The Department of Education announced this week that it will start referring student loan borrowers in default to debt collection.

Why it matters: After a five-year penalty pause, the 5.3 million borrowers in default could see their wages garnished if they don’t resume payments.

Here’s what to know:

State of play: The department will begin involuntary collections on May 5 through the Treasury Offset Program, which collects delinquent debts that people owe to government agencies, through wage garnishment.

• Wage garnishment is a legal procedure in which employers are ordered to withhold a person’s earnings for the payment of a debt, such as unpaid child support.
• There will be a 30-day notice, after which the department will begin garnishing wages for borrowers in default.
• Student loans are considered default after 270 days without payments.

Why was there a pause?

Federal student loans, including those in default, have not been referred for collection since March 2020, when leniency was initiated during the COVID pandemic.

How many people owe money?

By the numbers: Only 38% of borrowers are up to date on their student loans, according to the department.

• 4 million borrowers are in “late stage delinquency,” officials said, or 91 to 180 days delinquent.
• There could be nearly 10 million borrowers in default in a few months, according to the department, meaning almost a quarter of borrowers will be delinquent.

How can people make payments?

Borrowers in default will receive an email in the next two weeks about the policy update, the department said. Borrowers can contact the government Default Resolution Group to make a monthly payment.

What are the next steps for borrowers?

Borrowers can sign up for an income-driven repayment (IDR) plan or loan rehabilitation.

Income-driven repayment plans, like Saving on a Valuable Education (SAVE) launched under the Biden administration, are calculated based on a borrower’s income and family size, rather than loan balances.

• A federal court prevented the implementation of SAVE and other IDR plans in February, leading to the temporary removal of applications from the Education Department website. As of March 26, 2025, however, the online IDR application is once again available.
• After the injunction, there was brief confusion over whether changes to the program meant that married borrowers on an IDR plan could be required to make higher loan payments, but the department later clarified that they would not.

Yes, but: Some experts are worried that SAVE is on the chopping block.

• Jason Delisle, a nonpartisan higher education researcher with the Urban Institute, told NPR last month that congressional Republicans want to kill SAVE as part of their budget reconciliation bill,
• Beth Akers, a higher education researcher at the conservative-leaning American Enterprise Institute (AEI), told NPR that Republicans could use the savings to help pay for President Trump’s tax cuts, but if the courts ended it first, Republicans’ legislative savings would evaporate.

What else is the Education Department doing for borrowers?

The department said that there are several tools for borrowers, such as extended loan servicer call center hours and an AI assistant to help find a repayment program.

• “We’re looking forward to working with Congress on their efforts to streamline loan repayment as well as lowering college costs,” a senior official told reporters.