Student loan collections restart May 5: Here's what you need to know

The federal government on Monday will resume collecting defaulted student loan payments from millions of people for the first time since the start of the pandemic, officials said.

The federal government on Monday will resume collecting defaulted student loan payments from millions of people for the first time since the start of the pandemic, officials said.

The Trump administration said it would collect the debt through a Treasury Department program that withholds payments through tax refunds, wages and government benefits.

The U.S. Education Department has not collected on defaulted loans since March 2020. Of the nearly 43 million people who owe money, only a little more than a third have made regular payments, the agency said.

In the last five years, student debt has grown to $1.6 trillion, officials said. Education Secretary Linda McMahon said taxpayers would now be saved from shouldering that cost.

A person walks on campus at Muhlenberg College in Allentown, Pa., on March 26.Hannah Beier / Reuters“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” McMahon said in an April 21 news release announcing the restart of collections.The move comes after years of legal back-and-forth about loan forgiveness and at a time when advocates say student borrowers are stretched thin from inflation and growing concerns over the cost of living.