WASHINGTON — The Department of Education announced Monday that it will resume collecting federal student loans in default on May 5, ending a roughly five-year pause initiated during the pandemic.
More than 5 million borrowers are in default, defined as 270 days without payment, the department said in a news release.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said in a statement. “The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear.”
The Education Department’s Office of Student Aid will restart the Treasury Offset Program, which garnishes federal and state payments, such as tax returns or Social Security benefits, to collect debts. Administrative wage garnishment, allowing federal agencies to withhold a portion of an employee’s income, is set to begin this summer.
The department urged defaulted borrowers to contact the Default Resolution Group to “make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation.”
The announcement follows President Donald Trump’s executive order last month to begin dismantling the Education Department. Trump said the Small Business Administration will absorb the department’s $1.8 trillion student loan portfolio.
The resumption of collections coincides with limited access to affordable repayment options. Following a court order to end the Biden administration’s SAVE plan, the department removed applications for income-driven repayment plans from its website, blocking borrowers from adjusting unaffordable standard rates. The SAVE plan, launched in 2023, capped monthly payments at 5% of income and offered forgiveness after 10 years.
The department said it will share details next week about a new “enhanced” income-driven repayment process that eliminates annual income recertification.
The Student Borrower Protection Center criticized the Trump administration’s actions. “For five million people in default, federal law gives borrowers a way out of default and the right to make loan payments they can afford,” Executive Director Mike Pierce said in a Monday news release. “Since February, Donald Trump and Linda McMahon have blocked these borrowers’ path out of default and are now feeding them into the maw of the government debt collection machine.”