Borrowers with defaulted federal student loans will soon find their loans once again in collections.
In an April 21 press release, the Department of Education (ED) announced that Federal Student Aid (FSA) will resume collections of its defaulted federal student loan portfolio on May 5, 2025.
Defaulted student loans have not been collected on since March 2020. The resumption of collection will include a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default.
Borrowers were to resume repayment on their student loans in October 2023; however, the Biden-Harris Administration wouldn’t lift the collections pause, leaving some borrowers confused about what they should do.
The Treasury Offset Program, administered by the U.S. Department of Treasury, will resume on May 5. FSA will send email communications to defaulted borrowers over the next two weeks to make them aware of this and urge them to contact the Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. FSA will send required notices regarding the start of administrative wage garnishment later in the summer.
Guaranty agencies can also begin involuntary collection activities on loans made under the Federal Family Education Loan Program (FFELP).
FSA plans to keep borrowers informed of their payment options and will conduct a communications campaign to stress the importance of repayment and provide resources and assort to assist borrowers in selecting the best repayment plan.
An enhanced Income-Driven Repayment (IDR) process will be launched which will simplify the enrollment time for IDR and no longer require borrowers to recertify their income every year. More information will be posted on StudentAid.gov next week.
FSA will also enlist its partners, including states, institutions of higher education, financial aid administrators, college access and success organizations, third-party servicers, and other stakeholders to assist in this campaign.
More information to help borrowers get out of default is available at StudentAid.gov/end-default.
