Trump admin to restart defaulted student loan collections from May 5
U.S. Secretary of Education Linda McMahon, during a cabinet meeting at the White House in Washington, D.C.. Al Drago/ABACA PHOTO: Reuters
The US Department of Education announced it will resume collections on defaulted federal student loans beginning May 5, ending a five-year pause.
The move is expected to impact millions of borrowers already facing economic challenges.
More than 5 million Americans have not made student loan payments in the past year, according to the department, and an additional 4 million are nearing default. In total, over 42.7 million borrowers owe $1.6 trillion in student debt.
'American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,' said US Education Secretary Linda McMahon.
The department will begin notifying affected borrowers via email in the coming weeks, encouraging them to make payments or enroll in repayment plans.
Starting in May, borrowers who remain in default will be referred to a Treasury Department collections program.
Later this summer, the department plans to begin wage garnishments, allowing automatic deductions from paychecks.
Critics argue the timing is harsh for vulnerable populations. 'This could not have come at a worse time,' said Aissa Canchola Bañez, Policy Director at the Student Borrower Protection Center. 'Borrowers are still navigating serious economic uncertainty.'
Older borrowers are expected to be among the hardest hit. Nearly 40% of federal student loan holders over age 65 were in default as of 2017, often relying on fixed incomes.
Defaults can severely damage credit scores, further complicating access to housing and basic financial needs.
The announcement follows a broader shift in Trump administration policy aimed at curbing debt relief efforts and reinforcing personal accountability in federal loan repayment.
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