When will default collections start for delinquent federal student loans?
Starting May 5, the U.S. Department of Education will start collections on defaulted federal student loans. At the start of the COVID-19 pandemic, the federal government in March 2020 paused repayment requirements on student loan debt. The pause outlasted the pandemic, creating a situation where some graduates never budgeted for loan repayments. Student borrowers should be on the lookout for an email from the U.S. Department of Education with details about their outstanding loans. According to the Department of Education, nine million borrowers are either currently in default of their payments, or in late-stage delinquency. These borrowers may be referred to a federal debt collection service if their loans are in default after May 5. After a five-year hiatus, borrowers may face automatic deductions from paychecks, tax refunds or federal benefits to meet their loan payment obligations. To avoid wage garnishment and damage to credit scores, borrowers should contact their loan service providers to start payment arrangements. Notably, government data show only one-third of the 38 million student borrowers who should be making payments are currently making payments. The Biden administration’s efforts to cancel student debt, double down on the payment pause button and push income-driven repayment plans have sown uncertainty and confusion. The bottom line is this: the pandemic-related pause is over. Student borrowers need to get in touch with their loan service providers and start making good faith payments on their loans.
What resources are available for student borrowers to learn more?
Borrowers can find specific details about their federal student loans by logging in to their individual account at or their loan service provider’s website. Be sure contact information is up-to-date to avoid missing important messages. Borrowers may choose repayment plans based on income. Income-driven repayment (IDR) plans may provide a lower monthly payment compared to other plans and consider income and family size. Borrowers may apply and learn more by using the online tool at . Alternatively, loan service providers will place borrowers on the Standard Repayment Plan, a 10-year fixed repayment plan. This plan covers loans from the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program.
As always, I encourage Iowans to be wary of scams. As the May 5 deadline approaches, fraudsters may be on the prowl to take advantage of student borrowers. Be wary of solicitations that evoke a sense of urgency to “act now” to qualify for student loan forgiveness. Scammers may request fees on the false premise they can get your loan cancelled. Be aware you don’t need to pay someone to help set up payments or navigate loan forgiveness. That’s part of your loan service provider’s responsibilities. If something sounds too good to be true, it usually is. Protect your sensitive information. The U.S. Department of Education and its partner lenders and loan service providers will never ask for your username and password. Doublecheck URLs and email addresses for authenticity. For example, communications from the federal Department of Education will come from the following addresses: noreply@studentaid.gov; noreply@debtrelief.studentaid.gov; ed.gov@public.govdelivery.com. The Federal Student Aid Information Center can be reached by Live Chat, email or phone (800) 433-3243. For help with defaulted loans or wage or tax refund garnishment, call (800) 621-3115.
In May, I’ll reintroduce bipartisan legislation to put student borrowers in the driver’s seat. My legislation would empower borrowers to make informed financial decisions so they don’t get in over their heads in debt. For example, it would ensure students know what they would owe compared to their earning potential before taking out loans to pay for college. And it also would boost transparency tools to help drive down the cost of college.
