The five-year pause is over.

And for more than 5 million Americans, it’s about to get real. Starting May 5, the Department of Education will resume student loan debt collection for borrowers in default. These are individuals who haven’t made payments in at least 270 days. After years of pandemic-era relief dating back to 2020, the federal government is flipping the switch back on. This time, it’s bringing wage garnishments, seized tax refunds, and a wave of financial pressure with it.

This isn’t just a policy shift for people already juggling rent, groceries, and gas; it’s a potential financial blow.

The Government’s Warning Shot About Student Loan Debt

ABC News reports that emails will go out to borrowers over the next two weeks. If you’re in default, you’ll be asked to either make a payment or enter a repayment plan. But if you don’t? The government has clarified that it will begin collecting through legal mechanisms like intercepting tax refunds, dipping into Social Security, and garnishing wages.

According to the Department, this move is about accountability and ensuring federal student loans aren’t a burden on taxpayers. “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” Education Secretary Linda McMahon said via ABC News. “The Biden Administration misled borrowers. …Hundreds of billions have already been transferred to taxpayers.”

In short, the government wants its money, and it’s using the full force of the Treasury Department to get it.

A Crushing Reality For Borrowers

Let’s be clear. This isn’t just about balance sheets. This is about people. Families. Workers. Students who dreamed of building a better life but got caught in the high-interest, high-stakes world of student loan debt collection.

“This is cruel, unnecessary, and will further fan the flames of economic chaos for working families across this country,” Mike Pierce, executive director of the Student Borrower Protection Center, said, per the outlet.

And it’s not just rhetoric. Right now, 5.3 million borrowers are already in default. Another 4 million are dangerously close, just months behind on payments. The Guardian notes that fewer than 40% of all borrowers are paid up on their federal student loans.

With wages stagnating, housing prices rising, and inflation still felt in everyday life, this wave of collections could deepen inequality and push vulnerable families even further to the margins.

Confusion, Layoffs, And Broken Student Loan Debt Systems

If this all feels chaotic, it is. The Education Department’s student loans division has undergone major cuts, including massive layoffs within the Federal Student Aid office. As ABC News reports, that means fewer people are available to help borrowers navigate an already complicated system.

“Borrowers who are trying to get help just don’t have the same resources that they did before the department staff was cut in half,” James Kvaal, a former Under Secretary of Education, said.

And if you’re trying to apply for one of the newer income-driven repayment plans? Good luck. Applications were taken down in February, brought back weeks later, and now live in legal limbo due to recent court rulings. Even advocates can’t predict what tomorrow’s policy might look like for consumers with student loan debt.

Kristin McGuire, executive director of Young Invincibles, summed it up via The Guardian: “People are in default because they can’t pay their loans and because they don’t know how to pay their loans.”

The Bigger Economic Picture

This isn’t just about individual struggle. Student loan collections on May 5 could have ripple effects across the entire economy. When borrowers get their wages garnished or lose their tax refunds, less money circulates in local communities. Credit scores drop. Job prospects narrow. In some states, even driver’s licenses can be revoked due to student loan debt going into default.

This comes as the Trump administration attempts to reorganize the $1.6 trillion student loan portfolio by moving oversight from the Department of Education to the Small Business Administration. It’s a major shift that experts say could deepen confusion for borrowers already trying to keep up.

“We’re at a point now where millions of borrowers are late on their student loans,” Kvaal warned. “For the department to be focused on laying off half its staff, …I think it’s very dangerous…”

What You Can Do Now

If you’re in default or unsure where your loan stands, don’t wait until the deadline. Go to studentaid.gov, log in, and find out your options. Explore income-driven repayment plans and take steps before collections begin.

The truth is, student loan debt collection isn’t just coming. It’s here. And whether it brings order or more chaos, the people who stand to lose the most are the ones who can afford it the least.