US education department to restart ‘involuntary’ student loan collections

The US Department of Education will restart the “involuntary” collection of defaulted federal student loans on May 5, ending a Covid-era pause.

More than five million borrowers are currently are in default, according to a statement Monday from the department. Federal student loans default if no payment is made in 270 days.

As part of the move, the department will restart the Treasury Offset Program, which collects outstanding debts by intercepting payments such as tax refunds and government benefits.

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said.

Later in the summer, the department also will begin garnishing wages for borrowers in default.

Former president Joe Biden attempted to introduce a new student loan repayment and relief program known as “SAVE” that was blocked in court.

“The Biden-Harris administration refused to lift the collections pause and kept borrowers in a confusing limbo,” the Department of Education said, condemning Biden’s “illegal loan forgiveness schemes to win points with borrowers”.

“The Biden administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear,” it added.

The Department of Education urged defaulted borrowers to contact the Default Resolution Group student aid body to “make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation.”

“The department will also authorize guaranty agencies that they may begin involuntary collections activities on loans,” it said.