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Federal student loan borrowers, take notice: Default collection for federal loans resumes on May 5, posing a threat for millions as their benefits and wages could be seized.

, and Administrator

2025 April 25 . 8:45 PM

2 min read

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Revised Article:

Gear up, folks! The Department of Education is about to swoop in and snatch up those overdue federal student loans, putting roughly 5 million borrowers in a pickle. Yep, you heard that right. May 5 is the date they've got their sights set on, and if you're one of the millions in default, it might be time to batten down the hatches.

But what exactly does default mean? Well, it's the all-too-familiar territory that awaits after 270 days of skipping loan payments. It starts with a delinquency period lasting 90 days or more, and if you don't take action before reaching that 270-day threshold, you're in a world of trouble.

So, what's the Department of Education going to do about it? They're pulling out all the big guns. They plan to revive the Treasury Offset Program, which specializes in collecting debts by grabbing hold of federal and state payments - think tax refunds or Social Security benefits. And that's not all, come summertime they'll kick off the process of administrative wage garnishment, allowing them to command non-federal employers to pinch pennies from your paycheck and use them to settle those hefty debts.

Not exactly light reading, huh? If you think you might be on the hook, CNN wants to hear from you. Fill out the form below, and they'll get in touch without publishing any personal information.

Now, let's dive a little deeper into the nitty-gritty of the situation. After default, the Department of Education may employ tactics such as treasury offsets, administrative wage garnishment, loan rehabilitation programs, and involuntary collections on FFEL Program loans by guaranty agencies. But don't despair! Borrowers can avoid default by making a switch to income-driven repayment plans, jumping aboard the autopay bandwagon, or requesting deferment or forbearance. Default also cuts you off from income-driven repayment plans until you've resolved the issue. If you're currently in late-stage delinquency, you're one of the nearly 4 million borrowers facing potential default.

With the Department of Education set to enforce collections on overdue federal student loans, those in default could find their tax refunds or Social Security benefits seized, as part of the Treasury Offset Program.
In an effort to settle their debts, borrowers in default may find themselves facing administrative wage garnishment, with non-federal employers warned to deduct a portion of their paychecks.
If you've defaulted on your student loans, you'll no longer be eligible for income-driven repayment plans until the issue is resolved, potentially cutting off a valuable avenue for loan management.
To avoid default, consider switching to income-driven repayment plans, enrolling in autopay, or seeking deferment or forbearance – these actions could help keep your loans in good standing and stave off the consequences of default.