FILE - New graduates line up before the start of a community college commencement in East Rutherford, N.J., May 17, 2018. This summer, millions of Americans with student loans will be able to apply for a new repayment plan that offers some of the most lenient terms ever. Interest wont pile up as long as borrowers make regular payments. Millions of people will have payments of $0. And starting in 2024, undergraduate loan payments will be reduced by half. (AP Photo/Seth Wenig, File) (Seth Wenig, AP)
HOUSTON – Millions of Americans are at risk of having their wages garnished as the federal government resumes collections on defaulted student loans.
Starting May 5, the U.S. Department of Education will begin collecting on federal student loans that have been in default — including garnishing wages, seizing tax refunds, and even pulling from Social Security checks. This marks the end of a pandemic-era pause that began in March 2020.
About 5.3 million borrowers are already in default.
An additional 4 million borrowers are 91 to 180 days behind on payments and could also be headed toward default.
Only 40% of borrowers are currently up to date on their student loans.
What is default, and what happens?
Loans become delinquent when a payment is 90 days late.
If a borrower doesn’t pay for nine months (270 days), the loan goes into default.
Once in default, the loan is sent to collections, and borrowers may face: Wage garnishment, seizure of tax refunds, withholding of federal benefits (like Social Security).
What you can do if you’re student loans default
Visit the Default Resolution Group to: Make a payment; Enroll in an income-driven repayment plan; Apply for loan rehabilitation (a one-time option that requires nine on-time monthly payments)
Forbearance vs. default
Forbearance allows you to temporarily pause payments, but it does not apply if your federal student loan is already in default.
Interest continues to build during forbearance.
How to check your loan status
Log in to your account at studentaid.gov to check if you’re in default.
Make sure your contact information is up to date — notices about collections will go out via email.
Other important notes:
Delinquency can drop your credit score by over 100 points and stays on your credit report for seven years.
Borrowers already approved for the SAVE Plan (now closed to new applicants) are still in administrative forbearance and don’t have to make payments for now.
Applications are still open for other income-driven repayment plans.
The Associated Press contributed to this article.
Copyright 2025 by KPRC Click2Houston - All rights reserved.