Federal Student Loan Collections to Resume in May, Wage Garnishments Expected

The U.S. Department of Education has announced that it will resume collections on federal student loans in default starting next month, ending a pandemic-era pause that shielded millions of borrowers from involuntary collection efforts. Beginning May 5, the department will initiate wage garnishments and use the Treasury Offset Program to collect overdue debts by withholding tax refunds, federal salaries, and other government benefits.

Currently, approximately 5.3 million borrowers are in default on their federal student loans. The decision, confirmed by education secretary Linda McMahon, signals a return to stricter enforcement under the Trump administration. “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” McMahon stated on Monday.

The move effectively ends a leniency period that began under the Trump administration in March 2020 and was extended several times during President Joe Biden’s tenure. Although the Biden administration attempted to introduce sweeping student loan forgiveness, legal challenges blocked those efforts.

Under the new policy, borrowers will receive a 30-day notice before any garnishments begin. Officials estimate millions could be affected, especially as less than 40% of federal borrowers are currently up to date on their payments. In addition to the 5.3 million already in default, roughly 4 million more are considered delinquent, with payments overdue by 91 to 180 days.

The announcement has been met with sharp criticism from borrower advocacy groups. “This is cruel, unnecessary and will further fan the flames of economic chaos for working families across this country,” said Mike Pierce, executive director of the Student Borrower Protection Center.

Kristin McGuire, executive director of Young Invincibles, echoed concerns about the timing and clarity of federal communication, pointing to recent layoffs at the federal student aid office and a confusing rollout of income-driven repayment plans. In February, applications for these plans were briefly removed from the department’s website, only to be reinstated weeks later.

Borrowers enrolled in the Biden-era SAVE plan remain in forbearance, accruing interest despite temporary payment relief. McGuire emphasized that defaults are often a result of systemic issues rather than unwillingness to pay. “People are in default because they can’t pay their loans and because they don’t know how to pay their loans,” she said.

As the May deadline approaches, borrowers are urged to contact loan servicers to explore options and avoid the harsh consequences of default.