### **Student-Loan Borrowers in Default Face Harsh Consequences as Federal Collections Resume**
Thousands of defaulted student-loan borrowers are at risk of losing federal benefits, including tax refunds and Social Security payments, as the U.S. government resumes aggressive debt collection measures. After a five-year pause that began during the COVID-19 pandemic under former President Donald Trump and continued under President Joe Biden, the Department of Education has restarted involuntary collections through the Treasury Offset Program. Starting this summer, 195,000 borrowers will receive 30-day notices before their benefits are withheld, with the first offsets expected in early June. Later this summer, all 5.3 million defaulted borrowers could face wage garnishment if they fail to resolve their debt.
### **Borrowers Struggle with Unaffordable Payments and Limited Options**
Most federal student-loan borrowers enter default after missing payments for 270 days. The Education Department advises defaulted borrowers to contact the Default Resolution Group to set up a payment plan or enroll in loan rehabilitation, which requires nine consecutive monthly payments. However, many borrowers say they cannot afford the proposed payments. James Southern, a 63-year-old borrower, told *Business Insider* that his projected $1,500 monthly payment is unmanageable, leaving him with few options. Experts note that while collections have resumed, some borrowers may not face immediate consequences as the government must first locate them and identify income sources to garnish.
### **Government Urges Universities to Help Prevent Defaults**
In an effort to mitigate future defaults, the Department of Education has also reached out to universities, urging them to support borrowers and educate students on repayment options. Education Secretary Linda McMahon emphasized the need to reform the higher education finance system, which she argues has contributed to rising tuition costs without ensuring students receive high-value degrees. As collections ramp up, advocates warn that many borrowers—particularly older adults and low-income individuals—may face severe financial hardship unless more flexible repayment solutions are implemented.
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