Student loan collections have officially resumed in the United States, ending a five-year pandemic-era pause. For borrowers in default, this means the risk of wage garnishment, tax refund seizure, and Social Security offsets is back—and action must be taken quickly.
When did student loan collections restart?
The U.S. Department of Education resumed collection activities on May 5, 2025. This affects millions of Americans who have federal student loans currently in default. Until now, borrowers were protected under emergency relief measures that suspended forced collections during the COVID-19 pandemic.
Now that protections have expired, defaulted borrowers who do not act may face:
- Wage garnishment
- Seizure of federal tax refunds
- Withholding of Social Security benefits
How to check if your loans are in default
Borrowers can check the status of their federal loans through the Federal Student Aid website at studentaid.gov. You will need to log in with your FSA ID to review your loan balances, repayment status, and any collection actions underway.
If you find that your loans are in default, it is critical to act before wage garnishment or tax refund seizure begins.
Options to stop collections and exit default
Borrowers have several options to resolve default and protect their wages and refunds:
Loan Rehabilitation
Loan rehabilitation is a one-time opportunity to remove a default from your record. You must agree to make nine consecutive, on-time payments based on your income. After successful rehabilitation, the default is erased from your credit report.
Loan Consolidation
Borrowers can consolidate their defaulted loans into a new Direct Consolidation Loan. To qualify, you must agree to repay the new loan under an income-driven repayment plan or make three voluntary payments beforehand.
Full Loan Repayment
While rare, borrowers can also resolve default by paying the full loan balance at once. This is typically not practical for most borrowers.
Important policy changes for 2025
Under the Trump administration, some changes to student loan repayment were initially misreported. Officials recently clarified that married borrowers filing taxes separately will not have spousal income counted under the new SAVE plan, helping some borrowers lower monthly payments.
However, these changes do not stop collections on defaulted loans. Borrowers must still take direct action to avoid garnishment or refund seizure.
Key steps to take today
- Log into studentaid.gov and check your loan status
- Contact your loan servicer immediately if you are in default
- Explore rehabilitation or consolidation options
- Stay alert for notices of wage garnishment or tax offsets
The return of student loan collections marks a major shift for millions of Americans. Acting early can help you avoid financial penalties and start fresh toward repayment.
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