Millions of Americans may face harsh consequences starting May 5 as the Education Department resumes collections on defaulted federal student loans for the first time since the pandemic pause began in March 2020.
A recent TransUnion analysis reveals record-high delinquency rates, with about 20% of borrowers at serious risk of default. Many could see their credit scores drop dramatically and face garnished wages, withheld tax refunds, or lost Social Security benefits. Experts warn that lack of awareness, financial hardship, and limited outreach are fueling the crisis, while calls grow for broader use of income-driven repayment plans and automated enrollment to protect vulnerable borrowers. Education Secretary Linda McMahon emphasized that student debt cannot be erased without accountability, criticizing prior relief efforts as constitutionally flawed.
