On May 5, 2025, the U.S. Department of Education officially resumed involuntary collections on defaulted federal student loans—the first such action since the very beginning of the pandemic, way back in March 2020. This move impacts over 5 million borrowers already in default and places nearly 10 million more at risk in the coming months. If you’ve fallen behind, now is the time to act. In this post, Kaplan Law Firm explains what’s happening, how you can protect yourself, and why engaging a student loan lawyer is essential for navigating complex repayment and student loan debt forgiveness options.
Why Collections Are Restarting
- Legal mandate: Under the Higher Education Act, the Department of Education must collect on defaulted loans to safeguard taxpayer dollars and maintain program integrity.
- End of the pause: Pandemic-era relief measures expired in late 2023, but the collections freeze was extended through the 2024 election. That extension has now ended. Read more here: U.S. Department of Education.
- Scope of impact: As of May 5, more than 5 million borrowers in default will face wage garnishment, tax refund offsets, and withholding of Social Security benefits via the Treasury Offset Program. An additional 4 million in “late-stage delinquency” (91–270 days past due) may default soon if they don’t act.
What Borrowers Face Next
- Notice of collection
- All borrowers in default will receive emails from Federal Student Aid (FSA) within two weeks of May 5. These notices outline next steps and urge borrowers to contact the Default Resolution Group.
- Wage garnishment & benefit offsets
- After required notices later this summer, FSA can start garnishing up to 15% of disposable wages, intercepting tax refunds, and offsetting federal benefits.
- Credit consequences
- Default remains on your credit report until you cure the default, harming your credit score and ability to obtain future loans or favorable interest rates.
- Default remains on your credit report until you cure the default, harming your credit score and ability to obtain future loans or favorable interest rates.
Your Options: Avoiding Permanent Damage
- Loan rehabilitation
- Make nine voluntary, on-time payments within 10 months. Once completed, your loan status is restored, and garnishment stops—though previous late payments stay on your credit report.
- Loan consolidation
- Combine multiple loans into a single Direct Consolidation Loan. A single $1 payment can immediately remove default status, but be aware: consolidating restarts the clock on income-driven plans and may increase long-term interest costs.
- Income-driven repayment plans
- If eligible, you can shift your payments to as little as $0/month under plans like SAVE, PAYE, or IBR—preserving good standing once you resolve default. Note: you must first rehabilitate or consolidate to regain access.
- If eligible, you can shift your payments to as little as $0/month under plans like SAVE, PAYE, or IBR—preserving good standing once you resolve default. Note: you must first rehabilitate or consolidate to regain access.
Exploring Student Loan Debt Forgiveness
While collections have resumed, there remain paths to student loan debt forgiveness:
- Public Service Loan Forgiveness (PSLF): After 120 qualifying payments in public service, the remainder may be forgiven—provided your loans are in good standing.
- Income-driven forgiveness: Under current law, any remaining balance is forgiven after 20–25 years of qualifying payments (depending on plan).
- Borrower defense & discharge: In cases of school misconduct or undue hardship (via bankruptcy’s “Brunner Test”), borrowers may qualify to discharge some or all of their debt.
Why You Need a Lawyer for Student Loans
The rules around default resolution and forgiveness are complex and constantly evolving. A dedicated lawyer for student loans can:
- Audit your loan history for errors or servicer noncompliance (e.g., failure to apply processing forbearance when you applied for a plan).
- Negotiate with servicers on your behalf to secure rehab or consolidation and halt garnishment quickly.
- Map out forgiveness strategies, ensuring you maximize programs like PSLF or income-driven forgiveness.
- Represent you in appeals if your applications are denied or if you face improper collection actions.
Why Choose Kaplan Law Firm?
- Specialization: We focus exclusively on student-loan law, staying on top of legislative and regulatory changes.
- Proven track record: We’ve helped hundreds of clients eliminate garnishment, restore good standing, and secure millions in loan forgiveness.
- Personalized guidance: Every borrower’s situation is unique. We craft tailored strategies to address your financial and career goals.
Take Action Today
Default collections are here—and the consequences are severe. Don’t wait for your wages or benefits to be garnished. Contact Kaplan Law Firm, your trusted student loan lawyer, for a free consultation. We’ll help you explore student loan debt forgiveness, stop harmful collection actions, and get your loans back on track.
