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Date: 29-apr-2025 | By: Nuztrend Team
Photo by Towfiqu barbhuiya on Unsplash
After a five-year freeze initiated during the pandemic, the U.S. Department of Education will restart collections on defaulted federal student loans beginning May 5, 2025. Millions of borrowers must prepare for resumed actions like tax refund seizures and wage garnishments.
Approximately 5.3 million borrowers with defaulted federal loans will see collections activity resume. The Treasury Offset Program, which allows federal agencies to withhold tax refunds, Social Security benefits, and federal wages, will also be reinstated.
Borrowers in default will receive direct communications from Federal Student Aid (FSA) with options and next steps. To learn more about repayment and to explore loan rehabilitation or consolidation, visit StudentAid.gov.
With collections resuming, it’s crucial for borrowers to act swiftly. Setting up a repayment plan or consolidating loans can prevent harsh penalties like wage garnishment or loss of tax refunds. Early action can also help restore eligibility for federal student aid benefits.
Focus first on setting up an affordable monthly payment — even if it feels small. Consistency beats perfection when rebuilding after default. Exploring income-driven repayment plans early can protect your wages, tax refunds, and future financial goals.
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