The Trump administration resumed collection efforts on defaulted student loans Monday after a roughly five-year hiatus — and affected borrowers could begin feeling the financial consequences sooner than experts expected.
The U.S. Department of Education released new details on what actions it plans to take, when.
Here’s what to know.
Federal benefits could be garnished by June
The Education Department said it began this week alerting around 195,000 student loan borrowers in default that their federal benefits will be subject to garnishment in 30 days.
Borrowers could have their benefits, including Social Security retirement checks, seized by the government as soon as June, the Education Department said.
Wages at risk over the summer
The Treasury Department will send notices to 5.3 million defaulted borrowers about the collection activity of their wages “later this summer,” the Education Department wrote in the Monday press release.
How student loan collection efforts have changed
Since the pandemic began in March 2020, collection activity on federal student loans has mostly been paused. The Biden administration focused on extending relief measures to struggling borrowers in the wake of the Covid pandemic and helping them to get current.
The Trump administration’s aggressive collection activity is a sharp turn away from that strategy, experts say.
“Borrowers should pay back the debts they take on,” said U.S. Secretary of Education Linda McMahon in a video posted on X on April 22.
The U.S. government has extraordinary collection powers on federal debts and it can seize borrowers’ federal tax refunds, wages, and Social Security retirement and disability benefits.
But in the past, student loan borrowers were usually given 65 days’ notice before the garnishment of their federal benefits, said higher education expert Mark Kantrowitz.
“Odd that they say a 30-day notice,” Kantrowitz said.
Historically, the offsets to people’s retirement and disability benefits were also “a last resort,” Kantrowitz said, “occurring a year after wage garnishment and other attempts at collection had failed.”
“Given the timing, it sounds like they are not pursuing the normal due diligence schedule for collecting defaulted federal student loans,” Kantrowitz added.
The Education Department provided borrowers with federal student loans in default the required notice, a spokesperson for the agency said in an emailed statement.
“Before an offset begins, a notice of intent to offset is sent to borrowers last known address to inform them their offset is scheduled to begin in 65 days,” they told CNBC. “The notice may be sent only once, and borrowers may have received this notice before COVID.”
Social Security garnishments may hurt retirees
Carolina Rodriguez, director of the Education Debt Consumer Assistance Program in New York, recently told CNBC that she was especially concerned about the consequences of resumed collections on retirees.
“Losing a portion of their Social Security benefits to repay student loans could mean not having enough for food, transportation to medical appointments or other basic necessities,” Rodriguez said in an April interview.
There are some 2.9 million people ages 62 and older with federal student loans, as of the first quarter of 2025, according to Education Department data. That’s a 71% increase from 2017, when there were 1.7 million such borrowers.
How to avoid collection activity
Borrowers in default will receive emails making them aware of the new policy, the Education Department said. You can contact the government’s Default Resolution Group and pursue a number of different avenues to get current on your loans, including enrolling in an income-driven repayment plan or signing up for loan rehabilitation.
Some borrowers may also be eligible for deferments or a forbearance, which are different ways to pause your payments, Rodriguez said.
“We’re advising clients to request a retroactive forbearance to cover missed payments, and a temporary forbearance until they can get enrolled in an income-driven repayment plan,” she said.
