Nationwide — The Department of Education (DOE) will resume collections on defaulted federal student loans starting in May, marking the end of a four-year payment pause put in place during the pandemic. This change is part of a policy shift from the Trump administration. More than 40 million Americans with student loan debt are now at risk of default.Starting May 5, the DOE will restart involuntary collections through the Treasury Department’s offset program, according to Newsweek. This means tax refunds, federal salaries, and benefits may be withheld from borrowers who are behind on their payments. After a 30-day warning, wage garnishment will also resume for those who have defaulted on their loans.
This change follows the expiration of the payment pauses and grace periods that began in 2020 under the Biden administration. The DOE claims the move will help protect taxpayers from bearing the cost of unpaid student loans, which borrowers initially took out to finance their education.
In addition to resuming collections, the DOE will launch an outreach campaign to help borrowers understand how to return to repayment and avoid default. As part of this effort, Federal Student Aid will offer an “enhanced income-driven repayment process,” which will simplify the process for borrowers to enroll in more manageable repayment plans.
While President Biden had previously advocated for widespread student loan debt cancellation, which was met with both support and criticism, many argue that forgiving loans unfairly burdens those who have already paid off their debts.
U.S. Secretary of Education Linda McMahon commented, “The Biden administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do loan balances simply disappear.”
Borrowers who are in default will begin receiving emails from the Federal Student Aid office within the next two weeks. These emails will encourage borrowers to contact the Default Resolution Group to make payments or sign up for income-driven repayment plans.