Federal student loan collections—including wage garnishment—will resume within weeks, the Education Department confirmed on April 21, ending a five-year freeze and setting the stage for millions of defaulted borrowers to face renewed enforcement.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said in a statement. “The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers.”
McMahon was referring to sweeping debt cancellation plans unveiled by President Joe Biden, which aimed to forgive student loans through executive action. Those efforts were ultimately blocked by the U.S. Supreme Court in 2023, which ruled that such measures exceeded the president’s authority without congressional approval.
Supporters of Biden’s plans said that widespread forgiveness would relieve financial stress, reduce economic disparities, and stimulate the economy. Critics criticized the proposals as unlawful, fiscally irresponsible, and unfair to those who had already paid off their debts or never borrowed in the first place.
On Monday, the Education Department reported that roughly 5 million borrowers are already in default, with another 4 million in late-stage delinquency—meaning they are between 91 and 180 days behind on payments. Without intervention, officials warned, nearly 10 million Americans could be in default by midyear, representing close to 25 percent of the federal student loan portfolio. Only 38 percent of borrowers are currently in repayment and current on their loans.
To begin enforcement, Federal Student Aid (FSA)—the department’s loan servicing arm—will restart the Treasury Offset Program on May 5. This allows the federal government to collect overdue student debt by intercepting tax refunds, garnishing wages, and withholding Social Security benefits.
Administrative wage garnishment will begin later this summer, following the legally required notice period. The department will also authorize guaranty agencies to resume involuntary collection activities on defaulted loans issued through the now-defunct Federal Family Education Loan Program.
“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 return of collections comes as the Education Department undergoes a major overhaul.
Despite the downsizing, McMahon said, the department remains committed to assisting struggling borrowers. FSA will soon launch a nationwide outreach campaign—including emails, social media, and expanded call center hours—to help borrowers understand their options. Several IDR plans are being reopened, including Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR).
The Education Department stated that there will be no further attempts at blanket student debt forgiveness.
“Federal student loans are financed by the American people,” the department stated in Monday’s release. “Instead of protecting responsible taxpayers, the Biden-Harris Administration put them on the hook for irresponsible lending, pushing the federal student loan portfolio toward a fiscal cliff.”
The original freeze on student loan payments and interest accrual was initiated by Trump in March 2020, intended to temporarily ease the financial burden on Americans amid the COVID-19 pandemic. Although the payment pause officially ended in September 2023, the Biden administration introduced a one-year “on-ramp” period that shielded delinquent borrowers from default, collections, and negative credit reporting—while allowing interest to accrue.
By the end of that transition period, the New York Fed estimated that the volume of past-due student loans reached a record-high 15.6 percent, totaling more than $250 billion in delinquent debt held by 9.7 million borrowers.
