[UNITED STATES] After a five-year suspension, the Trump administration has restarted collection efforts on defaulted federal student loans, with borrowers likely to feel the impact sooner than many experts had anticipated.
The U.S. Department of Education on Monday unveiled new details outlining the next steps in its collection strategy. Roughly 195,000 borrowers have begun receiving notifications that their federal benefits, including Social Security, could be garnished starting in 30 days.
The move reflects a broader fiscal shift by the administration aimed at tightening enforcement around federal debt—marking a significant departure from the Biden-era policies that prioritized pandemic-related relief. Analysts warn the change could disproportionately affect older borrowers and lower-income households that rely on federal assistance.
According to the Education Department, benefit garnishments could begin as early as June. The department also confirmed that the Treasury will notify an additional 5.3 million borrowers about potential wage garnishments later this summer.
Collection activity on federal student loans had largely been on hold since March 2020, when pandemic relief measures were introduced. During that time, the Biden administration focused on helping borrowers regain good standing through pauses and repayment options.
But with defaults reaching a decade-high in 2024, the resumption of aggressive collection efforts has raised alarms among consumer advocates. Many fear that borrowers, especially seniors living on fixed incomes, may not have sufficient time to seek alternatives like loan rehabilitation or income-driven repayment plans.
Unlike prior administrations that often provided extended grace periods, the current policy offers just 30 days' notice before garnishments begin—an accelerated timeline that has sparked concern.
“The 30-day notice is unusual,” said higher education expert Mark Kantrowitz, who noted that previous practices typically included a 65-day warning and resorted to benefit offsets only after other collection methods failed. “This suggests they may not be following the traditional due diligence process.”
U.S. Secretary of Education Linda McMahon defended the administration’s approach in an April 22 video posted on X, stating, “Borrowers should pay back the debts they take on.”
The federal government holds sweeping authority when it comes to recovering debts. It can seize tax refunds, garnish wages, and withhold Social Security and disability benefits.
Advocates argue that such powers—especially when applied swiftly—could cause significant hardship for vulnerable populations. Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York, expressed concern about the impact on older Americans.
“For retirees, losing even a portion of their Social Security benefits could mean going without essentials like food or transportation to medical appointments,” Rodriguez told.
Federal data shows 2.9 million Americans aged 62 and older currently carry student debt—a 71% jump from 2017. Experts attribute the rise to a mix of factors, including parents borrowing for their children’s education and adults returning to school later in life. With limited retirement savings and rising healthcare costs, many older borrowers now face the added burden of student loan collections.
The Education Department has begun sending email notices to affected borrowers, outlining their options. Those in default are encouraged to contact the government’s Default Resolution Group and consider programs such as loan rehabilitation or income-driven repayment plans. Some may also qualify for deferment or forbearance, temporary measures that can pause required payments.
“We’re advising clients to seek retroactive forbearance to cover missed payments, and temporary forbearance while they apply for an income-driven plan,” Rodriguez said.
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