Student loan collections to resume: Experts urge swift borrower action

News story originally published in KHOU11. To see the full story, please click here: https://www.khou.com/article/news/nation-world/student-loan-collection-update/285-6d7d664a-ed61-45a3-8269-1c5a4011e19f

The Trump administration will resume the involuntary collection of defaulted student loans on May 5, impacting millions of borrowers.

Author: Victor Jacobo - KHOU11

Published April 22, 2025, 6:54 pm CDT

HOUSTON — Millions of student loan borrowers should act quickly, expert said, after the Trump administration announced it will resume the involuntary collection of student loans that are in default next month.

The Department of Education made the announcement this week, alerting borrowers of the significant change to student loans since involuntary collection was paused in March 2020.

"No student loan has been referred to collections since March of 2020," White House Press Secretary Karoline Leavitt said Tuesday. "That comes to an end."

The continuing of involuntary collection is set to begin on May 5. That will include the government garnishing wages, intercepting tax refunds and seizing portions of social security checks.

KHOU 11 spoke with experts on the topic to learn more about what it means for borrowers and what steps they should take. One of them was David Fernandez, a consumer law attorney in Houston.

"Just today, for instance, I had two bankruptcy calls regarding student loans," Fernandez told KHOU 11.

Fernandez said the involuntary collection by the government can be crippling for some.

"It's quite severe, especially if you were a co, you're a guarantor of the loan — of the note," Fernandez said. "And if your mom and dad or even grandparents and you're on a fixed income with Social Security, retired, those funds can be attacked."

KHOU 11 asked Juan HernandezAriano, the Principal of Houston-based WealthCreate, what immediate steps borrowers should take.

"The first thing I would do is I would contact your loan provider," HernandezAriano said.

HernandezAriano, who is also a Certified Student Loan Professional, said getting an understanding of a borrower's status is an important first step.

"Understanding where you are, how much are your loans? How much you need to pay and whether you're in default or in deferment," HernandezAriano said. "If you're in default, that means you're subject to this action as soon as possible, so you need to take action immediately. If you're in deferment, that means that you have a little bit of extra time, but you still should do some planning nonetheless."

Once a borrower's status is known, they can explore options.

"Explore income-driven repayment options; those income-driven repayment options really, really can help you be able to afford those loans," HernandezAriano said.

If that doesn't work out, there are other avenues to pursue.

"There's always an option to either refinance, with a private lender, or see what your options are with the loan provider," HernandezAriano said.

The Department of Education said borrowers in default should hear from the Office of Federal Student Aid (FSA) soon.

"All borrowers in default will receive email communications from FSA over the next two weeks, making them aware of these developments and urging them to contact the Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation," the department's statement said. "Later this summer, FSA will send required notices beginning administrative wage garnishment."

A link to the Default Resolution Group can be found here.

Additional information for borrowers in default can be found here.

Borrowers can also learn more about options with The Institute of Student Loan Advisors, a nonprofit that provides borrowers with advice and dispute resolution assistance.