Federal Student Loan Collections to Resume After Five-Year Pause
Education Department to restart defaulted loan collections May 5
The U.S. Department of Education has announced plans to resume collections on defaulted federal student loans beginning May 5, ending a pause that has been in place since March 2020. According to department figures, over 5 million borrowers have not made payments in more than 360 days, with only 38% of borrowers currently making regular payments on their loans. The Education Department stated that the total student debt has reached approximately $1.6 trillion across 42.7 million borrowers.
Education Secretary Linda McMahon emphasized that the resumption of collections represents a return to responsible management of the federal student loan program. The department characterized previous administration policies as "illegal loan forgiveness schemes" designed to mask rising delinquency rates. Officials stated that borrowers, not taxpayers, must be responsible for repaying student loans, explicitly noting that "there will not be any mass loan forgiveness."
KEY POINTS
- •Collections resume May 5 after 5 years
- •$1.6 trillion owed by 42.7M borrowers
- •No mass loan forgiveness planned
The Federal Student Aid office plans to implement a communication campaign to inform defaulted borrowers about the resumption of collections. Borrowers will receive email notifications about monthly payment requirements and loan rehabilitation options for those needing assistance. Later this summer, FSA will send notices regarding administrative wage garnishment, which allows the government to collect payments directly from borrowers' wages.
The department recently reopened online applications for Income Driven Repayment plans, which allow borrowers to make payments based on their income levels. This follows a period earlier this year when these applications were temporarily unavailable. The Education Department indicated it will work with states, universities, colleges, and financial aid administrators to promote what it calls "commonsense and fairness" in student loan repayment.
The resumption of collections comes after Congress ordered borrowers to begin repaying student loans in October 2023. The department stated this action was necessary after the previous administration's pause on collections and difficulties processing income-driven repayment applications. Department officials maintain that returning the federal student loan portfolio to active repayment will benefit both borrowers and taxpayers by restoring normal operation of the program.