Charles Esther
The Trump administration is restarting involuntary debt collection for millions of Americans with defaulted federal student loans.
Beginning this summer, approximately 5.3 million borrowers may have their wages garnished, ending a five-year pause on collections that was initiated during the COVID-19 pandemic.
Wage Garnishment and Benefit Seizure to Resume
Federal authorities will first target tax refunds and Social Security payments under the Treasury Offset Program.
This began with notices sent on May 5, 2025, to around 195,000 borrowers, warning them of impending offsets starting in early June.
Following that, wage garnishment notices will be sent out to all defaulted borrowers later in the summer.
Borrowers Encouraged to Contact Default Resolution Group
The U.S. Department of Education is urging borrowers in default to reach out to the Default Resolution Group.
This can help them explore options like income-driven repayment, loan rehabilitation, or consolidation.
These steps can halt collections and help restore their loans to good standing.
Concerns Over Affordability and Systemic Strain
Many affected borrowers say they cannot afford the resumed payments.
Some, like 63-year-old James Southern, fear that garnishments as high as $1,500 monthly could cause significant financial hardship.
Advocates are also concerned about the timing, especially as many borrowers face delays due to backlogs, under-resourced federal staff, and unresolved applications for income-driven repayment plans.
Education Secretary Calls for Accountability and Reform
Education Secretary Linda McMahon emphasized the need for universities to play a stronger role in preventing loan defaults.
She reminded schools that institutions with high default rates risk losing access to federal student aid programs.
She also called for long-term reforms to address ballooning tuition costs and better financial literacy resources for students.
Legal and Political Backlash Grows
The move has reignited controversy as critics argue that restarting collections could further destabilize already strained households.
Legal experts warn that confusion around repayment options and ongoing litigation related to blocked relief programs — such as the Biden-era SAVE plan — may worsen the situation.
Some advocacy groups have called for congressional intervention and more borrower protections.
What Borrowers Should Do Now
Experts advise affected individuals to act quickly.
They recommend applying for income-driven repayment plans, consolidating loans to get out of default, or starting the rehabilitation process.
Borrowers should also stay in contact with their loan servicers and document all communication.
A Return to Aggressive Collections
With the reinstatement of these harsh collection practices, the Trump administration is signaling a shift back toward strict enforcement in the student loan space.
Whether this will improve the solvency of the federal loan system or lead to deeper financial distress for millions remains to be seen.
