The U.S. Department of Education has announced that it will resume collections on defaulted federal student loans beginning May 5, bringing an end to more than five years of relief measures introduced during the COVID-19 pandemic. The announcement signals a return to pre-pandemic enforcement for millions of Americans and marks a significant policy shift under the current administration.
A Pause That Spanned Five Years
The collections pause, which began in March 2020 under the CARES Act, allowed federal student loan borrowers to temporarily halt payments without penalties or interest accrual. Over the years, this relief was extended multiple times by the Biden administration, which also introduced plans to cancel up to $20,000 in student loan debt for millions of borrowers. However, the U.S. Supreme Court struck down that initiative in June 2023, ruling that the executive branch had overstepped its authority.
Another major initiative, the Saving on a Valuable Education (SAVE) repayment plan, was designed to tie monthly loan payments to a borrower’s income and family size. The plan aimed to ease the long-term burden on lower-income households. However, implementation of SAVE was frozen by federal courts in August 2024, following legal challenges questioning its constitutionality.
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New Administration, New Approach
With the shift in administration, the policy tone has changed. The current Trump-led White House has made it clear that it does not support mass loan forgiveness and will not pursue similar debt-relief measures. The Education Department emphasized that while assistance will be available for borrowers seeking to re-enter repayment, there will be no broad cancellations of student loan balances.
“There will not be any mass loan forgiveness,” the Department said bluntly in its statement. Instead, the agency encouraged borrowers in default to explore repayment options, including enrollment in income-driven repayment plans or rehabilitation programs.
Defaulted Borrowers Face Renewed Collection Efforts
According to the Department of Education, over five million borrowers have not made any payments in the past year. These borrowers will begin receiving emails and official notices within the next two weeks, informing them of their default status and outlining possible consequences.
Those consequences may include:
- Referral to federal debt collectors
- Automatic wage garnishments
- Deductions from tax refunds
- Enrollment in income-based repayment without borrower initiation
By the summer, many defaulted borrowers could see automatic paycheck deductions, unless they act quickly to address their delinquency. While the department has promised to work with borrowers to find manageable solutions, it also stressed the importance of compliance.
A Heavy Burden for Millions
Today, more than 42 million Americans hold federal student loans, with the total debt surpassing $1.6 trillion. For many, the return to repayment and potential collections come at a difficult time, as inflation and housing costs continue to challenge household budgets.
Student debt has become a major issue in American politics, influencing voting patterns and financial decisions, especially among younger voters. The end of the collection pause raises concerns about a potential rise in defaults, credit score damage, and financial instability across a wide segment of the population.
What Borrowers Can Expect
The Department of Education recommends that borrowers visit its official website or contact their loan servicer to check their repayment status. Those in default can take steps now to avoid harsh penalties, including:
- Applying for a loan rehabilitation program
- Consolidating their loans into a new direct loan
- Enrolling in an income-driven repayment plan
Borrowers are also urged to be vigilant against scams, as the resumption of collections may be exploited by fraudulent companies posing as government agents.
Outlook
While some lawmakers continue to advocate for long-term reform of the federal student loan system, no major changes are expected in the immediate future. With the court-blocked Biden-era plans stalled and the current administration firmly opposing forgiveness, the focus now shifts to enforcement and collection.
For millions of Americans, the next few months will bring renewed financial pressure as loan obligations return in full force. As the Department of Education reactivates its collection apparatus, many borrowers will be forced to make tough decisions—balancing student loan payments with other essential costs of living.
