On April 21, the U.S. Department of Education (ED) announced its Office of Federal Student Aid (FSA) will resume collections of defaulted federal student loans on May 5 [ED, U.S. Department of Education to Begin Federal Student Loan Collections, Other Actions to Help Borrowers Get Back into Repayment, 4-21-25]. ED has not collected on defaulted loans since March 2020.
FSA will restart the Treasury Offset Program, administered by the U.S. Department of Treasury, on May 5. FSA said it would email all borrowers in default before the May 5 deadline to make them aware of changes. Later this summer, FSA will send the required notices to begin administrative wage garnishment.
ED said it will also authorize guaranty agencies to begin to make involuntary collections on loans under the Federal Family Education Loan Program. FSA collection activities are required under the Higher Education Act and will be conducted only after student and parent borrowers are provided sufficient notice and opportunity to repay their loans under the law.
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Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Senior Manager of Payroll Information Resources for PayrollOrg.