Starting May 5, 2025, the Trump administration will resume aggressive collections on defaulted federal student loans, ending a five-year pandemic-era pause. This shift could impact up to 10 million borrowers, with consequences including wage garnishment, intercepted tax refunds, and withheld Social Security benefits.
What’s Changing?
The Department of Education, in coordination with the Treasury Department, will restart the Treasury Offset Program. This allows the government to:
- Withhold federal tax refunds
- Garnish up to 15% of Social Security benefits
- Deduct up to 15% of federal salaries
Wage garnishment is expected to begin later this summer, following a required 30-day notice to borrowers.
How to Get Out of Default
If you’re in default, consider these options:
- Loan Rehabilitation: Make nine voluntary payments over ten months to remove the default from your credit history.
- Loan Consolidation: Combine multiple loans into one new loan, removing the default status but retaining a record of the default on your credit report.
Both options can only be used once, so choose carefully.
What’s Next?
The Department of Education will contact affected borrowers via email, providing information on repayment options. Borrowers can also visit StudentAid.gov to check their loan status and explore repayment plans.
Critics argue that resuming collections could exacerbate economic hardship for struggling families. Education Secretary Linda McMahon emphasized that these measures are necessary to uphold financial accountability.
If you’re facing student loan default, act now to explore your options and avoid severe financial consequences.
Join the Conversation
Are you affected by the resumption of student loan collections? Share your experiences and questions in the comments below. Follow MEFeater on Twitter, Instagram, Facebook, and Pinterest for more updates on financial news and advice.
