The Trump administration is set to resume collections on defaulted student loans, impacting borrowers who have not made payments for over five years. Starting May 5, those in default may face severe consequences, including wage garnishment and loss of federal benefits like Social Security. This decision follows the suspension of collections that began in March 2020 due to the pandemic. With over 5 million borrowers currently in default, the Department of Education is urging individuals to restart their payments and has committed to providing necessary assistance to help manage repayment.
"Borrowers who don't make payments on time will see their credit scores go down, and in some cases their wages automatically garnished," stated Education Secretary Linda McMahon.
"If you are a student borrower with a federal loan balance and haven't been making payments, you must restart payments now," McMahon emphasized.
The department's press release stated that FSA will contact defaulted borrowers over the next two weeks to urge them to make plans to restart payments.
Over 5 million student-loan borrowers are in default, or more than 270 days past due, marking a significant financial issue coming out of the pandemic.
Collection
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