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Home TRUMP ADMINISTRATION

Trump Administration Resumes Collections on Defaulted Student Loans After Five-Year Pause

Maria Cruz by Maria Cruz
April 24, 2025
in Education, TRUMP ADMINISTRATION, U.S.
Trump Administration Resumes Collections on Defaulted Student Loans After Five-Year Pause
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A major shift is coming for millions of federal student loan borrowers as collections on defaulted loans will officially resume on May 5th. For the first time since 2020, the Trump Administration will once again begin seizing tax refunds, garnishing wages, and withholding Social Security benefits from borrowers in default.

The Department of Education confirmed the move, signaling the end of a long-standing pandemic relief measure that offered temporary protection for those struggling with defaulted loans.

Education Secretary Linda McMahon stated that reinstating repayment efforts is intended to benefit both the public and the federal loan system. She emphasized that returning the student loan portfolio to repayment status will support long-term financial stability for borrowers and taxpayers alike.

Originally paused in March 2020 during the COVID-19 economic crisis, collection efforts were frozen to help ease financial burdens. Although standard federal student loan payments resumed in October 2023, default-related collections had remained on hold—until now.

Federal data highlights the scope of the looming issue. Roughly 2.9 million borrowers are currently 61 to 90 days behind on their payments, and another 4 million are close to default, having entered the late stages of delinquency. The Department is encouraging those at risk to act before collections begin.

Borrowers in default will receive formal notices in the coming months, including possible wage garnishment letters later this summer. Officials advise exploring income-driven repayment plans or starting monthly payments to avoid enforcement actions.

Experts also warn that federal student loans carry no statute of limitations, which means the government can collect indefinitely. Borrowers are urged to check their status and explore repayment options by logging into StudentAid.gov.

Tags: Defaulted Student LoansDepartment of EducationFederal Student AidMay 5 CollectionsSocial Security OffsetStudent Loan CollectionsWage Garnishment

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