Are the feds about to start hounding you over your student loans?

Fast Company

10-05-2025

After a five year reprieve, the U.S. Department of Education (ED) is coming for defaulted federal student loans.
The ED has not collected on defaulted loans since all payments on federal student loans were paused as part of the Covid-19 emergency relief effort in 2020. Student loan payments resumed on September 1, 2023 for all 42.7 million federal student loan borrowers. The majority of borrowers resumed monthly payments at that time and have loans in good standing. However, some 5 million borrowers have not made a payment for more than 270 days, meaning their loans are currently in default. The ED refrained from collecting on defaulted loans until earlier this week.
Nearly 5 million more borrowers are currently delinquent, meaning they have missed at least one payment and owe a past due amount. If these borrowers don't repay the past due amount or otherwise make their federal loans current, we may see upwards of 10 million borrowers–almost one-quarter of all federal borrowers–default on their federal student loans before the end of this year.
Unfortunately, the government has called in the heavies to enforce collections on defaulted loans. The good news is that the Department of Education won't send a leg-breaker named Eyeball to shake down borrowers for missing payments. The bad news is that government collections garnish your paycheck or Treasury payments instead of menacing you in a dark alley.
Whether you're in good standing, delinquent, or in default on your student loans, it's important to understand what to expect from federal student loan collections. Here's what you need to know.
Garnishment hasn't started yet
If you've only seen the headlines about collections restarting for defaulted loans, you might assume that as of May 5, 2025, borrowers in default were already seeing money lifted from their paychecks and Treasury payments. But even though we have a WWE Secretary of Education, the ED can't pull a heel-turn without any warning.
According to Adam Minsky, an attorney who focuses on helping student loan borrowers and their families, 'it was only the Treasury Offset Program (TOP) that began this week.' In other words, as of May 5, TOP began the process of identifying borrowers in default so they can be notified of the government's intent to offset, aka garnish.
Expand to continue reading ↓