Federal collections have resumed after the pandemic-era freeze. Beginning in June, the government will intercept defaulters’ tax refunds and other payments.
The U.S. government will begin seizing federal benefits from 195,000 student loan defaulters in June, with wage garnishment notices set to reach 5.3 million borrowers later this summer, the Education Department announced on May 5, marking the formal restart of involuntary collections after a years-long pause.
The renewed enforcement effort begins with the Treasury Offset Program, which allows the federal government to intercept tax refunds, Social Security checks, and other federal payments to recover unpaid student debt. Borrowers affected by the program began receiving notices on May 5, the department said.
“Starting today, approximately 195,000 defaulted student loan borrowers will begin receiving an official 30-day notice from the U.S. Department of Treasury notifying them that their federal benefits will be subjected to the Treasury Offset Program,” the Education Department said in the May 5 announcement.
Following the notice period, administrative wage garnishment will begin later this summer for all 5.3 million borrowers who remain in default. Guaranty agencies have also been authorized to resume involuntary collections on defaulted loans under the Federal Family Education Loan Program, the department stated.
The move officially ends a pandemic-era freeze first imposed in March 2020 under President Donald Trump and extended multiple times under the Biden administration. Although payments officially resumed in fall 2023, most collection efforts remained paused—until now.
In an April 21 statement previewing the shift, the department said the decision was necessary to “restore common sense and fairness” and protect taxpayers, citing data that only 38 percent of the 42.7 million federal student loan borrowers were current on their loans, while nearly 10 million were delinquent or in default. The remainder were in forbearance, deferment, or grace periods.
“Student and parent borrowers–not taxpayers–must repay their student loans,” the Education Department said at the time. “There will not be any mass loan forgiveness.”
As of early 2025, roughly 5 million borrowers were already in default and another 4 million were in late-stage delinquency, defined as 91 to 180 days behind on payments. The New York Federal Reserve estimated that delinquent student debt reached $250 billion by the end of 2024.
