Starting May 5, approximately 5 million Americans with defaulted student loans will face mandatory collections, as announced by the Department of Education. This marks the first time since the pause on student loan payments due to the COVID-19 pandemic that debts are being collected, affecting borrowers who have not made payments for around nine months. The decision comes amid significant staff cuts within the Federal Student Aid agency, raising concerns about the support available for borrowers navigating repayment or forgiveness options. Critics warn that defaults can have serious repercussions, including adverse effects on credit scores and potential state penalties, while the administration emphasizes its responsibility to ensure taxpayers are not burdened by unpaid loans. A comprehensive outreach campaign is planned to assist borrowers in understanding their options as collections begin.
