The U.S. Department of Education announced its Office of Federal Student Aid (FSA) will resume collections on federal student loans in default.

Collections will begin on May 5th.

“The Department has not collected on defaulted loans since March 2020. Resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education,” the Department of Education stated.

“This initiative will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default,” it continued.

Some 5 million Americans with defaulted student loan payments will have their loans sent for collections on May 5, the Department of Education announced on Monday. https://t.co/ZGS9URJR4R

— ABC News (@ABC) April 22, 2025

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said U.S. Secretary of Education Linda McMahon.

“The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers. Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment—both for the sake of their own financial health and our nation’s economic outlook,” she added.

ABC News reports:

Next month, for the first time since student loan payments were paused due to the onset of the COVID-19 pandemic, the Education Department will collect the debts from borrowers who had defaulted — which means they hadn’t paid their debts for around nine months or 270 days — before the pandemic.

The announcement comes as scores of Federal Student Aid (FSA) employees have been terminated at the Department of Education as part of President Donald Trump’s efforts to shutter the agency, which creates uncertainty for borrowers and the future of the student loan system, according to former Under Secretary of Education James Kvaal.

“The concern is that the department is, you know, cutting the people who would help borrowers make this transition,” Kvaal told ABC News. “Borrowers who are trying to get help by getting into an affordable repayment plan or by applying for loan forgiveness, if they’re eligible, you know, just don’t have the same resources that they did before the department staff was cut in half.”

The pause — started in 2020 in Trump’s first administration — for all 43 million student loan borrowers was implemented due to the economic hardship and disruption caused by COVID. This will be the first time in five years the repayments have begun.

Education Department to begin garnishing wages on defaulted student loan borrowers https://t.co/rDr7i6OUXg

— POLITICO (@politico) April 21, 2025

From POLITICO:

The Treasury Offset Program, which collects debts by intercepting payments such as tax refunds and Social Security benefits, will administer the collections.

Following a required 30 day notice to borrowers, wage garnishment will start later this summer, a senior Education Department official said Monday on a call with reporters.

No federal student loan has been referred to collections since March 2020 when the Education Department paused federal student loan payments and collections during the Covid-19 pandemic.

About 5.6 million borrowers were in default at the end of 2024. Most federal student loan borrowers will go into default if they do not make a payment in more than 270 days.

Only 4 out of 10 borrowers are current on their student loans, Education Department officials said Monday. Thirty five percent of borrowers are 60 days delinquent and about 4 million borrowers are 91 to 180 days delinquent.

Defaulted borrowers can lose eligibility to receive additional federal student aid and experience legal consequences.