Anticipated Shift in Student Debt Collection by 2024
Major changes are expected in federal student loan debt collection processes, raising concerns for millions of borrowers.
A major shift is on the horizon for federal student loan debt collection as the government plans to resume efforts on defaulted loans for the first time since the pandemic pause. Despite the Biden administration's call for borrowers to resume repayment, approximately 5.6 million individuals with federal student loans are in default, facing potential wage garnishment, tax refund interception, and other recovery actions. Experts warn that many borrowers, especially from lower-income backgrounds, may be unprepared for the looming debt collection as collections are expected to be postponed until at least 2025. Speculation arises on the responsibility of restarting collections as President-elect Donald Trump's administration awaits inauguration. The Student Borrower Protection Center emphasizes the critical decision ahead for Trump appointee Linda McMahon regarding the student loan system and wage garnishment. The persistent high rate of student loan defaults continues to be a concern for policymakers, underscoring the ongoing attention needed for federal student debt management.
