Education Department Resumes Student Loan Collections After Pandemic Pause

The Education Department will start collecting on defaulted student loans next month, including wage garnishments. Approximately 5.3 million borrowers are in default, with many more at risk. The decision ends leniency begun during the COVID-19 pandemic. The Biden administration paused student loan payments, which resumed in October 2024.

The Education Department announced it will resume collection on defaulted student loans starting next month. This includes wage garnishment, as millions of borrowers face debt recovery actions. As of now, roughly 5.3 million borrowers are in default, and many more risk similar consequences.

The move follows the end of a leniency period that began during the COVID-19 pandemic. Since March 2020, no federal student loans in default had been referred for collection. However, from May 5, the department will reinitiate involuntary collection processes via the Treasury Department's offset program.

This decision follows the Biden administration's 2020 temporary pause on student loan payments, which was extended multiple times before repayments resumed in October 2024. With less than 40% of borrowers current on their loans, many individuals are now facing financial challenges as they return to regular payments.

(With inputs from agencies.)