Student Loan Collections Set to Resume: Borrowers Brace for Impact

May 5, 2025 - 17:16

As the Department of Education prepares to restart the collection of defaulted student loans, millions of borrowers are facing potential financial repercussions. Many individuals who have fallen behind on their payments for several months may soon experience withheld tax refunds and adverse effects on their credit scores.

The return to active loan collections marks a significant shift after a prolonged pause, leaving borrowers anxious about their financial futures. For those in default, the implications could be severe, as unpaid loans can lead to garnished wages and increased debt due to accumulating interest and fees.

Experts advise borrowers to review their options, including repayment plans or loan rehabilitation programs, to mitigate the fallout from this policy change. With the resumption of collections, it is crucial for borrowers to stay informed and proactive in managing their student loan obligations to avoid further financial distress.