Student loan borrowers face collections starting May 5

RICHMOND, Va. (WRIC) — Starting Monday, May 5, people behind on paying off their student loan debt could soon face debt collectors.

According to the United States Department of Education, more than 5 million Americans whose student loans are in default will soon have their loans sent to collections. 

It’s the first time the federal government is going after borrowers since the payments were paused due to the COVID-19 pandemic.

About 42.7 million borrowers owe more than $1.6 trillion in student debt. Only 38% of borrowers are in repayment and current on their student loans. 

U.S. Secretary of Education Linda McMahon said it’s all about protecting taxpayers from shouldering the burden of federal student loans borrowers undertook.

“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies. The Biden Administration misled borrowers: the executive branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers. Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment—both for the sake of their own financial health and our nation’s economic outlook.”  Linda McMahon, U.S. Secretary of Education

Former Under Secretary of Education James Kvaal said tax refunds, income and garnishing wages are some methods the Treasury Department could use to collect debt.

Federal Student Aid said it will start reaching out to borrowers through emails and social media for reminders over the next two weeks. That reminder will also offer support in selecting the best repayment plan possible.