• Federal student loan collections resumed on May 5, 2025, after a prolonged pause.
• Nearly 10 million borrowers face potential defaults as collection resumes.
• Record-high delinquency rates show 20.5% of borrowers at serious risk of default.

The U.S. Department of Education has recommenced collections on defaulted federal student loans as of May 5, 2025, marking the first time since March 2020 that borrowers in default will confront involuntary repayment measures. This resumption occurs following a pause instituted at the onset of the COVID-19 pandemic, which extended through multiple guidelines by the Biden administration until October 2023. As a direct result, millions of borrowers now face a grim financial reality, particularly with over 42.7 million borrowers collectively owing more than $1.6 trillion, according to Newsweek, CBS News, India Times, and Los Angeles Times.

The postponement of collections has led to a significant rise in delinquency rates, with approximately 20.5% of borrowers classified as "seriously delinquent," reflecting an alarming increase from previous records. Over 5 million borrowers have not made a payment for more than a year, and an additional 4 million are approaching default, experiencing late payments of over 90 days, according to a recent analysis by TransUnion cited in various reports. Secretary of Education Linda McMahon emphasized the need to protect taxpayers by asserting, “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” highlighting the economic importance of the restart, according to Newsweek and Los Angeles Times.

To facilitate the transition, the Department of Education has initiated a communication campaign aimed at providing guidance to borrowers on repayment options. Borrowers have several avenues to avoid the severe consequences associated with defaulting, which include wage garnishment, tax refund seizures, and potential impacts on Social Security benefits. Should borrowers wish to consolidate their loans or rehabilitate them to return to good standing, they must contact the Default Resolution Group, a step essential to mitigate long-term financial damage and erase default rates, according to India Times and CBS News.

The Treasury Offset Program is also an active tool now, allowing the collection of federal tax refunds and other normative federal payments towards unpaid loan balances. With the resumption of collections, the Department of Education will enforce repayment policies even more strictly, indicating the gravity of the situation with the potential for up to 15% of wages to be garnished for those in default. This swift return to repayment has raised concerns among advocacy groups about the financial strain it may impose on households already challenged by inflation and rising living costs, according to CBS News and Los Angeles Times.