The U.S. Department of Education will restart collections on defaulted federal student loans beginning May 5, 2025, ending a pandemic-era pause that lasted more than four years. For millions of borrowers, this could mean wage garnishment, seized tax refunds, or other aggressive collection actions if steps aren’t taken immediately.
Over 5 million borrowers already in default
According to the Department of Education, more than 5 million borrowers are currently in default, and another 4 million are at high risk. If your loan has been delinquent for 270 days or more, it may already be flagged for collections. For some loans, like Perkins Loans, default can occur after just one missed payment.
What happens when your loan enters collections?
Once a loan enters federal collections, the entire balance becomes due immediately. The government may:
- Garnish your wages
- Withhold tax refunds
- Intercept federal benefits, such as Social Security
Borrowers will receive notification emails from Federal Student Aid (FSA) starting in late April through early May. These messages urge borrowers to contact the Default Resolution Group for help with repayment options like loan rehabilitation or income-driven repayment plans.
Support delays and repayment system changes
Accessing support has proven difficult for some. The Institute for College Access & Success reports borrowers facing hold times of up to eight hours.
Meanwhile, a new version of the SAVE Plan—the Biden administration’s income-driven repayment program—will debut in May after a court decision struck down the previous iteration. The revised plan aims to simplify monthly payments and eliminate annual income recertifications.
What you should do now
- Check your status at StudentAid.gov
- If you’re behind, contact the Default Resolution Group immediately
- Set up a repayment plan to avoid collections before May 5
Time is limited. Acting now could help you avoid costly collection measures and long-term financial damage.
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