The federal government announced Monday that it will begin collecting defaulted student loan payments in May after a five-year pause.
During his first term, President Donald Trump initially paused collections in March 2020, intending to ease financial stress during the pandemic-induced economic crisis. Former President Joe Biden later extended the policy several times throughout his presidency.
Defaulted borrowers are those who have failed to make their loan payments for at least 270 days. According to a press release by the Department of Education, Federal Student Aid will begin “involuntary collections” for defaulted borrowers on May 5.
“Resuming collections protects taxpayers from shouldering the cost of federal student loans that borrowers willingly undertook to finance their postsecondary education,” the press release wrote.
With an in-state tuition of $17,640 and an out-of-state tuition of $36,760, many students at the University take out student loans to fund their studies. Forty-five percent of first-year students received need-based financial aid from the federal government in the fall of 2022.
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Borrowers in default will be notified in the next two weeks about the policy change and will be directed to begin repayment. FSA will later start taking payments from defaulted borrowers’ social security benefits, tax refunds and wages.
“This initiative will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to return to repayment or get out of default,” the press release wrote.
The Department of Education said its communications campaign will include email and social media outreach, a Loan Simulator and an updated Income-Driven Repayment process.
