Student Loan Collections May 5 Threaten 5.3 Million with 15% Seizures

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Federal student loan collections restart May 5, 2025, ending the five-year pause that protected millions of borrowers.

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Nearly 5.3 million Americans are already in default, with another 4 million in late-stage delinquency.

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Government collectors can now seize up to 15% of your disposable income through wage garnishment after just a 30-day notice.

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Tax refunds can be intercepted and even Social Security benefits reduced through the Treasury Offset Program.

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Who's most affected? Women hold nearly two-thirds of the $1.6 trillion federal student debt total.

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Black borrowers default at 21.8% versus 6.1% for White borrowers, carrying $25,000 more debt four years after graduation.

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What can you do if you're in default? You have a critical 30-day window to take action before garnishment begins.

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Loan Rehabilitation offers a path out of default by completing 9 voluntary, income-based payments within 10 months.

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Direct Loan Consolidation can halt collections but typically requires 3 on-time payments or income-driven repayment enrollment.

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This collections restart happens as American households already manage record aggregate debt of $18 trillion.

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[{"selector":"#anim-9da67d59-55e3-4383-8d70-cd812df288e6","keyframes":{"opacity":[0,1]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8656279f-b9e1-4328-a2f9-58552fcf8cef","keyframes":{"transform":["translate3d(0px, -161.32209%, 0)","translate3d(0px, 0px, 0)"]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Will your credit score be impacted? The New York Fed projects 9 million borrowers may see credit score declines in Q1 2025. Representative Image. Photo Source: Facebook

[{"selector":"#anim-ccc45e5f-a27f-4875-a18c-e9f05b4a9845","keyframes":{"opacity":[0,1]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-3412e156-60d1-4352-b139-a38c37c82dd5","keyframes":{"transform":["translate3d(0px, -111.44866%, 0)","translate3d(0px, 0px, 0)"]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] How severe is the stress? 68% of young professionals report anxiety directly attributed to education debt. Representative Image. Photo Credits: Timur Weber

[{"selector":"#anim-6ac4427f-15e7-409d-a30d-a708c94471ad","keyframes":{"opacity":[0,1]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-d8ac582c-1e8e-40f4-a69e-360686be780e","keyframes":{"transform":["translate3d(0px, -166.89171%, 0)","translate3d(0px, 0px, 0)"]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Is your dream of homeownership at risk? 76% have delayed major life milestones like buying a home due to student loan burdens. Representative Image. Photo Source: American Advisors Group (CC BY-SA 2.0)

[{"selector":"#anim-32420216-79a4-4191-9795-59a23749d4e4","keyframes":{"opacity":[0,1]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-3789af07-ec0b-4c4f-bbee-11f51306b150","keyframes":{"transform":["translate3d(0px, -119.0436%, 0)","translate3d(0px, 0px, 0)"]},"delay":400,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] For personalized guidance on avoiding default, contact the Default Resolution Group at 1-800-621-3115 or visit studentaid.gov/defaultresolution. Representative Image. Photo Source: homematterspaoh

[{"selector":"#anim-71005d02-9971-452b-8256-78bcf3029a4f","keyframes":{"opacity":[0,1]},"delay":200,"duration":3000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-fd039392-5604-45de-b266-1a49a1386033","keyframes":{"opacity":[0,1]},"delay":200,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-adb31bbe-e37e-42da-8bc2-57b01eff038b","keyframes":{"transform":["translate3d(-114.50152%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":200,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-5e6187c0-e9d6-4aa0-946d-0f859176c123","keyframes":{"opacity":[0,1]},"delay":700,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-8f1a774a-328c-4fa7-aa72-7abb4f71cf3a","keyframes":{"transform":["translate3d(115.2381%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":700,"duration":3000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Navient Faces $120 Million Hit Over Student Loan Failures: Could This Be the End of Their Federal Loan Role? Learn more