Urgent warning to anyone

The U.S. Department of Education has announced that involuntary student loan collections will resume starting May 5, affecting around 5.3 million borrowers currently in default. These collections, paused since the start of the COVID-19 pandemic under former President Trump, will now involve the Treasury Department withholding federal payments such as tax refunds, salaries, and benefits from those with unpaid loans. Borrowers will receive a 30-day warning before wages are garnished. Despite President Biden’s efforts to cancel student debt for over 5 million people, a broader forgiveness plan was blocked by the Supreme Court in 2023 for lacking congressional approval.

Currently, another 4 million borrowers are between 91 to 180 days late on payments, and fewer than 40% of all borrowers are current. Education Secretary Linda McMahon criticized the Biden administration, saying it misled borrowers and reiterated that the executive branch lacks the authority to unilaterally cancel debt. She stated that moving forward, the Education and Treasury Departments will manage the loan program according to the law, aiming to return borrowers to repayment to protect their financial futures and support the broader U.S. economy. Notices to affected borrowers are expected within the next two weeks.