It’s hard enough to get by in 2025 — but student loan collections could make things even worse for those with student debt.
The federal government plans to resume collections on defaulted student loans, officially ending a pandemic-era pause that began in March 2020. As of this week, the U.S. Department of Education is once again recovering funds through the Treasury Offset Program, which allows the government to withhold tax refunds, garnish wages, and reduce federal benefits like Social Security.
About 5 million borrowers nationwide are currently in default, and with student debt in the U.S. now totaling $1.6 trillion, the financial impact could be widespread.
In the South alone, more than a million people hold student loans — many could be at risk of collections if they’ve fallen behind on payments.
Collections are restarting under the Trump administration’s direction, marking a sharp policy shift from the previous administration’s approach to student debt relief.
Borrowers in default should have received emails from the Office of Federal Student Aid with steps for resolving their debt. Options include enrolling in income-based repayment plans, making monthly payments, or entering a loan rehabilitation program that could remove their loans from default status.
Those who do not take action could face serious consequences, including wage garnishment and the loss of tax refunds. Credit scores may also be negatively affected.
This change comes after the U.S. Supreme Court blocked President Biden’s 2023 plan to cancel up to $20,000 in federal student loan debt. Trump administration officials have stated there will be no mass forgiveness moving forward.
Current and future borrowers are urged to review their loan details, update contact information and consider repayment options at studentaid.gov.
