Washington — The Education Department will soon begin collecting payments for student loans that are in default, including through wage garnishment for potentially millions of borrowers, the department announced Monday.
Beginning May 5, the Education Department will begin involuntary collections through the Treasury Department’s offset program, which claws back delinquent debts by withholding payments such as tax refunds, federal salaries and Social Security benefits.
More than 5 million borrowers are in default and 4 million more could be in the same position in a few months, which would put nearly a quarter of the federal student loan portfolio in default, according to the Education Department. Less than 40% of borrowers are current on their student loan payments.
In the next two weeks, those in default will receive emails informing them of the next steps and urging them to look into repayment options. Wage garnishment notices will be sent out later this summer.
No federal student loan has been referred to collections since March 2020 when President Trump paused payments and interest accrual during the COVID-19 pandemic. The Biden administration extended that pause, which ended in October 2024.
Former President Joe Biden sought to wipe out student loan debt for tens of millions of people during his four years in the White House, but the effort was repeatedly rejected by courts, including a 2023 ruling by the Supreme Court. Still, the Biden administration erased student loan debt for more than 5 million borrowers through other forgiveness programs.
Education Secretary Linda McMahon said the Biden administration “misled” borrowers about its authority to waive debt.
“Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook,” she said in a statement Monday.
The announcement from the department added, “There will not be any mass loan forgiveness.”
Caitlin Yilek is a politics reporter at CBSNews.com, based in Washington, D.C. She previously worked for the Washington Examiner and The Hill, and was a member of the 2022 Paul Miller Washington Reporting Fellowship with the National Press Foundation.
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