Federal officials will resume collecting on defaulted student loans starting May 5, potentially affecting 5.3 million borrowers with wage garnishment and tax refund seizures, the Education Department announced Monday.
Secretary Linda McMahon said the decision ends a five-year pause initiated during the pandemic, declaring that taxpayers should no longer bear responsibility for what she called unsound lending practices.
BREAKING: The Education Department will begin collection on student loans that are in default next month, including garnishing wages for up to 5.3 million borrowers.
— More Perfect Union (@MorePerfectUS) April 21, 2025
The resumption involves Treasury Department seizures of tax refunds, federal salaries, and benefits for past-due borrowers. Wage garnishment will commence after a mandatory 30-day notice period.
The Biden Administration misled student borrowers about loan forgiveness.
— Secretary Linda McMahon (@EDSecMcMahon) April 21, 2025
Starting May 5, the Department is ending the Biden-era practice of zero-interest and zero-accountability for student borrowers. https://t.co/xF3y1Icky4
This policy reversal comes six months after October 2024’s expiration of the last repayment grace period. Federal loan payments were first suspended by President Trump in 2020 as pandemic relief and extended through 2024 under Biden.
⚠️May 5th, federal student loan collections resume.
— Amanda Goodall (@thejobchick) April 22, 2025
Let's break it down.
Over 5 million borrowers are already in default – 5M ya'll!!!
4 million more are in late-stage delinquency.
Nearly 10 million could be in default within months.
That’s 25% of the federal loan…
Federal data indicates another 4 million borrowers are between three and six months behind on payments. Overall, under 40% of borrowers are meeting their obligations, officials reported.
Communication challenges have intensified following recent staff reductions at Federal Student Aid offices, while a February court decision blocking certain repayment plans has created additional uncertainty, noted Kristin McGuire of Young Invincibles. Some borrowers were placed in interest-accruing forbearance as application systems were temporarily offline.
5.3m student loans are in default
— Darth Powell (@VladTheInflator) April 21, 2025
Federal student loans do not have a statute of limitations, meaning the government can pursue collection at any time.
They may garnish up to 15% of your disposable income WITHOUT a court order.
Borrowers facing garnishment have limited options, including one-time loan rehabilitation requiring nine months of consistent payments calculated based on verified income, explained Betsy Mayotte of The Institute for Student Loan Advisors.
The restart contrasts sharply with Biden-era policies that eliminated over $180 billion in debt for 5 million borrowers through various programs, despite the Supreme Court rejection of broader forgiveness plans.
McMahon stated the department would now manage the program according to existing law, prioritizing borrower repayment as essential for individual financial wellness and national economic health.
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