Millions of Americans with student loans are about to face collections again. After a long pause due to COVID-19, the U.S. Department of Education will restart Student Loans Debt Collection efforts on May 5, 2025.
If you’re in default or behind on payments, this change affects you.
This post will explain what’s happening, who it affects, and what you can do now to stay ahead.
Why Collections Were Paused
Back in March 2020, the government hit the brakes on student loan collections. The goal was to give borrowers a break during the pandemic.
That pause meant no wage garnishment, no tax refund seizures, and no calls from debt collectors. Many people used this time to catch up financially. But that break is now ending.
What’s Changing in 2025
Starting May 5, 2025, the Education Department will resume collecting from people who are in default.
This includes:
- Taking tax refunds
- Seizing Social Security payments
- Starting wage garnishments later in the summer
If you’re affected, you’ll get emails or letters before anything happens. But ignoring them can cost you.
Who Is Affected?
More than 5 million people are in default on their student loans. Another 4 million are behind on payments and at risk of default.
If you haven’t made payments in a while, check your loan status now. Visit StudentAid.gov to log in and find out where you stand.
What Is the Treasury Offset Program?
This is how the government collects unpaid federal debts. If you owe and don’t pay, they take money from:
- Your federal tax refund
- Your state tax refund
- Your Social Security checks
You may not even know it happened until the money is gone. That’s why it’s important to act fast.
What You Can Do Now
Don’t wait for collections to start. You have options:
- Check your loan status. Log in to StudentAid.gov.
- Call your loan servicer. Ask about your default or late payments.
- Look into loan rehabilitation. This program helps you get out of default with steady payments.
- Think about loan consolidation. This rolls your loans into one and may restart your repayment.
- Try an income-driven plan. It sets payments based on your income.
- Use the Fresh Start program. If you qualify, it clears the default and gives you a clean slate.
How to Avoid Wage Garnishment
If you’re in default and don’t respond, your wages can be taken from your paycheck. This happens after a 30-day warning notice.
To stop this:
- Reply right away to any letter or email
- Work with your servicer to set up a plan
- Ask for a hearing if you think it’s wrong
Once garnishment starts, it’s harder to stop. It’s better to deal with it early.
The Cost of Ignoring This
Debt collection can hit hard. It can drain tax refunds, lower your paycheck, and make daily life harder.
For people already struggling, it can feel like too much. That’s why many are speaking out against this move. They say it puts more pressure on those with the least money.
Where to Get Help
You don’t have to face this alone. Some places can help:
- Federal Student Aid: studentaid.gov
- Loan servicers: Find out who holds your loan and call them
- Credit counselors: Groups like NFCC offer free or low-cost help
- Legal aid: If your wages are being taken unfairly, they may help for free
Help is there. But you need to reach out.
Final Thoughts
Student loan debt collection is back. Starting May 5, 2025, the government will collect from people in default. That means tax refunds, Social Security, and even wages could be at risk.
Don’t wait for a letter. Check your loan now. Make a plan. And ask for help if you need it.
The sooner you act, the more choices you have.
