⚠️ Student Loan Collections Resume: What Borrowers Need to Know (And What to Do Next)

By James Farias, CEO, Relief Strategies, LLC

If you’ve been hoping that the federal government might forget about your defaulted student loans—think again. Starting May 5, 2025, the U.S. Department of Education (DOE) will officially resume collections on defaulted federal student loans. That includes wage garnishments, tax refund seizures, and Social Security offsets—all tools the government uses to reclaim unpaid debts.

For millions of Americans already navigating inflation, rising interest rates, and high levels of personal debt, this shift could trigger major financial disruption.

A Quiet Pause Is Over

During the pandemic, federal student loan collections were paused under the CARES Act and later extensions. This brought meaningful, if temporary, relief for borrowers in default. But now, that era is over.

In an official April 2025 press release, the Department of Education outlined plans to reengage borrowers and enforce repayment. On May 5, the government will begin collaborating with the Treasury Department, private collection agencies, and other federal systems to resume involuntary collections.

The stated goal is to “support long-term success and avoid unnecessary financial hardship,” but for many borrowers, this move may have the opposite effect.

What You Need to Know

If you’re behind on your federal student loans—or worried you might fall into delinquency—here’s what to expect:

💸 Wage Garnishment: Your employer may be required to withhold part of your paycheck before it hits your account.
🚫 Tax Refund Offsets: Your federal or state tax return could be intercepted and applied to your defaulted balance.
📉 Social Security Offsets: Even retired borrowers could see monthly checks reduced due to unresolved loan debt.
⚠️ It Starts Now: Collections begin May 5, 2025. This isn’t a proposal. It’s active enforcement.

“Don’t Panic—But Don’t Ignore It.”

Cartoon ostrich named Ollie saying “You’re not behind. You’re just at the part of your story where the hero faces the storm.”

What Should Borrowers Do?

If you or someone you know is in default—or even at risk of default—now’s the time to act:

✅ Check Your Loan Status

Go to StudentAid.gov and log in. Many borrowers don’t even realize they’re in default until collections begin.

✅ Explore ‘Fresh Start’ and Settlement Options

The DOE is offering limited-time programs to rehabilitate or settle defaulted debt. These could help remove default status and avoid collections.

✅ Be Proactive—Not Reactive

Just because collections haven’t started for you yet doesn’t mean they won’t. Garnishments and offsets will roll out in phases. And they’re going to start rolling out on May 5th.

✅ Ask for Help Sooner Rather Than Later

Whether with Relief Strategies or another trusted resource, don’t wait until collections have already begun. Early action creates better outcomes.

The Bottom Line

This isn’t just federal policy—it’s personal. Paychecks, refunds, and retirements are at stake.

At Relief Strategies, we help people face financial challenges with clarity and confidence. If this update leaves you unsure, anxious, or overwhelmed, know this: you’re not alone, and you’re not powerless.

Let’s figure it out together—before collections figure it out for you.

Want personalized help navigating your student loans or overall debt relief strategy?

Contact Relief Strategies for a free consultation and take the first step toward clarity and control.

Best regards,

James Farias

CEO of Relief Strategies, LLC

About the Author

James Farias is the CEO of Relief Strategies, LLC, a leading firm dedicated to helping individuals achieve financial freedom through effective debt relief solutions. With over 30 years of business management experience and a passion for empowering others, James has guided countless clients through their journey to reduce debt and regain control of their finances.

Recognizing how quickly debt can overwhelm even the most financially disciplined individuals, James focuses on strategies that reduce monthly payments, minimize financial stress, and unlock new opportunities. His mission is to help clients move past financial challenges and embrace a brighter future.

Connect with James on LinkedIn or visit Relief Strategies to learn more about how he and his team can assist you on your journey to financial freedom.