Trump Administration To Resume Student Loan Payments of 5 Million Borrowers

The Trump administration announced Monday that federal student loan collection efforts will resume on May 5, 2025 ending a more than five-year pause and affecting over 5 million borrowers currently in default.

This announcement comes as many economists warn of an imminent recession from the administration’s imposed tariffs.

The U.S. Department of Education's decision marks a significant shift in federal student loan policy, with collection activities set to restart for millions of Americans who have not made payments since early 2020, when repayments were suspended during the COVID-19 pandemic.

"American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies," Education Secretary Linda McMahon said in a statement announcing the change.

According to the Education Department, beyond the 5 million borrowers in default, another 4 million are currently behind on their payments. The Office of Federal Student Aid will begin sending email notifications to affected borrowers within the next two weeks, with wage garnishment notices to follow later this summer for those who remain in default.

The resumption of collections represents a stark contrast to the previous administration's approach to student debt. Former President Biden implemented multiple extensions of the payment pause and attempted broader loan forgiveness initiatives, most of which faced legal challenges and were ultimately restricted by court decisions.

Financial experts note the May 5 restart date gives borrowers minimal time to prepare for the financial impact of resumed collections.

"This sudden restart could create significant hardship for millions of Americans who have structured their finances around the absence of these payments for over five years," said Dr. Marcus Thompson, professor of economic policy at Georgetown University. "Many borrowers in default were already struggling before the pandemic."

The Student Borrower Protection Center, an advocacy organization that litigates on behalf of borrowers, condemned the announcement, pointing to what they describe as "unprecedented economic uncertainty" facing many Americans.

"This decision shows a callous disregard for the financial realities many borrowers are experiencing," said Elena Ramirez, executive director of the center. "With rising costs and economic instability from recent government workforce reductions, the timing could not be worse for vulnerable borrowers."

Republican lawmakers have generally supported the move, describing it as a necessary step toward fiscal responsibility. Senator James Whitaker, who chairs the Senate Education Committee, called the decision "long overdue" and suggested that the extended pause had "created an unsustainable expectation of permanent relief."

The Education Department indicated that borrowers seeking to avoid default status should contact their loan servicers immediately to discuss rehabilitation options before collection activities resume.

For many of the 9 million affected borrowers, the May announcement leaves little time to adjust household budgets that haven't included student loan payments since the first quarter of 2020 – potentially creating a wave of financial pressure just as summer begins.

* The administration has not announced any new repayment options or relief measures to accompany the resumption of collections.