The U.S. Department of Education will restart aggressive debt collection efforts on defaulted federal student loans starting May, including wage garnishments, tax refund seizures, and Social Security benefit offsets. Education Secretary Linda McMahon confirmed the Trump administration’s move impacts 5.3 million borrowers already in default and millions more at risk of delinquency.
Key consequences:
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Wage garnishment (up to 15% of disposable earnings)
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Treasury Offset Program deductions from tax refunds and federal benefits
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Credit score damage for missed payments
Borrowers in default will receive email notifications within two weeks and are urged to contact the Default Resolution Group to enroll in repayment plans, apply for loan rehabilitation, or consolidate debt. The department has extended call center hours and updated its loan simulator tool, including an AI assistant named Aidan, to help navigate options.
McMahon emphasized the policy shift aims to hold both borrowers and colleges accountable, criticizing institutions for “profiting from federal loan subsidies” while students face underemployment. The move follows the Biden administration’s stalled SAVE repayment plan and Supreme Court-blocked forgiveness efforts.
Collections were paused in March due to COVID-1 but will now resume with enhanced enforcement, including administrative wage garnishments starting this summer. Defaulted borrowers can avoid penalties by acting before May.
