The U.S. Department of Education is resuming student loan collections, starting with involuntary collections on May 5, 2025. This includes withholding government payments for the more than 5 million borrowers currently in default and plans to garnish wages later in the summer. With 4 million additional borrowers in late-stage delinquency, there is a risk of almost 10 million borrowers defaulting, equating to 25% of the federal student loan portfolio. Critics argue this approach will worsen the economic strain on families during an impending recession, exacerbating wealth inequality.
The Education Department announced resuming student loan collections for defaulted borrowers, indicating a significant change for millions facing financial uncertainty.
The department will garnish wages later this summer, targeting over 5 million borrowers already in default, further exacerbating their financial distress.
Collection
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