The US Department of Education has announced it will resume collection of defaulted federal student loans from next month, including the garnishment of wages. The move, which ends a pandemic-era pause, affects approximately 5.3 million borrowers currently in default.
Education Secretary Linda McMahon stated that American taxpayers would no longer bear the cost of irresponsible student loan policies. From 5 May, involuntary collection will commence via the Treasury Department's offset programme, which withholds government payments such as tax refunds and federal salaries. After a 30-day notice, wage garnishment will also begin.
The decision has drawn criticism from advocacy groups, who argue it will cause economic hardship for working families. Mike Pierce of the Student Borrower Protection Center described the move as cruel and unnecessary. Meanwhile, layoffs at the federal student aid office have made it harder for borrowers to seek assistance, according to Kristin McGuire of Young Invincibles.
The collection restart follows the end of a loan payment pause that began under Donald Trump in 2020 and was extended by Joe Biden. A final grace period ended in October 2024. Currently, less than 40% of all borrowers are up to date on their loans, with around 4 million more borrowers between 91 and 180 days late.
Confusion over income-driven repayment plans has also mounted after a February court ruling blocked some options, leading to the temporary removal of application forms. McGuire noted that many borrowers are defaulting not from unwillingness but from inability to pay or understand their obligations.
