Trump Administration To Resume “Wage Garnishment” On May 5 To Collect On Massive Amount of Unpaid Student Loans Administration Also Preparing a Robust Communication Campaign On the Importance of Student Loan Repayment
Overview
In an announcement released from the U.S. Department of Education yesterday afternoon at 4:25 PM ET entitled “Trump Administration Resumes “Wage Garnishment” To Collect On Massive Amount of Unpaid Student Loans Collections, Other Actions to Help Borrowers Get Back Into Repayment.” The notice states that the “Office of Federal Student Aid (FSA) will resume collections of its defaulted federal student loan portfolio on Monday, May 5th and will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default.”
To address a federal student loan portfolio that Secretary of Education Linda McMahon stated is being pushed towards a fiscal cliff, her agency will reinstate involuntary collection for defaulted loans and provide support for current and struggling borrowers. The details of both initiatives were stated as follows:
Involuntary Collections for Defaulted Borrowers
FSA will restart the Treasury Offset Program, administered by the U.S. Department of Treasury, on Monday, May 5, 2025. All borrowers in default will receive email communications from FSA over the next 2 weeks making them aware of these developments and urging them to contact the Default Resolution Group (t1.info.ed.gov/r/?id=h23c67b4,1f7dccc,1f7f968) to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. Later this summer, FSA will send required notices beginning administrative wage garnishment.
The Department will also authorize guaranty agencies that they may begin involuntary collections activities on loans under the Federal Family Education Loan Program. All FSA collection activities are required under the Higher Education Act and conducted only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans under the law.
Support for Current and Struggling Borrowers
FSA is committed to keeping borrowers updated with clear information about their payment options to put them on a productive path toward repaying their federal student loans. Over the next two months, FSA will conduct a robust communications campaign to engage all borrowers on the importance of repayment. FSA will conduct outreach to borrowers through emails and social media reminding them of their obligations and providing resources and support to assist them in selecting the best repayment plan, like the new Loan Simulator, AI Assistant (Aiden), and extended servicers call times. FSA will also launch an enhanced Income-Driven Repayment (IDR) process, simplifying the time that it will take borrowers to enroll in IDR plans and eliminating the need for borrowers to recertify their income every year. More information will be posted on StudentAid.gov next week.
FSA intends to enlist its partners – states, institutions of higher education, financial aid administrators, college access and success organizations, third-party servicers, and other stakeholders – to assist in this campaign to restore commonsense and fairness with the message: student and parent borrowers – not taxpayers – must repay their student loans. There will not be any mass loan forgiveness. Together, these actions will move the federal student loan portfolio back into repayment, which benefits borrowers and taxpayers alike.
In response to the Trump Administration announcement, earlier today, House Education and Workforce Committee Chairman Tim Walberg issued the following statement:
“The Biden-Harris administration’s misguided student loan policies forced hardworking American taxpayers to cover the cost of the loan repayment freeze—even if they never went to college or took out student loans. Congress mandated payments resume in 2023, but the Biden-Harris administration willfully and unconstitutionally ignored this mandate, creating chaos in the student loan repayment system and abusing Americans’ tax dollars.
It is time for repayment to resume while we work to address skyrocketing, opaque college costs and restore stability in the student loan repayment system. President Trump is getting back to the letter of the law and restoring stability in the student loan repayment system—I look forward to working with the Trump administration to get borrowers back on track, end wasteful spending, and bring back common sense.”
What’s Next
CSPEN will discuss some of the major implications of this important new student loan news, as well as provide updates and reminders on everything from the list of Executive Order deadlines that are coming up soon to our collection of YOUR recommendations and others regarding the student loan, and other federal regulatory issues that Secretary McMahon and the Department of Education should consider revisiting as part of the 2025-2026 Federal Negotiated Rulemaking. And then there is our new list of the top ten Congressional bills introduced in the 119th Congress that you should be aware of, but might not be yet…
