tax refunds and Social Security income.
This decision marks the end of a long pause on student loan collections that began in March 2020, when the pandemic first hit. At the time, the government had stopped collecting overdue payments as a form of relief. But now, with the pause officially coming to an end, the Department of Education has announced that it will begin collecting money from borrowers who have defaulted on their student loans.
Education Secretary Linda McMahon explained in a statement that borrowers who continue to avoid payments will face harsh consequences. Their credit scores could drop, their wages may be garnished, and government benefits, such as tax refunds and Social Security checks, could be withheld.
The Education Department has said that, starting May 5, the Federal Student Aid (FSA) office will restart the Treasury Offset Program. This program allows the government to take money directly from federal benefits, such as Social Security and income tax refunds, to recover past-due payments. If borrowers still fail to respond after 30 days, the Treasury Department will also begin garnishing their wages.
Federal officials are now urging all borrowers in default to take immediate action. Over the next two weeks, FSA will contact millions of borrowers to help them prepare for repayment. Borrowers are encouraged to contact the Default Resolution Group, where they can either set up a monthly payment or enrol in an income-driven repayment plan.
Secretary McMahon stated that the government is offering all the legal support it can to ensure borrowers can manage their payments. “If you are a student borrower with a federal loan balance and haven’t been making payments, you must restart payments now,” she said.
Currently, more than 5 million student-loan borrowers are officially in default, which means they have not made a payment for over 270 days. Additionally, the New York Federal Reserve estimates that over 9 million borrowers are behind on their payments but have not yet entered default status.
This renewed push for collection has raised concerns among some lawmakers. Last year, Senator Elizabeth Warren and other Democratic leaders urged the Biden administration to halt the practice of withholding Social Security benefits from individuals who have defaulted on student loans. They argued that this kind of penalty is especially harmful to elderly borrowers and people with disabilities who depend entirely on Social Security for survival.
Despite those concerns, the Trump administration has chosen to move forward with collections. Borrowers who do not act now may soon find themselves in even more financial trouble, losing vital income sources that many rely on to make ends meet.
In short, if you have a federal student loan that has gone unpaid for a long time, now is the moment to act. Reach out to the Department of Education’s Default Resolution Group, understand your repayment options, and avoid losing your income through garnishments or withheld benefits. This is not just a warning—it’s a timeline. May 5 is just around the corner.
Disclaimer: This article has been meticulously fact-checked by our team to ensure accuracy and uphold transparency. We strive to deliver trustworthy and dependable content to our readers.
Jon King is an experienced journalist with 3 years of experience in the field. With a strong background in investigative reporting, Jon is known for his in-depth coverage of crime news, finance news, local news, and USA news. Currently working with Mikeandjonpodcast, Jon brings his sharp investigative skills, where he provides timely updates and analysis on a wide range of topics. His commitment to delivering accurate and impactful news has earned him a reputation for providing insightful and comprehensive stories that resonate with his audience.
