Education Department to resume collecting student loans in default

The Department of Education announced on Monday that it will restart collecting federal student loans in default on May 5, ending a pandemic-era pause that began roughly five years ago.

The Department of Education announced on Monday that it will restart collecting federal student loans in default on May 5, ending a pandemic-era pause that began roughly five years ago. More than 5 million borrowers are in default, the department said in a news release. Student loans go into default after 270 days without payment. “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.” As part of the move, the Education Department’s Office of Student Aid will restart the Treasury Offset Program, which collects debts by garnishing federal and state payments, such as tax returns or social security benefits. The department’s Monday announcement urged defaulted borrowers to contact the student aid office’s Default Resolution Group and “make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation.” The office will move to begin the process of administrative wage garnishment this summer. That process allows a federal agency to order a non-federal employer to withhold a percentage of an employee’s income to pay a delinquent debt, according to the Bureau of the Fiscal Service.