Education Department to resume federal student loan collections

The Department of Education announced that its Office of Federal Student Aid (FSA) will resume collection of its delinquent federal student loan portfolio on Monday, May 5. The directive returns after five years.

It was the first Trump administration that suspended the referral of federal student loans to collection in March 2020 at the onset of the COVID-19 pandemic.

The resumption of collection protects taxpayers from bearing the cost of federal student loans that borrowers voluntarily assumed to finance their higher education. This initiative will be complemented by a comprehensive communication and outreach campaign to ensure borrowers understand how to repay or get out of default, the department said in a statement.

While Congress mandated that student and parent borrowers begin repaying their student loans in October 2023, the Biden-Harris administration refused to lift the pause on collections and kept borrowers in a confusing limbo.

The source said that only 40% of borrowers are current on their loan payments, while the remaining 60% are behind. There are at least 4 million borrowers who are in the late delinquency stage, meaning they are between 91 days and 180 days behind on their payments.

Today, 42.7 million borrowers owe more than $1.6 trillion in student debt, according to Department of Education data.

"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," Education Secretary Linda McMahon said.

She also said the agency will implement a communications plan to inform borrowers of their status and encourage them to sign up for auto debit to reduce the number of delinquent borrowers.

The news comes after the Trump administration unveiled plans in March to reform the agency, in keeping with the president's campaign promises to eliminate the federal government's influence over education.