The Trump Administration has officially resumed collection efforts on defaulted federal student loans as of May 5, 2025, marking a significant policy shift after a near five-year suspension. This increased push to collect what’s owed will touch the lives of at least 5.3 million borrowers. As a result, many of these people are subject to wage garnishments and other punitive financial measures.
U.S. Secretary of Education Linda McMahon emphasized the importance of loan repayment in a video posted on X on April 22, 2025. She stated, “Borrowers should pay back the debts they take on,” reinforcing the administration’s stance on financial responsibility amidst a changing policy landscape.
As of the first quarter of 2025, the Education Department estimates that about 2.9 million Americans age 62 and older have federal student loans. This further underscores a troubling trend in older adults financing higher education. This vulnerable demographic is at great risk from the various government collection measures. These provisions enable the federal government to intercept federal tax refunds, wages, and Social Security retirement and disability benefits. In reality, historically, retirement and disability benefits were exempt only after wage garnishment efforts had failed. Borrowers used to get a 65-day warning before the federal government could begin garnishing their federal benefit payments.
The Biden administration seemed to recognize this last year, putting a clear priority on extending relief measures to struggling borrowers hit hard by the pandemic. Their mission was to ensure these borrowers were able to return to repayment on their loans. In stark contrast, the Trump administration’s predatory collection tactic marks a clear break from this more forgiving practice. Affected borrowers will start to feel the financial impact from these resumed collections much sooner than experts expected.
The painful truth is the statistics show the number of borrowers who fell into default has increased by leaps and bounds over time. By 2017, 1.7 million borrowers had defaulted on their loans. Since then that number has more than doubled, up by 71%, and has skyrocketed to more than 2.9 million today. The intent to resume collection activities understandably raises concern for many in this group. It’s a welcome relief indeed, especially given national households are already facing a continuing crisis in our economy.
Mark Kantrowitz, a financial aid expert, commented on the administration’s approach: “It’s odd that they say a 30-day notice,” suggesting that borrowers may not be adequately prepared for the swift resumption of collections.
With borrowers across the country preparing for the restart of debt collection, financial advisors are encouraging borrowers to take a proactive approach. One advisor noted, “We’re advising clients to request a retroactive forbearance to cover missed payments, and a temporary forbearance until they can get enrolled in an income-driven repayment plan.” This guidance highlights the need for borrowers to know their options under the new policy changes.
Carolina Rodriguez highlighted the potential hardships that could arise from wage garnishments, stating, “Losing a portion of their Social Security benefits to repay student loans could mean not having enough for food, transportation to medical appointments or other basic necessities.” The truth is that millions of borrowers are under more financial stress than ever. As collections on those debts resume, their impact will continue to reverberate throughout wide swaths of society.
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