Defaulted On Your Student Loans? Education Department To Resume Seizing Wages-Here’s What You Need To Know

(Photo by Paul Morigi/Getty Images for We, The 45 Million)
The Department Of Education is getting ready to resume collections on student loans that are in default—including taking money directly from paychecks for potentially millions of borrowers. The move, announced Monday, marks a major shift for borrowers who’ve fallen behind.
Starting May 5, the department will start involuntary collections through the Treasury Department’s offset program. That means if you owe, the government could withhold your tax refund, your federal paycheck, or even your Social Security benefits to cover the debt.
Right now, more than 5 million people are already in default, and another 4 million could join them in the coming months. That would put nearly a quarter of all federal student loan borrowers in default, according to the department. For context, fewer than 40% of borrowers are currently up-to-date on their payments.
In the next two weeks, people who are in default will start receiving emails with more information and guidance on repayment options. Notices about wage garnishment are also expected to go out later this summer.
No federal student loans have been sent to collections since March 2020, when President Trump paused payments and interest during the COVID-19 pandemic, in his first term. The Biden administration extended that pause until it officially ended in October 2024.
During his time in office, Former President Joe Biden tried to cancel student loan debt for tens of millions of Americans—but his plan was blocked multiple times in court, including a 2023 Supreme Court ruling. Still, the Biden administration had forgiven loans for more than 5 million borrowers through other targeted programs.
Education Secretary Linda McMahon said the Biden administration “misled” borrowers about its legal ability to cancel 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,” McMahon said.
The department also made it clear: “There will not be any mass loan forgiveness.”