Millions face new student loan collections starting in May

Federal student loan borrowers who have defaulted are about to face a major shift. After more than five years of pandemic-era leniency, the U.S. Department of Education will restart collections on defaulted student loans beginning May. For the.3 million Americans currently in default, this means the government can once again garnish wages, seize tax refunds, and withhold federal benefits to recover unpaid debts.

This move ends a pause on collections that began in March. Under the new policy, borrowers who have missed payments for at least days will receive a 30-day notice before involuntary collections begin. The Treasury Department’s offset program will be used to deduct payments directly from tax refunds, federal salaries, and Social Security benefits.

The return of collections comes after several attempts at broad student loan forgiveness stalled in the courts. While some borrowers have benefited from targeted relief programs, millions now face renewed financial pressure. Advocacy groups warn this could spark economic hardship for many families already struggling to recover from the pandemic.

Borrowers seeking help with repayment or forgiveness may encounter delays, as recent staffing cuts at the Department of Education have reduced available support. If you’re in default, now is the time to review your options and contact your loan servicer to avoid the harshest consequences of collection.