The U.S. Department of Education is set to resume collections on defaulted federal student loans on May 5, following a hiatus since 2020 due to the COVID-19 pandemic. Affected borrowers will receive notices regarding their loan status and potential collection actions, which may include withholding from wages or tax refunds. Prior to the pandemic, delinquency rates in California were notably low, but many borrowers, especially from private institutions, now face challenges. Officials emphasize the importance of adhering to the law and express that these changes are part of a return to normal practices.
The federal Department of Education will resume collecting defaulted federal student loan payments starting May 5, marking the first collection in five years.
Education Secretary Linda McMahon stated that the government "will shepherd the student loan program responsibly and according to the law," as default collections resume.
The PPIC revealed that one in four non-graduates and one in five private for-profit borrowers in California were delinquent on their loans before the pandemic.
Scott Buchanan described the new payment policy as a "return to normalcy," reassuring that such changes are not unprecedented in the history of federal student loans.
Collection
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