Federal Student Loan Collections Have Resumed – Act Now!
This is an important update regarding federal student loans. The pause on collections for defaulted federal student loans has ended.
What’s Happening Now:
Effective Monday, May 5, 2025, the U.S. Department of Education’s Office of Federal Student Aid (FSA) resumed collecting on defaulted federal student loans. This impacts over 5 million borrowers.
- Treasury Offset Program: The government can now withhold federal payments, including tax refunds and Social Security benefits, if you have defaulted student loans.
- Administrative Wage Garnishment: Later this summer, administrative wage garnishment will resume, allowing up to 15% of your disposable income to be withheld.
If You’re in Default – Act Immediately!
The FSA is urging all borrowers in default to take immediate action to avoid these involuntary collection measures. You should receive an email from FSA in the next two weeks with details on how to contact the Default Resolution Group. They can help you explore options like:
- Setting up a monthly payment plan.
- Enrolling in an income-driven repayment (IDR) plan.
- Signing up for a loan rehabilitation program to get your loan back in good standing.
How Parachute Can Help (NY Residents):
For New York residents, Parachute offers free, confidential student loan counseling. Our counselors can help you understand your options, navigate the repayment process, and develop a plan to manage your student loan debt, especially if you’re in default. Contact us at (800) 926-9685 to schedule a session.
For those in other states, please visit StudentAid.gov for information on repayment options. You can also search for a local non-profit organization in your region that provides student loan counseling, such as those affiliated with the National Foundation for Credit Counseling (NFCC).
Taking proactive steps now can help you avoid serious financial consequences.
