Student loan collections are back, and over 5 million Americans are officially on the hook starting May 5.
The government is resuming involuntary collections for borrowers in default, meaning missed payments for 270 days or more. If you’re in that group, your wages, tax refunds, and even Social Security benefits could be up for grabs.
Linda McMahon, Secretary of the Department of Education under the Trump administration, confirmed the move in late April. She called it the final step in ending pandemic-era relief measures and said it’s time for taxpayers to stop covering for defaulted borrowers. Collections had been paused since March 2020. Now, it’s game on.
Anyone in default will begin receiving emails this week. The notice will lay out your options, start paying, join an income-driven repayment plan, consolidate your loans, or go through rehabilitation. But if you do nothing, expect wage garnishment and refund seizures to follow.
This hits during a rough time. Inflation is still high. Costs are up. And many borrowers were hoping the Biden-era SAVE plan or other income-based programs would kick in soon. But with legal challenges delaying those programs, and Trump back in office, relief is looking slim.
McMahon slammed previous protections as misleading and said this is about “responsible borrowing.” But not everyone’s buying that. Mike Pierce from the Student Borrower Protection Center called the timing cruel and accused Trump’s team of feeding struggling borrowers into the “debt collection machine.”
Just 38% of borrowers are currently up to date on payments. Millions more are either in forbearance or still hoping for relief. But for the 5 million already in default, the countdown has ended. The Biden administration delayed collections into 2024, even past the election, but that window’s now closed.
This move reactivates aggressive tactics, wage garnishment, refund interception, Social Security cuts, all standard tools for collecting federal debt. They haven’t been used in years, but they’re coming back fast.
If you’ve ignored your loans or missed too many payments, now’s the time to act. Log in to your studentaid.gov account. Find out your status. If you’re in default, enroll in a rehab plan or consolidate to stop garnishments before they start.
The Department of Education says this shift is about returning to normal. But millions of borrowers don’t feel ready. The real consequences, empty paychecks, lost refunds, start this week.
Whether more court challenges or policy reversals show up later remains to be seen. But today, the message is clear: if you’re in default, pay up or face penalties.
