The U.S. Department of Education has given arts advocates one reason to be excited! Beginning on May 5, its Office of Federal Student Aid will resume involuntary collections on federal student loans that are in default. Now, collections are set to restart after a nearly three-year hiatus. This pause began in March 2020 due to the COVID-19 pandemic. More than 5 million borrowers today are in default on their loans. On top of that, another 4 million borrowers are defined as being in “late-stage delinquency,” which means they’ve missed payments for more than 90 days.
Involuntary collections will be done through the Treasury Offset Program. Under this program, the federal government can offset or garnish certain payments to individuals—for example, federal tax refunds, Social Security payments, federal wages, and other federally-administered benefits. This enforcement action is intended to target past-due debts owed to the federal government, marking a hard line return to pre-pandemic collection policies.
If you find yourself in default on your loans right now, look out! The Department’s Office of Federal Student Aid will send you email notifications over the next two weeks. The new announcement reiterates that most of those who stay in default will be susceptible to these involuntary collections. Though impacted by the pandemic and recent wave of loan pauses, that same promise has been made by higher officials as collections are set to resume.
U.S. Secretary of Education Linda McMahon stated, “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.” The administration should be focused, first and foremost, on holding borrowers accountable. They’re addressing the harm done to those who have defaulted on their repayment responsibilities.
To that end, the Biden administration has made a concerted effort to untangle the mess that is student loans. To better serve these borrowers, it has delivered a stopgap measure protecting them from the ripple effect of missed payments since the borrower protection ended in September 2023. This policy shift means that people who do nothing about falling into default will suffer harsh consequences.
If you’re an individual borrower wanting to see alternatives to involuntary collections, Do It Today! The Education Department wants you to reach out to the Default Resolution Group for help. These are payment options, enrolling in an income-driven repayment plan or signing up for loan rehabilitation.
Higher education expert Mark Kantrowitz remarked on the importance of accountability: “Payment is due even if you are dissatisfied with the quality of the education you received.” This highlights that regardless of individual circumstances, borrowers must adhere to their repayment responsibilities.