The Education Department is set to resume collections on student loans in default, marking the end of a leniency period that began during the COVID-19 pandemic.
Approximately 5.3 million borrowers are currently in default on their federal student loans.
The resumption of collections includes garnishing wages and withholding government payments through the Treasury Department’s offset program.
This decision follows several attempts by the Biden administration to offer broad student loan forgiveness, efforts that were blocked by the courts.
The pause on federal student loan payments, initially put in place by the Trump administration in 2020, was extended multiple times by the Biden administration, with the final grace period ending in October 2024.
The move to resume collections has sparked criticism from advocates who argue that the policy changes between administrations have caused confusion and financial strain for borrowers. Many borrowers are already struggling with the return of payment obligations, and about 4 million are currently late on their payments.
The Federal Student Aid office has faced layoffs, complicating efforts for borrowers seeking assistance. Additionally, income-driven repayment programs have faced legal challenges, causing further uncertainty.
Borrowers in default can avoid wage garnishment by entering loan rehabilitation, which involves making nine consecutive on-time payments after providing proof of income and expenses. This process can only be done once.
Despite the challenges, the Biden administration has managed to cancel student loans for over 5 million borrowers through expanded forgiveness programs.
However, Education Secretary Linda McMahon emphasized a return to more stringent enforcement of loan repayments moving forward.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” McMahon said.
