Millions Face Wage Garnishment as Loan Collections Begin \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ The Trump administration will resume collections on defaulted federal student loans starting in May, ending a pandemic-era pause. Wage garnishment and Treasury offsets will be used to recover debt from millions of borrowers. Education Secretary Linda McMahon criticized prior loan forgiveness policies and emphasized legal repayment enforcement.
Quick Looks
- Federal student loan collections resume May 5, ending a four-year pandemic pause.
- The move affects 5.3 million borrowers in default, with millions more delinquent.
- The Treasury Department will offset tax refunds and federal benefits.
- Wage garnishments will begin after a 30-day notice period.
- Trump-era loan pause, initiated in 2020, ended in October 2024.
- Education Secretary Linda McMahon emphasized returning to legal enforcement.
- Under President Joe Biden, $183.6 billion in student loans were forgiven.
- Less than 40% of borrowers are current on student loan payments.
Deep Look
After a four-year pause brought on by the COVID-19 pandemic, the Trump administration is restarting collection efforts on federal student loans in default, beginning May 5, 2025. The policy shift, announced by Education Secretary Linda McMahon, represents a significant turning point for the 5.3 million borrowers currently in default, many of whom now face the real possibility of wage garnishment, tax refund seizure, and federal benefit offsets.
A Return to Collections: What It Means
This announcement marks the end of one of the longest and most comprehensive pauses on federal debt enforcement in U.S. history. Initially rolled out in March 2020 under President Trump, the student loan payment and interest pause was part of a broader pandemic relief effort aimed at stabilizing household finances during widespread job losses and economic uncertainty.
Though originally intended to last a few months, the pause was extended multiple times through both the Trump and Biden administrations, with the final extension expiring in October 2024. Since then, borrowers have been expected to resume monthly payments—but many haven’t.
According to Education Department data, over 4 million borrowers are now delinquent, meaning they’ve missed payments for at least 91 days but haven’t yet crossed into default. An additional 5.3 million borrowers have officially defaulted by missing payments for nine consecutive months. Combined, that’s nearly 10 million Americans in a precarious financial position.
Under the restarted collections plan, those in default will be subject to enforcement through the Treasury Offset Program, which enables the government to seize tax refunds, garnish wages, and withhold Social Security and federal employment benefits. These aggressive tactics are often automatic and difficult to reverse once triggered.
Borrowers will receive a 30-day notice before garnishment begins, giving them limited time to resolve their default status through loan rehabilitation or consolidation.
The Political Shift: From Relief to Responsibility
The Trump administration’s renewed focus on collections comes with a dramatic rhetorical shift. While President Trump himself initiated the original payment pause during the height of the pandemic, the current administration under his second term is taking a markedly tougher stance on debt recovery.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” said Education Secretary Linda McMahon. “We are committed to restoring the student loan program to its original purpose—helping responsible borrowers, not bailing out broken systems.”
The administration argues that allowing defaulted loans to remain uncollected undermines not only the financial integrity of the student loan system but also incentivizes noncompliance among borrowers. McMahon emphasized that the new approach reflects a return to fiscal discipline, in contrast to what she characterized as “excessive loan forgiveness” under President Biden.
Contrasts with the Biden Era
Under the Biden administration, the Education Department canceled over $183.6 billion in student loans, benefiting more than 5 million borrowers through a combination of Public Service Loan Forgiveness (PSLF) expansions, income-driven repayment (IDR) fixes, and targeted debt relief for borrowers defrauded by institutions.
Although Biden’s plan to forgive up to $20,000 in federal loans per borrower was struck down by the Supreme Court, the administration continued pursuing other avenues for cancellation and borrower support—moves that drew sharp criticism from fiscal conservatives.
The Trump administration’s return to enforcement reflects a philosophical reversal, emphasizing personal responsibility over systemic relief. While Biden-era programs focused on borrower hardship and forgiveness, the current policy positions repayment as a civic duty and economic necessity.
The Human Impact: Millions at Risk
The consequences of resumed collections are expected to be far-reaching. For borrowers already struggling with inflation, high housing costs, and economic recovery, the loss of tax refunds or part of their paychecks could push them further into financial distress.
Wage garnishment, in particular, can be devastating. It not only reduces take-home pay but can also cause employment instability, since some employers view garnishment as a red flag. Borrowers may also face mounting fees and penalties if their default status isn’t resolved quickly.
Critics argue that restarting collections without robust borrower outreach or enhanced support programs could exacerbate inequality, disproportionately affecting borrowers of color, low-income families, and those who attended predatory for-profit institutions.
Student loan advocacy groups have called for a 12-month on-ramp period for borrowers to avoid collections if they engage with loan servicers. As of now, no such safety net is in place beyond the required 30-day notice.
What Borrowers Can Do Now
For borrowers in default, the clock is ticking. The Education Department recommends that affected individuals take action immediately by:
- Contacting their loan servicer to explore rehabilitation or consolidation options
- Visiting StudentAid.gov for tools to determine their loan status
- Monitoring their email and mail for notices regarding wage garnishment
- Preparing appeals if they believe they were wrongfully placed in default
Advocates also stress the importance of knowing one’s rights. Federal law provides opportunities for borrowers to exit default, although navigating the process can be complex.
Looking Ahead
With more than $1.6 trillion in outstanding federal student loan debt, the future of the U.S. student loan system remains uncertain. What’s clear is that the Trump administration has chosen a path focused on revenue recovery and program enforcement, bringing to a close one of the most borrower-friendly periods in federal loan policy.
Whether this results in increased repayments—or mass hardship and legal challenges—remains to be seen. For now, millions of borrowers will have to prepare for a new reality: one where the student loan safety net has been pulled back, and the long arm of federal collections is reaching out once again.
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