As of May 5, 2025, the U.S. Department of Education will resume collections on defaulted federal student loans, ending a pause that began in March 2020 due to the COVID19 pandemic. citeturn0news14 This move affects approximately 5.6 million borrowers currently in default.
The Treasury Offset Program will intercept federal payments such as tax refunds and Social Security benefits to recover debts. Wage garnishment is expected to commence later this summer, following a required 30day notice to borrowers. citeturn0news12
This policy shift follows the Trump administrations decision to discontinue efforts at broad loan forgiveness, including the SAVE incomedriven repayment plan, which faces ongoing legal challenges. citeturn0news15 Critics argue that these changes could exacerbate financial hardships for struggling families. citeturn0news13
Borrowers are encouraged to explore options such as incomedriven repayment plans and loan rehabilitation programs to regain good standing. The Education Department has introduced tools like an AI assistant and extended call center hours to assist borrowers in navigating repayment options. citeturn0news12
With the federal student loan portfolio totaling 1.6 trillion and national debt at 36 trillion, officials emphasize the need for borrower accountability and fiscal responsibility. citeturn0news15 However, the resumption of collections and potential increases in monthly payments due to income recertification may pose challenges for many borrowers. citeturn0search1
As the landscape of student loan repayment evolves, borrowers should stay informed about policy updates and seek guidance to manage their repayment strategies effectively.