Debt Collection Resumes for Defaulted Student Loans by Education Department

Washington, D.C. — The U.S. Department of Education announced on Monday that it will resume collecting defaulted student loans starting May 5. This shift follows a pause on payments that began in March 2020 due to the COVID-19 pandemic, affecting over 5 million borrowers.

Education Secretary Linda McMahon stated, “It’s time to have people be held accountable again for their debts.” She emphasized that with 60% of borrowers currently behind on payments, the department will begin notifying borrowers via email over the next two weeks.

According to the department, there are more than 42.7 million students with a collective debt of $1.6 trillion. McMahon noted that many borrowers have not made a payment in over 360 days, and as a result, defaults are expected to increase, potentially putting almost 25% of the federal student loan portfolio in default.

McMahon appeared on FOX News to discuss available resources for borrowers. “Almost $1.7 trillion in student debt, and none of the collections have been made since March 2020,” she remarked. The department aims to move the student loan portfolio back into repayment.

Derrick Kinney, a money and business expert, advised borrowers to take immediate action. “If you ignore it, you are setting yourself up for a big, big problem,” he warned, recommending that borrowers contact their loan servicer to begin repayment options or set up a payment plan.

The department’s goal is to ensure borrowers understand their obligations to repay, stating clearly that “there will not be any mass loan forgiveness.” Resources are being made available to help borrowers return to repayment, and wage garnishments may become a reality for those who do not comply.

More detailed information can be found on the Federal Student Aid website, which offers guidance on how to manage loans and avoid default.