The U.S. Department of Education has announced that collections on defaulted federal student loans will resume on May 5, 2025, ending a pause that began in March 2020. This change affects over 5 million borrowers currently in default, with an additional 4 million at risk of default in the coming months.
As part of the reinstated collections, the Treasury Offset Program will be reactivated, allowing the government to withhold federal tax refunds, up to 15% of Social Security benefits, and up to 15% of federal salaries from defaulted borrowers. Borrowers in default will receive emails outlining options to exit default, including loan rehabilitation, which requires nine voluntary payments over ten months.
In addition to resuming collections, the Department of Education is implementing changes to simplify Income-Driven Repayment (IDR) plans. Under the updated system, enrolling in IDR plans will be easier, and current borrowers will no longer be required to recertify their income annually. These changes aim to streamline access to relief and support for borrowers navigating student loan repayments.
The Department has clarified that there will not be any mass loan forgiveness. Borrowers are encouraged to explore available repayment options to avoid potential financial consequences such as wage garnishment, reduced credit scores, and withheld tax refunds or Social Security payments.
For more information on repayment options and assistance programs, borrowers can visit the Federal Student Aid website at studentaid.gov.
