The U.S. Department of Education will resume collections on defaulted federal student loans starting May 5, potentially affecting nearly 10 million borrowers through garnished wages, seized tax refunds, and intercepted Social Security payments. The restart of the Treasury Offset Program and other enforcement measures marks the end of a pandemic-era freeze on involuntary debt collection, which had been in place since March 2020.
Education Secretary Linda McMahon announced the change on April 21, stating: "American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies." The policy shift finalizes the return to pre-pandemic enforcement under the Trump administration, with McMahon pledging to "shepherd the student loan program responsibly."
Roughly 5.3 million borrowers are currently in default, having gone more than 270 days without a payment, according to PBS. Another 4 million are in late-stage delinquency. Affected individuals will begin receiving notices by email within the next two weeks, with wage garnishment notifications expected later this summer.
The reinstated Treasury Offset Program allows the federal government to collect overdue debt by withholding funds from tax refunds, Social Security payments, and other federal disbursements. The department will also authorize administrative wage garnishment, giving borrowers 30 days' notice before employers are instructed to divert part of their paychecks.
"For many student loan borrowers, the past few years provided a plethora of forgiveness and payment plans to ease the repayment process," said Alex Beene, financial literacy instructor at the University of Tennessee at Martin, in an interview with Newsweek. "However, with a new administration comes new policy... the crackdown on repayments is about to begin."
The Biden administration paused collections and promoted new income-based repayment programs such as SAVE, billed as the "most affordable repayment plan ever." But legal challenges have stalled these options. Approximately 2 million borrowers are in interest-free forbearance while courts deliberate the fate of the SAVE plan and other programs.
Borrower advocates condemned the McMahon-led policy reversal. Mike Pierce, executive director of the Student Borrower Protection Center, said, "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. This is cruel, unnecessary and will further fan the flames of economic chaos for working families across this country."
Compounding the issue, the Department of Education has not processed new applications for income-driven repayment plans like IBR or PAYE since August 2024. Officials say processing will resume next month.
McMahon reiterated that no broad-based student debt forgiveness will be forthcoming, declaring, "There will not be any mass loan forgiveness." The administration's stated goal is to restore "commonsense and fairness" by enforcing repayment among borrowers who have fallen behind.
Borrowers hoping to avoid garnishment have limited options. One route is loan rehabilitation, which involves making nine consecutive, on-time monthly payments based on income. Others may consider loan consolidation or enrolling in income-driven repayment plans once applications reopen.
Beene urged borrowers to act immediately: "You need to start making plans immediately to begin making payments or you'll risk having your wages garnished later this year. It may not be the desired outcome for many, but it's the new reality for millions of borrowers."
