Student Loan Collections Resume After 5-Year Pause

The Department of Education will again pursue borrowers who have defaulted on federal student loans starting in early May, potentially impacting millions of Americans.

The Department of Education will resume collecting on defaulted federal student loans beginning May 5, ending a five-year pause that began in March 2020​ (WSJ).

Borrowers in default will soon receive email notices urging them to make payments, join an income-driven plan, or rehabilitate their loans, according to the department’s announcement. By later this summer, those who remain in default could face involuntary measures such as wage garnishment to recover the debt (NYT).

More than 42 million Americans owe federal student loans, and roughly five million of them are currently in default​. Since March 2020, collections on defaulted loans have been on hold as part of emergency pandemic relief​. That pause is now officially ending, and borrowers who don’t address their defaulted loans could soon be subject to debt collectors or even see portions of their paychecks seized​.

Officials say this step is needed to protect taxpayers from bearing the costs of unpaid student debt.

Critics of the move worry that borrowers may be unable to repay, and may fall further into debt, exacerbating their livelihood.

Why is the government restarting these collections now, and what could it mean for borrowers and the broader economy?

or a deeper look at the political context behind this move, the potential outcomes, and the debate among supporters and critics, read on in this Pro Brief.

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