Collections Temporarily Paused
Due to the COVID-19 payment pause, most collections on federal student loan debt have stopped. While the payment pause ended on September 1, 2023, the Department of Education announced a new program, called Fresh Start, to help borrowers get out of default quickly and easily before collections begin again. The Fresh Start program will run until one year after the payment pause ends. The pause on collections will continue for all loans that are eligible for Fresh Start (loans that defaulted before the pandemic) through the end of the Fresh Start period. Don’t miss out. See our page on Fresh Start for more information about signing up for this time-limited program.
What is a default?
You are in default on most federal student loans if you miss payments for nine months. If you start to fall behind on student loan payments, don’t wait to fall into default. Act now to avoid defaulting. Contact your loan servicer to see if you are eligible for a more affordable payment plan, a deferment or forbearance, or another way to get temporary relief.
What are the consequences of defaulting on federal student loans?
If you default on your federal student loans, the government may be able to seize money from your federal tax refunds or Social Security benefits and garnish your wages without a court order. Additionally, you will not be eligible for new federal student loans or grants if you are in default on a federal student loan, making it hard to go back to school. Default also hurts your credit history and score, which can make it harder or more expensive to get housing or loans. Collection fees can also be added to defaulted loans, and interest continues to be charged, making your loans harder to pay off over time.
How does the government collect defaulted student loan debt?
The three most common ways the government collects student loan debt are:
In more limited cases, the government will also file lawsuits against borrowers with defaulted student loan debt to try to get a court order to collect on the debt. The government does not file these cases as often because it can easily collect on the debt without a court order. If you have been sued recently for a student loan debt, it is likely that you were sued for a private student loan debt, but you should talk to an attorney to confirm this.
