Millions of federal student loan borrowers face the resumption of collections and potential wage garnishment as pandemic-era payment pauses end. The Education Department began sending about 195,000 default notifications in May and said that later this summer all 5.3 million defaulted borrowers would receive notices that wages could be garnished. Payments were paused early in the COVID-19 pandemic and the pause was extended multiple times by both the Trump and Biden administrations. Payments officially resumed in October 2023 and interest resumed around the same time. No exact date has been announced, but the administration indicated changes would come imminently as summer ends.
Student loan borrowers face an ominous deadline as Labor Day approaches. The Trump administration announced earlier this year that it planned to resume collections for borrowers behind on their student loan payments, setting a deadline of "later this summer." In May, the Education Department began sending an estimated 195,000 student loan borrowers default notifications that their federal benefits would be subject to collections, starting in June.
"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," Education Secretary Linda McMahon said in April. "Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment-both for the sake of their own financial health and our nation's economic outlook."
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