Student Loan Collections Resume: What Borrowers Need to Know

Resumption of Student Loan Collections

• 🎯 The Department of Education will resume collections for defaulted student loans in May, ending a pause that began during the pandemic.
• ⚠️ This change means the government will begin to withhold tax refunds and garnish wages to recover outstanding debt.
• 📉 Over five million borrowers are currently in default, with millions more at risk of falling behind.

The End of the Grace Period

• 🗓️ The Biden administration provided an additional 12-month grace period after student loans resumed in 2023, during which missed or late payments did not count against borrowers.
• ⏳ This grace period ended in September 2024, leading to a surge in missed payments and a subsequent drop in credit scores for many.
• ⚠️ Approximately four million people are currently 90 days past due on their student loans, facing potential full default later this year.

Navigating Loan Servicer Challenges

• 📞 Borrowers struggling with questions or issues are advised to first contact their student loan servicer (e.g., Nelnet, Mohela).
• 🏛️ Due to past efforts to downsize the Department of Education, contacting the federal student aid office for assistance has become more challenging.

Higher Education Confrontations

• 🎓 Over 180 higher education leaders have jointly condemned the administration's perceived efforts to control universities and interfere with academic freedom.
• 🚫 They oppose undue government intrusion, coercive use of public research funding, and the federal government dictating curriculum or hiring practices.
• 📉 Concerns exist that these confrontations could hinder research advancements and negatively impact the U.S.'s standing in global higher education and innovation.
• ⚖️ The lawsuit filed by Harvard against the administration over frozen federal funds has emboldened more university leaders to speak out against government overreach.