DENVER — The U.S. Department of Education will restart collections on defaulted student loans, which stopped in March 2020. The federal government said this will protect taxpayers from carrying the cost of loans that borrowers took out.
Currently, 42.7 million borrowers owe more than $1.6 trillion in student debt, with only 38% of borrowers in repayment and current on their student loans, according to the U.S. Department of Education.
Michael Nguyen, interim executive director of financial aid scholarships at MSU Denver, explained the return to student loan collections is a long time coming as the Trump administration passed the repayment during the Covid-19 pandemic to give relief to borrowers.
"Now that we're reaching May of 2025, the Department of Education is wanting to collect on students that have not been making payments towards their student loan debt, and at this point in time, of course, that does cause some level of financial stress for students," Nguyen explained.
This collection will impact people who have student loans in default, meaning they have not paid their student loans for over nine months. Nguyen explained the government could garnish wages, income taxes or federal benefits.
"Many students count on their student loans for educational expenses, as well as living expenses to fund their the way through education, so, in this aspect of it, it's very important for students to stay out of default, make sure that they're adhering to their responsibilities of paying on their loans so that they can continue to borrow or to access their degree in education," Nguyen said.
To know if you are in default, Nguyen recommends going to studentaid.gov where individuals can see the total amount they have borrowed and check on their loan status.
"I know the Department of Education is really making a push to contact these individuals that are impacted, so definitely be on the lookout for those communication efforts, whether it's through email or through the mail," Nguyen explained.
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