Student Loan Collections Are Back! What You NEED to Know 💰 It’s official — after a long pandemic pause, student loan collections are back. Starting May 5, the federal government will restart collecting defaulted student loan payments, and millions of Americans are about to feel the pressure. If you thought the debt crisis was bad before, buckle up. We’re entering one of the harshest financial landscapes in recent memory, and for many borrowers, it’s going to be a brutal wake-up call.
For the first time since 2020, the U.S. Education Department will once again be enforcing collection on defaulted loans using aggressive tactics through the Treasury Department. That means your tax refunds, wages, and even Social Security benefits could be garnished. Yes, even grandma’s check is at risk if she co-signed on a student loan and it’s in default. 😳
Education Secretary Linda McMahon made it very clear: taxpayers will no longer “serve as collateral” for unpaid student debt. While some call this accountability, many see it as catastrophic. Sabrina Calazans from the Student Debt Crisis Center warned that this could push people to the brink, especially as inflation and cost of living continue to rise. Millions of Americans are already living paycheck to paycheck. Now imagine losing part of that paycheck to debt you thought was on pause. That’s not just inconvenient — that’s devastating.
And here's the twist: even if you're eligible for relief, there is no mass forgiveness coming. The Biden administration did forgive debt for over 5 million borrowers before leaving office, but the Supreme Court shut down broader plans. The Trump administration is doubling down, stating clearly that forgiveness isn’t on the table anymore. So if you were holding out for another wave of cancellation — sorry, that ship has sailed.
Borrowers are now being urged to either rehabilitate their loans or enter income-based repayment plans. But this isn’t as easy as it sounds. It requires paperwork, tax returns, and for many, navigating a confusing and often frustrating system. If you miss payments, your credit will take a serious hit, and wage garnishment could follow. You might not even see your next tax refund.
This isn’t fearmongering. This is your financial reality check. If you're in default or know someone who is, act now. Don’t wait until you get that wage garnishment letter in the mail or your refund mysteriously vanishes. Visit the Default Resolution Group and take the steps needed before it’s too late.
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