Federal student loan collections resume, impacting 5 million borrowers

The federal government will resume collections on defaulted student loans, ending a five-year pandemic-era pause that began in March 2020. More than five million borrowers are now at risk of wage garnishment, tax refund seizures, and even reductions in Social Security payments if they fail to address their defaulted loans. The Department of Education has warned that collections could start as early as May 5, urging affected borrowers to take action to avoid financial penalties. During the pause, federal student loan debt continued to rise by over $60 billion annually, adding further pressure to borrowers. Advocates caution that many may be caught off guard, either believing their loans were forgiven or simply forgetting about their obligations during the pause. The resumption of collections is expected to impact financially struggling Americans, some of whom may have already experienced challenges staying current on payments.