The U.S. Department of Education has resumed its efforts to collect on defaulted student loans, ending a five-year pause since the start of the COVID-19 pandemic. The move will impact around 195,000 borrowers who have defaulted on their loans, with the government notifying them that their federal benefits, including Social Security retirement checks, could be garnished in as little as 30 days. This action is set to begin as early as June, with additional notices about wage garnishment to be sent to 5.3 million borrowers later this summer.
The resumption of collections marks a sharp shift from the previous administration’s relief efforts, which included extended pauses on loan payments and interest accumulation during the pandemic. The Biden administration had focused on providing relief and helping borrowers get back on track with their payments. In contrast, the Trump administration’s return to aggressive collection tactics involves seizing federal tax refunds, wages, and Social Security benefits from defaulted borrowers, a power the U.S. government holds over federal debts.
Historically, the government provided 65 days’ notice before garnishing federal benefits, but the recent 30-day notice raised concerns among experts. Mark Kantrowitz, a higher education expert, pointed out that this shortened timeframe deviates from the typical process, where collection actions were pursued only after other attempts, such as wage garnishment, had failed.
This policy change could have serious consequences for retirees. Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, expressed concern that garnishing Social Security benefits could leave older borrowers without enough funds for essential living expenses like food and medical appointments. As of the first quarter of 2025, nearly 2.9 million people aged 62 and older are still paying off federal student loans, a sharp increase from previous years.
Borrowers in default will receive emails informing them of the new policy and are encouraged to contact the government’s Default Resolution Group for assistance. There are various options available to help borrowers avoid garnishment, such as enrolling in an income-driven repayment plan or loan rehabilitation, and some may be eligible for deferments or forbearance. Borrowers are advised to seek retroactive forbearance to cover missed payments until they can return to a manageable repayment plan.
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