With the resumption, the Trump administration is protecting the taxpayers who were shouldering the federal student loans cost till now, and many things will change for borrowers. The US education department has ensured thie will set up a comprehensive communication and campaign to ensure borrowers know how to repay their loans.
The Education Department says only 38% are in repayment, and around $1.6 trillion in debt or more is still needed to be paid. The administration has confirmed that the debt collection will be made through the US Treasury Department, and they will begin informing the borrowers.
| Resuming from | 05 May 2025 |
| Debt | Over $1.6 trillion in Debt |
| Borrowers | 42.7 million |
| Defaulters | Borrowers who have not made the repayment for more than 270 days or more |
| What will happen? | FAS will begin the Treasury Offset program to recover the debt from tax refunds, or other governmental benefits, or the borrowers can choose their repayment plan. |
| Notice | Via email in the coming two weeks |
| Default Resolution Group Link | https://myeddebt.ed.gov/ |
| New IDR | Expect the info in a week |
| Official Website | https://studentaid.gov/ |
Who will be targeted?
The Department of Education says it will begin the collection of debt from the defaulter student loan profile from 05 May 2025. This means borrowers who have not paid for 270 days or more and have their payment recovered from their benefit will be the ones from whom the debt collection will begin.
According to the department, around 43 million owe money to the government for the support they receive via the student loan program for higher education. According to the agency, approximately 4 million are in arrears between the 91 and 180-day period.
If they fail to make the payment, they will also be added to the student or parent enrolled for the loan and are in default, raising the number to 25% of the defaulters, as identified defaulters. Many people have not started the repayment also due to the previous administration’s repayment plan, SAVE, PAYE, and others are frozen and are tangled in a legal war.
How does it work?
The Education Department says the Federal Student Aid will resume the Treasury offset program from today, so all the defaulter borrowers will receive an email from FSA in 2 weeks to make them understand how to repay the loan. The notice will inform the defaulters about all the developments made for the recovery of the loans.
The department advises the Defaulter Resolution group to choose the income-driven repayment plan, enroll in rehabilitation, or schedule their monthly payments. The offset program will cover the federal payments, like social security benefits, tax refund, and the Railroad and Office of Personnel Management retirement benefits, to cover the loan.
Additionally, the government initiates wage garnishment as part of the involuntary collections process to recover the Federal Family Education Loan program. So, until the parent or student borrowers have been notified and have had an opportunity to repay their loans, the FSA begins its collection activity.
What should you do?
The borrowers for FFEL who have received support to achieve their higher education goals should take the following steps with the resumption of the student loan repayment:
- As recommended, go to the Default Resolution Group through the link given above.
- Borrowers who wish to establish a monthly payment plan for repayment with no income or marital status, or other change, can send their recent 1040 tax form with IRS stamp and their signature, along with other documents, to the following address:
- U.S. Department of Education
- Default Resolution Group
- PO Box 5609
- Greenville, TC 75403-5609
- If there is a change in your marital status or income, or other factors, you can select other repayment options by calling 1800 621 3115 or visiting https://studentaid.gov/manage-loans/default/get-out to manage your loan repayment options and choose the plan that suits your financial conditions.
You can check your loan portfolio and determine whether you are in default status by going to the FSA student aid website. This is necessary if not the government will bag your tax refund or another benefit.
Support for Struggling Borrowers
Borrowers who can’t pay the loan currently due to financial hardships should not worry, as the FSA is committed to helping borrowers at every step to help them repay their loans. The FSA will stay connected with borrowers for the next two months to update them on repayment plans and help them repay the loans.
Federal Student Aid will introduce all the best student payment plans, such as extended services call times and a new Loan Simulator AI assistant to help borrowers. The authority will also initiate the IDR (Income Driven Repayment) process to make it easier for the borrowers to enroll in the IDR plans.
The IDR plans will help you make your repayment plan based on your income and family size, which will make it easy for you to repay your loan in a sustainable way without correcting your income annually.
However, as the IDR process is closed due to current legal challenges, the new IDR process information will be out by next week, so people struggling with paying the loan can wait for the IDR process notice.